(Update: I guess I wasn’t done talking about Tesla. I just wrote a longer piece about the company for Seeking Alpha. You can find it here.)
If Warren Buffett is right (and he usually is) that the stock market is a short term popularity contest and a long term weighing machine, you could easily argue that the most popular stock on Wall Street over the last eighteen months has been Tesla (TSLA). Elon Musk’s battery-powered car manufacturer is barely cash flow positive, but bullish investors have lifted it to a market cap of over $25 billion. That’s more than a third of the value of a little mom and pop outfit called Ford Motors.
But this past week hasn’t been kind to Tesla. First, a report from the website The Street called the Audi A8 Diesel a “Tesla Killer.” Besides bashing Tesla’s limited range and likening its interior comfort to a “Burger King” compared to the Audi’s “Buckingham Palace,” the piece also showed that, due to battery depreciation and electricity costs, the Audi is cheaper to own and operate. Then, yesterday, another Tesla caught fire. Of course, your average Honda or Chevy is liable to go up in flames if you plow it into a light pole at 100 MPH, as the driver of the Tesla did in this case. But reports from the scene said the Tesla’s batteries were “popping like fireworks” in the middle of the street. For a car with a well-publicized history of mysterious fires, that’s the last kind of press Musk wants.
Personally, I like Teslas. I think they’re neat looking. I’ve even considered buying one, and I wish Musk the best in his attempts to revolutionize the auto industry. But I am a little weary of the hype surrounding the cars. Sure, they don’t burn gasoline, but they do suck up electricity–and in a lot of places in the United States and abroad, that’s about the dirtiest way you can power a car.
I apologize for my recent lack of posts. I’ve been travelling a lot this past month. I just got back from ten days in China, where I visited with the chief financial officers of eight companies in Beijing, Shanghai, and Hong Kong. Their businesses ranged from solar panel manufacturing to construction to internet retailing. Aside from some minor language barriers, the meetings were all more or less identical to the thousands I’ve participated in here in United States–that is, they were straightforward, rather sleep-inducing discussions of things like cash flows, production capacities, and earnings forecasts. You can talk all you want about free trade and laissez faire government policies. In my opinion, the true indicator of a country’s commitment to a market economy is how professionally boring its corporate CFO’s are. By that metric, China might be even more capitalist than we are by now.
My last trip to China was six years ago, and its economic vitality hasn’t abated at all since then. Construction cranes still fill the horizon in every city, and traffic in Beijing and Shanghai made rush hour in Manhattan look like a Sunday drive. I think every American should go over there at least once to see what true growth looks like–both the good and the bad of it. I’d like to say I worked in some time to see the sights, but that would have been impossible, not just because my schedule was so busy, but because my eyes were burning from all the smog. The only “sight” you see most days is a thick brown haze that hangs over China’s cities like something straight out of a Dickens novel.