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Checkmate in three moves

In three stages, Tesla will dominate the transportation market.


In this article, we will explain Tesla's move of reducing the price of its vehicles all over the world as part of its strategy, and then return to the update of the company's growth and value model published on March 12, 2021. Inflation and interest rates have risen several times since then, and the model has been updated several times. Taking into account the high interest rate and the expected economic slowdown, we will update this model.


In 2022, Tesla raised the prices of its vehicles several times. A decrease in demand for vehicles worldwide, and for Tesla as well, along with increased production at all the company's plants, led the company to massively cut prices.


Tesla lowered its vehicle prices worldwide by 5% - 20% last week. There are three stages to the electric transportation revolution that Tesla is leading, which is already destabilizing the entire automobile industry:

  1. Increasing vehicle deliveries by reducing vehicle prices significantly and increasing production through technological innovations.

  2. Developing a new platform for an extremely cheap vehicle that will lower prices even further and increase production and distribution of electric vehicles.

  3. Robotaxy service - an autonomous taxi service that will reduce the price of travel to unprecedented levels which will completely change the car and real estate markets. 80% of parking lots in cities will be redundant as a result of this service.

As a result, Tesla will grow greatly at the expense of many traditional car companies and new electric vehicle entrepreneurs, many of whom will go bankrupt and disappear, similar to what happened at the beginning of the 20th century.


The disruption of the transportation industry

Take a look at the revolution that took place in the world at the beginning of the last century, when Ford began mass producing cars. From the lecture of the entrepreneur and future Tony Siva:

There is only one car on the street in the next picture, while the other vehicles are horse-drawn carts from the beginning of the last century.


"Thirteen years later, another photo was taken on the same street, but now we can only see a horse harnessed to a cart and all the other vehicles are cars. A perfect technological revolution in 13 years led by the Ford Company."


You can watch Tony Siva's entire lecture here:

Currently, electric vehicles are displacing gasoline and diesel vehicles in a similar way.


As Tesla has already pioneered the electric vehicle, it will undermine the automobile industry in three ways:

1. Tesla's first phase will reduce vehicle prices and increase production and delivery by implementing technological innovations in its factories. According to Tesla's CEO, Tesla's major advantage over other manufacturers will be in the production process, time, and costs. Tesla's first phase will reduce vehicle prices and increase production and delivery by implementing technological innovations in its factories. According to Tesla's CEO, Tesla's major advantage over other manufacturers will be in the production process, time, and costs. Tesla innovates and refines rapidly there. The profits Tesla makes from the production of electric vehicles are exceptional in the automotive industry, even when compared to the profits Toyota, Volkswagen, and Ford made from gasoline vehicles.


The rest of the auto industry doesn't really have the tools to compete with Tesla at this point, without increasing losses on electric vehicle production. The rest of the auto industry doesn't really have the tools to compete with Tesla at this point, without increasing losses on electric vehicle production.


2. For two years, Tesla has been working on an extremely cheap car platform that will lower prices even further and increase production and delivery. The new platform (generation 3 platform) will be presented at Tesla's investor day on March 1. Tesla's investor day will feature the new platform (generation 3 platform).

3. This is supposed to be a service similar to Uber or Get-Taxi, but the vehicle is driverless, which will significantly reduce the cost of travel. This is a service similar to Uber or Get-Taxi, but the vehicle is driverless, which will significantly reduce the cost of travel.


As of now, the software is still not perfect, and a driver is required in the car to use it. There are many videos on YouTube showing how close the system is to this. The launch date of Tesla's autonomous driving service is unclear, but the company will revolutionize the automotive industry by reaching autonomous driving. Tesla is 4-5 years ahead of its competitors in this field, in my opinion.


Until it launches the service, Tesla sells its autonomous driving software for $15,000 or $200 a month. By doing so, the vehicle is more capable of responding to unusual situations than a human driver, which greatly simplifies driving and increases safety.


Approximately 20% or 285 thousand Tesla customers in the US have purchased this package (as of December 2022), so on average the software adds $3,000 to an average marginal net profit of each Tesla car (the software is not marginally priced).


This presentation by futurist Tony Siva on the technological revolution in the field of transportation presents well the revolution that will impact the automobile industry in the coming years. Futurist expert Tony Siva explains how the technological revolution in transportation will affect the automobile industry in the coming years in this presentation. Here is a link to the presentation.


The vision of Tesla

The vision of Tesla is to accelerate the adoption of sustainable energy sources. The company's actions, including its current price reductions and future price reductions, stem from this vision. The goal of Tesla is to sell as many vehicles as possible.

Tesla manufactures solar panels and solar roofs to produce sustainable energy from the sun's energy, batteries of various sizes to store this energy, and various vehicles to use electric energy.


Around five years ago, Tesla was almost alone in realizing its vision. Only in the last three years has the transition to electric vehicles become commonplace and it is already clear to most analysts and energy policy makers that within a few years most of the vehicles produced will be electric.


Like any company, Tesla also wants to generate high revenues and profits to grow, create value for shareholders, and realize its vision. With Tesla's vision in mind, many customers bought shares and expensive vehicles with the feeling that they were contributing to a better future. To accelerate the transition to sustainable energy and acquire a larger market share, Tesla will try to make the vehicle accessible to people with any budget or interest in switching to an electric vehicle.


The purchase of Twitter by Elon Musk for $44 billion with the help of the sale of his shares in Tesla, and his inhumane entry into Twitter while making all the possible political and social mistakes, had a negative impact on the share price and the brand of Tesla and Musk himself. Many in the US are not fans more the company, and gave up buying a car from the company and dislike Elon Musk himself. Musk, who is very active on Twitter and sometimes acts like a sophisticated computer with no emotions, has moderated some of his controversial actions to some extent. Hopefully, he will find a replacement for Twitter soon and return to Tesla full-time.


To conclude

It is very difficult to timed events and predict the future. Those are only hypothetical estimates to understand how things could develop, the scale the company could reach, and its growth engines. There may also be unexpected events and malfunctions that will affect the development of the companies operating in the field and the entry of new competitors.


The big question is whether Tesla will be able to teach its artificial intelligence software, FSD, to drive the car independently? How long will it take them to succeed? When will the authorities allow such an independent vehicle to transport passengers without a driver? Eventually, autonomous driving will take place, but the question is when? For the authorities to allow it, it must be 10 times safer than the average driver.


In today's market, the Fed and its interest rate hikes are the biggest risk to the markets and the demand for cars. However, Elon Musk himself and his unexpected actions are another risk factor for Tesla. Several factors contributed to the sharp decrease in Tesla's value, including the sale of his 40 billion dollar shares and his actions on Twitter. Despite the fact that Musk founded Tesla and shaped its vision, there is no doubt that he has caused more harm to Tesla and its shareholders in 2022 than good. It seems so, at least.


We will closely follow Tesla's developments in the automotive sector, energy, and the completion of the artificial intelligence software for the car to better understand where the world is going and what Tesla will be worth in the future.


Successful investments to all!


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Please note that in this article we share with you our predictions, opinions and considerations for information purposes, but this is not advice or guidance on how to act and/or manage your investments. It is up to each individual/investor to conduct his/her own investigation and studies and draw conclusions according to their preferences.


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