Tesla’s mind-blowing stock rally (and the EV landscape), explained

Johan Moreno -- host of the Inside Transportation podcast -- tells us why Tesla's valuation might make sense.


August 21, 2020

(Photo by Justin Sullivan/Getty Images)

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Tesla’s stock (current price: ~$2k) looks unstoppable.

Elon Musk’s electric vehicle maker (and infinite source of memes) gained ~40% over the past 10 days, and it’s up ~9x over the past year.

Three things are driving the rally:

Tesla’s now worth ~$373B (AKA 2x Toyota or 11x Chipotle)

Johan Moreno — who hosts the Inside Transportation podcast with investor Jason Calacanis — tells us that Tesla’s position is “realistic, because they are being judged on a different standard” than other automakers.

Translation: Tesla’s more than just a car company.

It gets credit for its software, batteries, and solar energy tech. Moreno says the solar biz will be “huge” based on the storage of Tesla’s million mile battery.

Also huge: Tesla’s head start 

With China and the EU enforcing electric vehicle mandates in the decades to come, we’ll live in an electrified future.

Moreno said Tesla is “at least 10 years” ahead of everyone else on production, sales, and automated driving tech.

You hear that sound? That’s our collective regret at not owning any Tesla stock.

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Full Transcript: Johan Moreno on the EV Landscape

Here are Moreno’s thoughts on key electric vehicle (EV) players:

  1. Tesla
  2. Nikola
  3. GM
  4. Nio
  5. Fisker

1) Tesla: Being much more than a car justifies market cap

“I would say the current market cap is realistic – give or take. Mainly, because they are being judged on a different standard than GM, Ford etc.

Some people evaluate them as an automaker, others a tech/software company. Tesla is also getting into the battery game (word is they are working to cut out Panasonic/CATL/LG Chem from their battery supply chains).

The company also sells EV credits to automakers because it’s a federal mandate (this is actually how they are able to turn profits some quarters). Keep in mind, they also have a solar energy division, which is going to be huge.

When Tesla starts producing their “million mile battery,” people will be able to store energy in their old and recycled batteries, making the cost of going completely off the grid lower than current prices.

The reality is that Tesla is at least 10 years ahead of every automaker in terms of deploying and scaling EV production, sales, charging stations and automated driving technology.

China and Europe have implemented EV mandates that are going to be enforced in the late 2030s and early 2040s.”

2) Nikola: EV truck maker is targeting the commercial market but is not worth the hype

“Nikola, so they are working on two different types of drivetrains for their vehicles, hydrogen fuel-cell and battery-electric.

Hydrogen fuel-cell being mass adopted in the U.S. is a challenge because there are not nearly enough fueling stations. All of them right now are concentrated in California.

The other challenge is the cost of building those stations. Nikola has said it would use the funds brought in from orders to build stations, which is an off strategy.

They are focused more on enterprise / commercial orders (they have an order out with Republic Services and Anheuser-Busch). But just a few weeks ago, their market cap was at the same level as GM’s and they have zero products on the market.

The speculators’ point of view is they may be able to dominate the commercial vehicle end of the EV space, which is not sexy at all. Personally, I think their technology capacities and promise is very lackluster, but definitely sparked the SPAC movement within the EV space.”

3) GM: The Cadillac Lyriq is a compelling high-end Tesla competitor

“GM has been working on the car for years. Some of the details on the car are still unknown, such as final range and price point.

But the car, within the EV community, is seen as a compelling player in the space. The thing about Tesla is that its vehicles — while at a luxury price point — do not have very luxurious interiors.

This looks very promising for those who may want something a little different and a little more luxury at that price point, but will compete directly with the Model S/X, Audi e-Tron and other upcoming EV options.”

4) Nio: China’s EV carmaker is seeing sales rise during quarantine

“Nio has actually rebounded quite nicely in China – they were pretty much starving for cash because of low sales late last year, but the pandemic sparked sales for them.

It could be fear of catching COVID-19 on public transportation. We saw a similar thing happen with SARS”

5) Fisker: Can this OG electric car player come back?

“This is a revival of Fisker’s last company (Fisker Automotive), which went bankrupt and was acquired by a Chinese auto conglomerate (That company is now known as Karma Automotive).

Fisker is not building any of their vehicles, their big selling point is the vehicle is designed by Henrik Fisker, who is a legendary car designer. I don’t think they ever come out with the Ocean tbh.

The other thing worth noting is you need a lot of money to get into the EV space. If this was just a $100-200m endeavor, there would be more players in the U.S.

In fact, in China, there were hundreds of EV players but [each] eventually got eliminated one by one. It is a very capital intensive business.”

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