Whitney Tilson’s email to investors discussing that Elon Musk is now the richest person in the world, passing Jeff Bezos; from Tesla to Nio, electric vehicles are having a global moment; how to *know* that the EV industry, collectively, is overvalued.
Elon Musk Is Now The Richest Person In The World
1) Wow! It will be SUPER interesting to see if this is sustainable or if the stock blows up. I'm long AMZN – reasonable people may quibble whether its stock will do well from here, but I’m quite sure it won't blow up.
Baupost’s Seth Klarman: the Fed has broken the stock market [Q4 Letter]
Baupost founder Seth Klarman told investors that the large amounts of stimulus that have been poured into the world's economies are masking the severity of the problems caused by COVID-19. Q4 2020 hedge fund letters, conferences and more In a letter seen by the
Elon Musk is now the richest person in the world, passing Jeff Bezos
- Musk’s wealth surge over the past year marks the fastest rise to the top of the rich list in history — and marks a dramatic financial turnaround for the famed entrepreneur.
Elon Musk, CEO of Tesla, stands on the construction site of the Tesla Gigafactory in Grünheide near Berlin, September 3, 2020.
Elon Musk just became the richest person in the world, with a net worth of more than $185 billion.
Thursday’s increase in Tesla’s share price pushed Musk past Jeff Bezos, who had been the richest person since 2017 and is currently worth about $184 billion. Musk’s wealth surge over the past year marks the fastest rise to the top of the rich list in history — and is a dramatic financial turnaround for the famed entrepreneur who just 18 months ago was in the headlines for Tesla’s rapid cash burn and his personal leverage against the company’s stock.
Read the full article here by Robert Frank, CNBC
2) From Robinhood’s daily e-mail this morning:
From Tesla To Nio, Electric Vehicles Are Having A Global Moment
Electric vehicles are having a moment this week with a flurry of milestones from around the globe:
- China: EV sales from January through November jumped more than 4% from a year ago, while overall car sales fell nearly 8%. Nio, the so-called "Tesla of China," said its deliveries more than doubled from a year ago to ~44K vehicles.
- US: Rivian, the Amazon-backed electric truck startup, is reportedly close to raising funds at a sweet $25B valuation. Meanwhile, Tesla (the "Tesla of Tesla") delivered a record-breaking, expectation-beating 180.5K cars last quarter, for a 2020 total of nearly 500K (up from 367.5K in 2019).
- Norway: EV sales rose to a record 54% market share in 2020 — the first year electric cars outsold gas and hybrid models. Sadly for Elon, Volkswagen replaced Tesla as the top EV producer in the country.
- UK: Electric cars had their "best-ever year" — EV sales nearly tripled while UK auto sales as a whole hit the lowest level since 1992.
Ludicrous... While the rise of EVs is old news, this week's headlines prove what a remarkably good year 2020 was for the electric market.
Politics could make 2021 the Year of the EV... The top two barriers to EV-buying are range-anxiety and price. A Democrat-controlled Senate could pass legislation supporting EV cost incentives and infrastructure (think: more charging stations). Top Senate Democrate Chuck Schumer has already proposed a $454B 10-year plan to offer cash vouchers for EV purchases. That, coupled with swiftly-falling battery prices, could make 2021 the Year of the EV.
How To Know That The EV Industry, Collectively, Is Overvalued
A friend commented:
There is an easy back-of-the envelope way to *know* that the EV industry, collectively, is overvalued.
It’s simple, actually: We have all seen the bar-or-pie charts that show Tesla’s market cap is now roughly equal to, or greater than, the rest of the major publicly traded automakers -- most of them anywhere between 85% and 97% non-EV in nature, in terms of today’s sales.
Then add all the smaller players -- privately held and all of those new IPOs with no revenue (yet). So many of them have multi-billion dollar market valuations that are not too far away from many large existing automakers, whether Mazda, Nissan, FCA, Ford, Daimler, BMW, you name them.
I don’t think anyone is making the argument that more cars will be sold in the future, at least on a per-capita basis. So we’re still looking at almost 100 million cars sold per year.
And I don’t think anyone is making the argument that automakers will somehow be able to make more money selling EVs (to people who need to be subsidized in order to buy them). So far, EVs lose money -- let alone make greater profits than regular cars.
In other words, the industry’s profit pool isn’t going up. It will likely go down. But let’s say that it stays flat -- 100 million EVs sold per year, instead of 100 million ICE cars sold. Total profit pool remains the same.
The incumbent automakers have 80% market share of EVs today, and it’s not going down. If anything, it’s going up, given that Tesla is losing EV market share. We have seen this in 2020 and it’s going to get even more pronounced in 2021.
In all of this, why on Earth would the total market value of all EV makers, plus the existing large incumbent automakers -- who produce both ICEs as well as taking share in EVs -- be larger than in the auto industry world as it existed a few short years ago?
That’s why you *know* that the EV market valuation as a collective is simply too high. Given that total industry volume won’t change, and that total profits won’t be any higher than they are today, you can’t just have the total market cap of all automakers double -- or more than double -- and not recognize it as a totally irrational bubble.
When investors realize this, the EV bubble will collapse -- collectively -- by much more than 50%.
When? I have no idea. Sometime this year, I think.