Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Could This Be The End for Tesla?

Companies / Electric Cars Nov 14, 2017 - 10:20 AM GMT

By: Rodney_Johnson

Companies Tesla, the nifty electric car company, and its larger-than-life founder, Elon Musk, proved something.

People around the world will pay gobs of money for very cool electric cars, even if they have limited range and take forever to charge. Americans in particular love new gadgets, and Teslas are the biggest gadgets of all.

Musk and company also proved something else.




Investors love a story.

We ache for far-reaching dreams based on beating the odds and a cowboy, go-it-alone point of view. Nothing says “I see the future and you don’t” like driving a Tesla.

But dreams don’t come cheap.

Musk plowed a chunk of the fortune he made from building PayPal into his new venture, and has sold a lot of equity shares in Tesla. He’s also tapped the debt market.

Tesla now owes just under $10 billion to bondholders.

That’s a pretty big nut for a company that loses money on every unit sold. Something about making it up on volume comes to mind.

Unfortunately for Tesla, the world doesn’t stand still.

Chevy made the ill-fated Volt to compete in the electric car market, and when that failed it rolled out the Bolt to similar acclaim, or lack thereof. I know Ford makes an electric car, but it’s so boring I can’t remember the name. I guess I lack focus.

Nissan, an early player in the space, offered the most practical, if unloved, Tesla competitor. It’s called the Leaf.

None of these early misadventures have any hope of grabbing the attention of too many new car buyers, but their offspring will…

From Volts, Bolts, Focuses, and Leafs, we’ll get new versions of electric cars from major auto companies that solve the riddles of range anxiety and charging time, all in packages that, while probably not Tesla-inspired, still look good enough to drive every day with pride.

And they’ll be offered at prices comparable to their internal engine combustion counterparts… that should send shockwaves through the Tesla crowd.

The tough road ahead for Tesla is part of a larger energy story. It’s what I discussed last month at our Irrational Economic Summit in Nashville.

We’re on the cusp of moving to a world based more on electricity than internal combustion, and not because we’re worried about pollution or the scarcity of fossil fuels.

Instead, the shift is happening because we’re making strides in energy storage, specifically batteries.

As we improve our ability to efficiently store energy, we exponentially expand our possible uses of electricity. We targeted this theme in June of last year in our flagship newsletter, Boom & Bust, and our stock recommendation has since gained north of 70%.

The current state of the art for rechargeable consumer batteries is lithium-ion, which uses a liquid solution as the medium separating the positive and negative ends of the battery.

Your cell phone has a lithium-ion battery. So does your laptop.

A Tesla carries roughly 7,000 of the little power packs. They can be charged thousands of times, and hold a good chunk of energy, but we need more.

Toyota thinks they’ve found a better mousetrap.

The Japanese automaker claims to have perfected a solid-state version of the lithium-ion battery, which should be smaller and lighter, while storing more energy and taking just a few minutes to charge. This all comes as the price per kilowatt hour continues to fall, bringing the cost of electric cars closer to that of vehicles that run on gasoline or diesel.

If Toyota has cracked the code for such an advance, then it can be widely applied. We can use the new batteries in cars, vacuum cleaners, phones, semis, boats, lawn mowers, everything.

And, luckily, we’ve got a new-found source of cheap electricity to power it all: natural gas.

Imagine generating power through hyper-efficient natural gas plants, using dirt-cheap fuel recovered through fracking, and then storing all that power in cost-effective batteries large and small nationwide.

It would be, or rather, will be, an energy revolution.

It won’t happen overnight.

Gasoline-powered cars aren’t slowly rolling to the junkyard. But it will happen.

And along the way there will be plenty of winners and losers. GM, Ford, Toyota, and Nissan will most likely gain a new lease on life, giving consumers that weren’t in the market for a new ride a reason to visit the showroom.

But other producers, like Tesla, will find it hard to compete.

The company has a beautiful product, but can it be more than a niche player when its competitors have global supply lines, thousands of dealers, and gobs of cash on the books?

Maybe.

Perhaps, as the cost per kilowatt drops, Tesla will turn the corner on profits. But, at that point, it’s just another upscale car in a crowded market.

When your choice of posh electric rides expands from one, a Tesla, to many, such as Mercedes, Porsche, Bentley, BMW, and every other nameplate, it’s possible, just possible, that Tesla takes a backseat.

Repaying $10 billion could take a long time.

Rodney

Follow me on Twitter ;@RJHSDent

By Rodney Johnson, Senior Editor of Economy & Markets

http://economyandmarkets.com

Copyright © 2017 Rodney Johnson - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rodney Johnson Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in