Thursday, December 28, 2017

Tesla Buy and Hold

I was reading about Elon Musk and his latest tweet about his plans to make a pick-up truck.  While I think this is a great thought, I do not know if it really is the best place to focus.  The PU truck owner is usually about HP and loudness.  While this would be a good platform, if it were built as a platform, it could be used for other vehicles as well.  It would need to be at least 1 ton, and would have to have all wheel drive (4 wheel drive is the past).  It would be difficult with dual rear wheels to have all wheel steering, but that leads me to another line of thought.

All cars made today should be not only all wheel drive, but should also be all wheel steering.  Vehicles like Tesla make are especially well suited to such things as they are built on the platform style of building.  Such as the case, it should not be hard to develop an all wheel steering system that would work with all wheel drive.  The model S is a good example.  Using the Model S platform, several versions could be built, including duty cars (those used by security forces, or fleet vehicles for services like taxi or Uber), and business class limos and such.  He really needs to consider third party collaborations so that he can expand on his current line of cars without setting up whole new lines.

I think it is great that he is getting into commercial vehicles (pick-ups are quasi commercial vehicles), but he needs to build a platform truck, one that can be modified to suit many different needs.  I believe his ranges will continue to expand, and that will be great, and help a lot.  With the addition of fast charging stations, and more and more innovations in the battery technology, Tesla is poised to be a good buy for the foreseeable future, but only as a buy and hold.  I think Tesla represents a long term commitment, as even if Elon Musk fails to deliver, at some point his company will be a buyout for another company, maybe even Alphabet.

He is also involved in power production, at least on the small to medium scale, and at place.  That he does not have exactly a local power production solution is only a matter of scale.  Farms produce a lot of power now, and will be producing more power in the future as they try to leverage their interest and gain more income streams.  I still think that farms will become important parts to the power generation equation.  If he can continue to develop in that area, he will be poised to take advantage of that stream as well.  As farm as farm use vehicles, I do not know that he will compete in this area, it is highly competitive, and several suppliers are already working in that stream.

Elon Musk does not play well with others, and to some extent that limits him in capacity, but ensures the customer that you have a single point to find solutions to issues with.  If he were to collaborate with a company like Alphabet, or even one such as MB, but few of them other than Alphabet have the resources, and the diversity that Tesla has, so that really is the only good match.  It remains to be seen, but I could easily see Tesla as a buyout option for Alphabet in five or six years, as long as he continues to work on innovation, and produces just enough product to keep the company alive for the time being.

Overall, Tesla is a buy and hold for the next few years.  A process of slow accumulation of shares could ensure that if they are bought out, the holder will get a good position on the stock split when it does sell.

Anyway that is my thoughts on Tesla, for now.  I am not a financial advisor and all that crap, so if you lose money that is your problem.

Peace
JD

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