There is a part of me that loves seeing the scifi promises of my childhood come true. Skype is a scifi promise come true. It's TV phone technology for free. It's a delivery on an old promise. I don't have a flying car, but a free TV phone is a consolation prize. Elon Musk (got to be a made up name) sells an high end, high performance electric car. Sounds awesome and perfectly SWPL for TED talks. It's also bound to die. It's a niche of a niche market. Sure the stock races northward now, and Musk can sound like a cross between guru and businessman, but he's not Steve Jobs. Tesla will fail, and Mus will not live up to TED talk God status.
Tesla's car gets about 200 miles for a charge, and then has a long recharging time. It also has a huge cost. Musk is counting on conspicuous environmentalism to carry his company because he can't get the cost down to hit a wider market. targeting rich snobs who want to do a good environmental scout's badge purchase will work on some until Lexus, BMW and Mercedes expand their hybrid options and cut into the gas savings edge. Musk is using his own money to back up the resale guarantee. Range has always been a problem for electric vehicles, and there is no infrastructure on the horizon to create a vast network on recharging or battery swap stations. Hell, Better Place just ran through $850 million dollars trying to set up battery swap stations. Musk is going down that path because no one else will pony up the money to build a recharging or battery swap network. To take advantage of superchargers, drivers have to buy a model that is 10K more expensive or pay a surcharge (free for life, ha). Electric utilities are not going to spend money aiding an infrastructure build out right now with electricity usage down everywhere and EVs being a limited use market. It's not happening.
Musk is also playing the game that many firms are doing in the Obama era. Saved by a nearly half a billion dollar government loan, he sucks on the teat of Uncle Sam. He's living on federal subsidies and energy tax credits from the feds and different state governments. Tesla makes money selling the credits to other automakers. Tesla has about an $11 billion market cap while their EBITDA was around a negative $250 million. Musk has had Mercedes and Toyota take up stakes in the firm, and Tesla is not revolutionizing the driving experience. With these pipe dreams and subsidies, what Musk is selling is himself. The Steve Jobs comparisons and TED talks feed the image. It doesn't just play to people's idealism about the environment, but it sucks actual investors in. The stock has tripled in a year, and in addition to momo idiot traders, how many greenies bought in to support the firm?
Musk is selling himself and the green dream to investors. He is a billionaire due to his Tesla stock holdings and dependency on the government. How long can he keep the government cash flowing? A likely path I see Tesla taking is a failure that results in their sale to a larger car company to buy the technology, engineering and name for repackaging. Oil will stay expensive, but there may be an American way out. I love the quote from one Ford official about his company developing a cheap home refueling natgas station, "Once we get a good home refueling station, you’ll never have to go to a gas station again unless you like their coffee.” Americans can dream.