Energy
Thursday, August 4th, 2022 12:11 pm EDT
Tesla is holding its annual shareholder meeting today. Elon Musk likes to go through the history of the company during these annual shareholder meetings, so I expect a bit of that today, especially when you consider that the Model S was launched just over 10 years ago. We’re at a major historical milestone in the company’s young life. A decade-long view into the history of Tesla would be a fun topic for today’s meeting. The bigger question is what will happen in the next 10 years, but I’ll come back to that after exploring a few historical topics.
Without a doubt, Tesla was heavily bet against, with billions upon billions upon billions of dollars put down alongside predictions that the company would go bankrupt, or at least drop in stock value. A “Tesla Death Watch” was running 14 years ago — month after month, Tesla’s death was imminent. That narrative didn’t stop after a few months. Rather, year after year, there were the same arguments that consumer demand for Teslas, or any EVs, had a hard limit and we were already at it; that Tesla wouldn’t be able to produce the number of cars it was predicting anyway (for reasons X, Y, and Z); that Tesla could never develop the technology it was saying it would develop; and so on.
It wasn’t until Tesla Model 3 really got rolling in the 3rd quarter of 2018, Tesla showed a profit and said it would be sustainable, and then Tesla production and sales just kept growing and growing that the majority of the market turned the corner and agreed Tesla would survive and thrive.
This was the Tesla quarterly deliveries chart ending Q3 2018:
Breakthrough, right? That was the pivotal point, and many identified it as such at the time. I remember a prominent TSLA short seller changing sides dramatically at that time and using 4 of my charts in his letter to investors explaining his shift.
Though, even then, many argued that Tesla had hit peak demand, could only go down from there, and was still destined for a bloody bankruptcy. The spike was only due to pent up demand/reservations and there was no way interest in Tesla vehicles was sustainable at that level. Here’s the most recent Tesla quarterly deliveries chart (find that Q3 2018 spike):
Long story short, the fundamental Tesla mission was spot on: if the company could design and produce a highly desirable premium-class electric car, it could make enough money and inspire enough customers to increase its production scale and reduce prices; and if it could do that a few times, it could get to mass-market demand and supply and sell hundreds of thousands or even millions of electric vehicles a year.
Elon Musk and his team’s greatest achievements along the way in order to make this happen included: designing beautiful and fun vehicles, making very efficient vehicles that could maximize the energy you can store in battery packs, driving down production costs through innovative manufacturing, driving down supply chain costs through growing scale and industry influence, in-housing production of parts that presented bottlenecks or that could be greatly improved, constantly improving the software, developing a critical Supercharger network and service network alongside sales growth, and getting vehicles to market.
What core skills from that list will help Tesla achieve its goals in the next decade? Will the company also be able to crack the nut of fully autonomous driving, cheaper battery production, better battery mineral mining/extraction, and real-world general AI? Will Tesla continue to prove critics wrong? Or will some challenges prove too tough for Tesla’s team to crack and give critics the long-awaited proof that they got some things right, too? Full Self Driving is already well behind schedule, but Elon Musk is still bullish about Tesla’s approach, and how that turns out will be one of the defining stories of Tesla’s ability to predict and create the future (or not). How broadly Tesla AI is useful beyond transport is another major topic.
Elon Musk probably won’t talk too much about these AI matters at the shareholder meeting today since there’s a whole company event scheduled to present on their progress and plans on this front. However, if he touches on the future of Tesla much at all, that will likely include references to AI matters and massive vehicle production plans, and you can bet many people will criticize those bold plans. Who was right about Tesla in the past decade is clear — Elon and anyone who agreed with him had the story right. Who will be right about what Tesla achieves in the future is the big question now.
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