"We wanted flying cars, instead we got 140 characters."
With these words, Peter Thiel, the famous Silicon Valley investor who we have talked
about before joins the legions of people who consider that innovation in the past few
years has slowed down somewhat... or that the time of great revolutionary inventions
seems to have been left behind.
A good example of this slowdown can be found in the automobile industry, an industry that
has been pretty static for decades.
Yes, cars nowadays are better than 10 or 20 years ago, that's for sure, but they are basically
the same and they largely work in the same way.
In fact, there is nothing substantial that you can do with a car today, that you couldn't
do 20 or 30 years ago.
And, of course, car's certainly don't fly…
And we are not talking about a simple industry here, but one of the biggest industries in
the world…
However, hold on a second because everything suggests that finally, once for all, we're
on the verge of a great revolution in the realm of cars…
A transformation that many experts have compared with the one in the early 20th century by
Henry Ford, when he began to use assembly lines to mass produce cars.
Well, today this new revolution seems to have two key features: the electric car and the
autonomous car.
And here, dear viewer, we have an unquestionable star, a company that has managed to start
changing things, and knows how to win the admiration of the many people who see it as
an example of a new era that is about to begin.
We are talking, of course, about Tesla, the company of electric cars, that has managed
to dazzle investors, governments, and consumers.
In this video, we are going to see what kind of challenges Tesla is going to face in the
coming years.
So let's dive in…
A HISTORY OF WINE AND ROSES
Tesla is a very young company.
It was born in 2003 with the mission of producing an electric car capable of competing… and
defeating combustion engines.
Since then, it has managed to basically put on the market four models: The Tesla Roadster,
the Model S, the Model X and the newcomer, the Model 3.
Seem to be rather few, right?
Well… despite this in 2010, the company went public and do you know what happened
since then?
Well, Tesla has become one of the market's stars.
In these years the price of their shares has multiplied by 18.
Yep, just like that.
If in 2010 you had invested $1,000 in Tesla's shares, today you would have…
$18,000!
A amazing investment.
All this growth has led Tesla to fight for first place among the most valuable companies
in the United States.
At the time of publishing this video if you want to buy it…
Prepare your wallet!
Today, Tesla is worth more than $50 billion.
This is more than the value of Ford, and they are not that far off General Motors…
Look at this chart from Business Insider:
What do you think?
Not bad right?
This is especially the case if we take into account that it is a company that is barely
14 years old… and that…
Well, honestly, doesn't sell that many cars...
General Motors sells 10 million cars each year and Ford exceeds 6 million…
But in 2016 Tesla managed to sell just 76,000 cars.
Yeah, okay, so maybe some of you are thinking: "Well...
But so far Tesla has sold only luxury cars".
And, yes, it is true, but it's still just 76,000 cars, 3 times less than even Porsche.
This is what explains that while General Motors' sales in 2016 were almost $170 billion, Tesla
remains well below at just $10 billion.
And no, do not think that what is happening is that Tesla has very high margins and is
earning a lot of money, not at all in fact.
In fact, since the company was founded, it has not earnt money in a single year…
So, at this point you may be wondering:
Why, then, is it worth so much money on the stock market?
Why has it been so successful there?
And why is the company so famous?
Well, the answer has a lot to do with the revolution in the industry that we have commented
on before - electric and autonomous vehicles.
For example, in 2016 there were more than
2 million electric cars on the roads, 60% more than the previous year… that is to
say, we are talking about markets that are growing incredibly quickly …
Technological advances have cut the price of this type of cars;
"A forecast by Bloomberg New Energy Finance said that electric cars would become cheaper
than conventional cars without government subsidies between 2025 and 2030."
- New York Times
And on the other hand, many countries - including China itself - are betting on this technology
as a way to reduce air pollution in cities and also as a way to reduce their dependence
on foreign oil.
Environment and national security?
A strange combination indeed but it is how things are...
The point is that, today, Tesla is the great reference point in this new industry… so
many investors understand the future value that it possesses.
The company's own forecasts follow the same line and expect that production will increase
from 100.000 cars in 2017 to 500.000 in 2020, and more than a million by 2022.
It almost seems like we are talking about the Apple of the automotive sector, right?
Well, just wait a moment, because not everything that surrounds Tesla is... so beautiful and
joyful.
A CRUSHER OF MONEY
Tesla has a problem, a very serious problem: it is a machine for burning money.
Yes, you have heard me correctly.
Today the business is not profitable and the company loses money every day, but not only
that…
It also has to make a lot of investment in order to compete - for example it's factories
need pumping with loads of money.
If we look at the money that comes in and out of the cash box at Tesla (as we already
did with Amazon) we can say that from 2010, when it went public, the company has swallowed
everything that has entered it: the money from car sales, and about $10 billion more..
And the truth is that 2017 is not exactly being its best year…
In the first 9 months of 2017 it's swallowed about $4bn.
Yes, really, 4 billion dollars... and not only that...
At the same time its non-financial debt - for example, suppliers that have not been paid
- has skyrocketed…
For this reason, lights are beginning to flash red…
Consider this graph:
Yes, in the last few months Tesla has lost 16 million dollars every single day.
Money, of course, has had to be covered with debt.
But it doesn't stop there, at all.
Tesla is also having many problems with its latest model:
"Tesla reveals it has made just 260 Model 3 cars due to production 'bottlenecks'."
DailyMail.
It's also had quality problems, and dismissed staff…(Which, by the way, is a little bit
weird when they seem to need to be making more cars!)
Well, think that's the worst of it?
Well, wait a minute, because the worst of all is that the competition is moving quickly...
In 2016 the Renault-Nissan group sold more electric cars that Tesla!
And all big companies are already working on electrical vehicles… and autonomous cars,
a business where, by the way, companies such as Apple, Google and Uber are getting into.
That's serious competition!
So yeah, Tesla is not the only player at this game.
The difference is that almost all its rivals earn money and have research budgets at least
as big as those at Tesla.
"Daimler Steals Tesla's Thunder With Heavy-Duty Electric Truck" Bloomberg".
Well, at this point you may be thinking about what happened with Nokia and BlackBerry when
Apple stood out from all major companies with the iPhone.
So I ask you, do you think we can compare Tesla with Apple?
I do not believe the answer is easy, but I do believe there are at least a couple of
differences that we have to take into account:
First, Apple was always worried about earning money with the iPhone, and second, their product
was something really disruptive… so much that even the competition predicted its failure.
Consider what Steve Ballmer, the then CEO of Microsoft said:
"500 dollars?
I said that is the most expensive phone in the world.
And it doesn't appeal to business customers because it doesn't have a keyboard.
Which makes it not a very good email machine...
Right now, we're selling millions and millions and millions of phones a year.
Apple is selling zero phones a year.
In six months, let's see how the competition goes."
Steve Ballmer, former CEO of Microsoft.
As we have seen, Tesla does not earn money or have particularly surprising features.
However, it has to be said that making a company earn money has not been the most motivating
element for its CEO, the well-known, Elon Musk.
ELON MUSK, THE VISIONARY
A visionary, a genius, ahead of his time…
There are many opinions about Elon Musk, an entrepreneur who has become a billionaire
from his ventures.
And to be honest there are businesses that have never worried about money (with the exception
of PayPal).
Tesla, Hyperloop, SpaceX...
Everything where Elon Musk is involved sounds like science fiction and seen to have an infinite
budget!
If something is clear it is that, with his ideas, Elon Musk is influencing us in how
we see and build our future.
But it does not mean that there is no risk:
"Tesla has done a very useful work by opening the market for electric cars and showing people
may like them.
Another issue is that it can earn a lot of money, when it reaches its final goal.
I won't bet on Tesla as an investor, it is very difficult it can survive".
Andrés Allende, Fund Manager Analyst, Cobas AM.
But, this does not mean that the future is already written.
THE OPPORTUNITY
So does everything we have seen mean that Tesla is a company doomed to failure?
No, of course not.
Saying such a thing is not our intention, among other things because future is, by definition,
uncertain and because Tesla also has many competitive advantages.
For example, today it has an obvious technological advantage;
It is a leader in the development and manufacturing of batteries, which are the key to any electric
car; and very important growth rates.
And then there is also…
China.
Do you know who the biggest market of electric cars is?
Well, you might have guessed that it is indeed China.
In this country more electric cars are sold each year than on the rest of the planet combined...
and its government has clearly opted for this technology.
Well, Tesla is now negotiating the installation of a big factory in Shanghai, with rather
preferential conditions…
And, you know what?
It seems that negotiations with the Chinese government are going in the right direction…
Anyway, only the future will let us know what happens.
What is clear is that Tesla has been a turning point for the automotive industry and that
it is also a firm which is facing many risks.
The last one, for example, comes from Washington.
It seems that the fiscal reform of the Republican Party is going to finish public aid for the
purchase of electric cars.
We will see how the matter ends, but when Hong Kong did something like that, Tesla's
sales fell markedly.
Anyway, now it's your turn: Do you think Tesla will be successful and will become the
great car company of the future?
Leave your answer in the comments as well as in the survey.
I really hope you enjoyed this video, please hit like if you did and don't forget to
subscribe to our channel for brand new videos every Monday and Thursday.
Also, don't forget to check out our friends at the Reconsider Media Podcast - they provided
the vocals in this episode that were not mine!
And as always, thanks for watching!
For more infomation >> ANDREA MITCHELL REPORTS 11/30/17 | Brendan Cox: Trump is a purveyor of hate - Duration: 6:55. 
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