Tesla is holding its annual shareholder meeting today. Elon Musk likes to review the company’s history during these annual shareholder meetings, so I’m expecting a bit of that today, especially when you consider that the Model S was launched a good 10 years ago. We are at a major historical milestone in the company’s young life. A decade-long look into Tesla’s history would be a fun topic for today’s meeting. The bigger question is what will happen in the next 10 yearsbut I will return to that after exploring a few historical topics.
It was Tesla without a doubt heavy bet against, with billions upon billions upon billions of dollars poured in along with predictions that the company would go bankrupt or at least drop in stock value. A “Tesla Death Watch” ran 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 other electric cars had a hard limit, and we were already at it; that Tesla would not be able to produce the number of cars it predicted anyway (for reasons X, Y and Z); that Tesla could never develop the technology it said it would develop; etc.
It wasn’t until the Tesla Model 3 really took off in the 3rd quarter of 2018, Tesla showed a profit and said it would be sustainable, and then Tesla’s production and sales just kept growing and growing that the majority of the market turned around. agreed that Tesla would survive and thrive.
This was Tesla’s quarterly delivery chart ending Q3 2018:
Breakthrough, right? It was the focal point and many identified it as such at the time. I remember a prominent TSLA short seller dramatically switching sides at that time and using 4 of my charts in his letter to investors explaining his switch.
Although many argued that Tesla had hit peak demand, it could only go down from there, and was still destined for a bloody bankruptcy. The increase was only due to pent-up demand/bookings and there was no way interest in Tesla vehicles was sustainable at that level. Here’s the latest chart of Tesla’s quarterly deliveries (find that increase in Q3 2018):
Long story short, the basic Tesla mission was spot on: If the company could design and produce a highly desirable premium 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 mass market demand and supply and sell hundreds of thousands or even millions of electric vehicles a year.
Elon Musk and his team’s biggest achievements along the way to make this happen included: designing beautiful and fun vehicles, making highly efficient vehicles that could maximize the energy you can store in battery packs, reducing production costs through innovative manufacturing, driving down supply chain costs through growing scale and industry influence, in-house production of parts that were bottlenecks or could be significantly improved, continuous improvement of software, development of a critical Supercharger and service network alongside sales growth, and few cars on the market.
What core skills from this 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 mining/extraction of battery minerals and general artificial intelligence in the real world? 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 far behind, but Elon Musk is still optimistic about Tesla’s approach, and how it 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 transportation is another big topic.
Elon Musk probably won’t talk too much about these AI issues at today’s shareholder meeting, as an entire company event is planned to present their progress and plans on this front. But if he touches on Tesla’s future much at all, it will likely include references to AI issues and massive vehicle production plans, and you can bet that many people will criticize these bold plans. Who was right about Tesla in the last decade is clear – Elon and everyone 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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