Whitney Tilson’s email to investors discussing his skepticism on Tesla‘s stock and electric cars sold in Norway.
1) In my email today to my entire investing email list, I included this:
Should You Go All In On Water Like Michael Burry?
Water investments? Michael Burry was one of the first institutional investors to bet against the US subprime mortgage market in the mid-2000s, and today he’s concentrating all of his investment efforts on one commodity: water. Burry’s focus on water has attracted plenty of attention to the commodity in the investment community but trying to profit Read More
3) Whatever you may think of TSLA the stock (and my skepticism is well known), CEO Elon Musk and his company deserve enormous credit for dramatically accelerating the development and adoption of electric cars worldwide. What is happening in Norway, where more than half of all cars sold this year will be EVs, is a harbinger of what’s to come in every developed country in the world in coming years.
Here's the story from Norway: Tesla boom lifts Norway's electric car sales to record market share. Excerpt:
In response, a friend wrote:
The outcome in Norway isn't difficult to understand. It's 100% driven by a government incentive (de-facto mandate). It's like saying that UBER would have 100% of the market if the government imposed a special 125% tax on all LYFT rides. Or that McDonald's would gain almost 100% market share if a 125% tax was imposed on Burger King, Wendy's et al.
Let's say that a government were to impose a 100% blanket ban on non-electric cars. Then the EV market share would then be 100%. This is not a mystery. The Norwegian government is basically taxing the Norwegian population into a bloody pulp if they want to buy any car that's not electric. The only thing that's surprising is that the EV share in Norway isn't a nice round 100% already.
All of that said, just look at how dramatically Tesla's sales will fall in April, compared to March. We only have data for 2 days yet, but it's already down a lot. Model 3 remains #1 compared to other EVs, but by a far smaller margin, and it's likely to narrow even more as the first few days of the month probably contains some logistical spillover from March. Furthermore, look at how handily the Audi eTron and Jaguar i-Pace are widening their lead over the Tesla Model X and S in Norway now. It's not even remotely close.
Look here and sort on month: https://elbilstatistikk.no
Tesla's very existence has always been 100% dependent on subsidies and mandates, and Norway is of course the most extreme example under the sun. But even there, once we go beyond seeing the 3 years of backlog being crammed into barely a month worth of sales, we'll see a different story already in Q2 -- and that includes Tesla's higher-priced cars being completely chainsawed by Audi and Jaguar.
2) Another friend sent me this:
Here are some articles that discuss the challenges and approaches to building the software platform for the next generation of cars. These issues are vastly more critical to the eventual winners in the global auto market than the hardware platform. One article discusses the two different approaches to collecting data for training the machine learning platforms and the other discusses the difference in approach to machine learning algorithms.
These articles are just about the self driving software, there are many other types of software based features that are being incorporated in the car/software platform.
3) Re. Tesla’s reviews on Glassdoor, a third friend wrote: “Those reviews are easily gamed, and Musk employs a social media team.”