Back to Fundamentals: Five reasons why you should spend less time worrying about TSLA

I'm back!

For at least one post...

There are two reasons why it's been such a long time since I've posted about Tesla.

First off, after gaining financial freedom and moving to Singapore, I spent a number of years full-time working on myself and my emotional well-being, healing from heaps of unprocessed childhood trauma. If you're curious about this, I posted an autobiography over on franklee1111.blogspot.com.

Secondly, and most importantly, I don't think a lot changed about Tesla during the last four years since I posted my 3rd Tesla Investment Thesis, in which I talked in-depth about Tesla's super-long term outlook, which in my view largely revolves around AMaaS (Autonomous Mobility as a Service).

How my blog posts used to come about was:

I naturally did research in the process of being a Tesla investor.
I wrote down this research to help me structure my thoughts.
I shared it, because why not, and because it helped me gather feedback.

This blog post is different in that sense, because this one did not flow forth from research. This post exists because I know there are still so many people obsessively spending time keeping up-to-date with every little Tesla news story, piece of drama, stock price fluctuation, etc.

I'm here to hopefully help you relax and feel more secure about Tesla, and perhaps save you some time every day that you can invest in things other than Tesla, such as your job, health, mental health, family, or hobbies.

This one will be relatively brief compared to my posts of old, but here are five fundamental reasons (one of which is obviously AMaaS), why you can sit back, relax, and not worry so much about TSLA.

Reason #1: Best Battery Technology

Five to ten years ago, Tesla's lead in battery technology alone was enough of a reason to be invested in Tesla, because that's how big Tesla's lead was and that's how important it was to be successful in EVs at the time. I listed battery technology and battery supply as two of Tesla's top eight automotive advantages in my initital Tesla Investment Thesis back in June of 2019.

Today things are a little different. Quality batteries are widespread, and partly due to the sluggish EV demand it's not too difficult to secure batteries to produce electric vehicles from a company like CATL or LG. And as such, this alone is not a reason to be invested in Tesla anymore.

However. Tesla knows how important batteries are to its mission and has invested heavily in the technology and manufacturing processes over the past decade. And therefore it is still an advantage nonetheless. It's a fundamental piece to everything Tesla does, and Tesla does a lot of it in-house.

Furthermore, as the future moves closer and closer towards an autonomous one, Tesla's competition will shift more and more towards companies that have absolutely no competency in this field whatsoever, and so the vertical integration aspect is not to be underestimated.

Battery Technology (and supply chains) may be less of a big advantage over companies like Rivian, Volkswagen, and BYD than it used to be, it's still a major one over companies like... (let's imagine Waymo is competition to Tesla in the AMaaS sector) Waymo.

AEVs require batteries not just for the vehicles, but also for charging infrastructure. There are so many layers of companies and degrees of separation between Waymo and the actual battery technology:

Waymo
Jaguar making the cars
Maybe a company that makes battery packs
A company like CATL that makes battery cells
Maybe a company or two that make pieces of the batteries for CATL like the cathodes
Maybe a lithium refining company
Then mining companies for raw materials
And tons of others I don't even know about

It's similar for the charging infrastructure. Waymo has no expertise whatsoever on that front. Tesla does or is planning to do all of these things in-house at least to some degree, and understands these aspects of the business at a fundamental level.

Reason #2: Best Factories

This is as big of an advantage today as batteries were 5-10 years ago. Elon, and therefore Tesla, is obsessed with manufacturing. Elon has been talking about the machine that builds the machine since late 2014, half a year before I was even invested in Tesla!

I think many people were either underwhelmed by or have forgotten about Tesla's Investor Day in Q1'23:

This was truly one of Tesla's most underrated webcasts. In it, all of Tesla's top engineers leading Tesla's most important engineering efforts presented all their work, and I was particularly impressed with the way Tesla was going about designing its next-gen vehicle, which we now know is the robotaxi. The unboxed process and looking at the factory as a chip are going to be gamechangers:

People have forgotten about all these things, because the news cycle moves on and tries to catch your attention with something more exciting or something scary, but personally I'm just bored waiting for the truly next-gen vehicle, which will incorporate loads of new (manufacturing) technologies, that'll offer consumers something that no one else will be able to for probably at least 5 years at that price point.

And yeah... Tesla's financials are in a bit of a lull in the meantime, but why care if you're a long-term investor?

Reason #3: China

China is a big market, especially when talking about AMaaS. Tesla has been investing in China for over a decade, and let's not forget Tesla is still the only car manufacturer in the world that's been allowed to have its own manufacturing presence in China. Some other companies, such as BMW and Volkswagen, have been allowed to increase their ownerships in their Joint Ventures, but no one other than Tesla has thus far built its own EV manufacturing plant in China.

This in and of itself is great, as is the amount of data Tesla is gathering in China for its FSD efforts, but what I'm really getting at here are the relationships Tesla (and Elon) have built with China and the Chinese government. Strong relationships and a proven track-record are important to get things done in China, and Tesla has those.

Reason #4: AMaaS

This is of course far and away the most important reason. When I last shared my opinion on where Tesla's AMaaS outlook in 2021, I wrote this:

In my opinion the only company that has a chance at competing is MobilEye. Furthermore, Tesla's vertical integration adds a whole extra level of difficulty for any aspiring competitors. As a result, I have a hard time thinking of scenarios where Tesla does not end up with at least a majority market share, and I think it has a decent shot at attaining a quasi-monopoly in the AMaaS market.

I essentially thought Tesla would likely end up in an Apple like position, whereby it was far and away the largest player in the AMaaS business with perhaps fifty something percent market share.

However, as time has gone on, as MobilEye has followed Waymo's lead and gone the LIDAR route, and as no manufacturer has copied Tesla's winning approach, I honestly cannot come up with scenarios wherein Tesla does not end up with a Google-like monopoly on AMaaS. I simply don't see how anyone can compete at this point.

I've said this before, but the only way to even compete with Tesla would be for car manufacturers to ship cars with a sensor suite similar to Tesla's, possibly partner with a more tech and AI savy partner, have customers pay for those vehicles, have customers oversee those vehicles as they learn, and then essentially follow in Tesla's footsteps.

The only winning strategy is Tesla's. Adding LIDAR sensors does not mean you don't need vast amounts of real-world data from all over the world to "solve" FSD. And at this point others are far too far behind Tesla to have any chance of catching up.

Even if a car company "saw the light" today and tried to copy Tesla, by the time it achieved FSD safer than a human, Tesla's FSD will probably be 100x or 1,000x safer than a human, and equipping cars with anything other than Tesla's FSD software would be murdering people.

Mark my words, Tesla is going to win FSD (and AMaaS) and there's going to be nothing else that competes with it. Tesla is simply going to license its software so it doesn't end up with anti-monopoly lawsuits, but human lives are at stake here.

And this is just one angle as to why Tesla is going to absolutely dominate AMaaS. Other angles are its verticle integration, lowest costs, AI talent, and humanoid robots. AMaaS isn't just ferrying passengers from point A to point B, it'll include picking up groceries and bringing packages to doorsteps. If/when Tesla Bot succeeds, this adds another major advantage over other players.

It's pretty much unstoppable at this point. And honestly this reason alone is the reason to be invested in Tesla. Next time you hear someone talk about Waymo as a competitor to Tesla, just ignore the poorly informed soul, or perhaps link them to my blog ;)

Reason #5: Employees

Tesla employees are some of the brighest and hardest working out there. This is partly because of the example Elon sets, partly because of the demands Elon demands, and partly because it's one the most sought-after companies to work at, largely because of its noble mission, and its polarizing leader Elon.

Don't underestimate this one. A company's success is not solely the sum of the employees' efforts, and other factors such as the direction and a certain amount of luck play a part as well, but it's one of, if not the, biggest determinating factor.

Bonus Reason: Tesla Bot

I still haven't done in-depth research into Tesla Bot, because I simply don't think it's worth my time. Regardless of whether I think Tesla Bot has a 0% chance of success or a 100% chance of success, and regardless of whether I think Tesla Bot's market opportunity is $1M or $100T, it won't affect my investment decisions.

AMaaS alone is such a lock to propell TSLA stock significantly higher that Tesla Bot's potential doesn't even matter to me yet at this point. To me it's just a bonus.

However, logically thinking about it, it's potential is likely in the same ballpark as AMaaS. The only reason I'm more hesitant is that I think it'll be easier to compete with Tesla in the humanoid robot arena than it will be in the AMaaS arena.

Tesla has significant advantages in humanoid robots, drawing on expertise from AMaaS and manufacturing in particular. A lot of companies working on humanoid robots probably will have to partner (with a lesser manufacturer) to manufacture them.

However, Tesla's AMaaS advantages dwarf those, and so I'm not as optimistic about Tesla Bot as of right now as I am about AMaaS.

Outro

The bottom line is, please do yourself a favor and ignore all of the noise and the short-term stock price fluctuations, unless:

You need to sell in the near-/medium-term and you're hoping to sell high
You have the ability to buy in the near-/medium-term and you're hoping to buy low

Or unless you're a trader I suppose, in which case I wish you good luck outperforming buy & hold on a stock such as Tesla. Usually it's hard to know when it breaks out (2020 was a once in multi-generations thing imo), and I'd hate to miss this stock break out.

Personally, even though I have no job or income and have achieved financial freedom, I still have all but ~2 years worth of living expenses invested in TSLA common stock.

I don't know if I'll post again any time soon, because to me Tesla is just a buy, relax, and hold situation, but I do add something to the conversation via X every now and then, so you can follow me there if you don't already.

I've also been posting more about other topics, such as mental health, in case you are interested. And I recently posted a massive post about a host of topics, including:

Mental Health, Mind-Viruses, and Generational Trauma
The Parenting System, and Declining Birthrates
Governance, Direct Democracy, and a Consumption Tax
Capitalism's Flaws
The Education System and how to improve it
And much more

If any of that sounds interesting, check out this massive post reminiscent of my Tesla Investment Theses over on my other blog:

To Every Human Being

All the best, and good luck in your Tesla investment journey!

Frank

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