Showing posts from October, 2015

Not Going Anywhere

My take on why Tesla Motors is not going anywhere medium / long term and thus on why its current market capitalization is unsustainable. Designing / manufacturing an electric vehicle is not that difficult. Thus, the barriers to entry from current high volume manufacturers are not high. Actually many are already joining the fray. What is difficult respecting electric vehicles is to sell them above cost. Currently governments all over the place are subsidizing their purchase but this is an unsustainable policy and thus won't last forever. High volume vehicle manufacturers can subsidize losses on their EV line with the profits from the internal combustion engine vehicles. "Pure" EV players obviously cannot. Once government subsidies are removed they will have a difficult time. If Tesla tries to move down market to produce cheaper, higher volume cars, it would be eaten alive by the high volume car companies that enjoy substantial economies of scale. So, essenti