Monday, April 10, 2017

Can you name the second most valued American car company?

      If you guessed Ford you are wrong.  The big three American car companies have long been General Motors, Ford and Chrysler.  Now a company that is only 14 years old has replaced Ford as the second highest valued American car company.  The Tesla Motors is now the second highest valued American car company based on the value of all its stock.  However just as this has happened Tesla has dropped the word "motors" from its name because it plans to move beyond just being an electric car company.



        Its expanding business will now be to produce batteries in its Gigafactory , shown above in the Nevada desert, at such a low cost that battery powered cars will be price competitive with gas models.  Tesla is thinking bigger than just car batteries.  Batteries have the potential to produce energy cleaner and cheaper then what is being produced with fossil fuels.  Not only is he planning on building the batteries he has a plan that is a "vertically integrated company that builds electric vehicles, batteries to store the power to propel them, and the solar panels to generate that power. He also wants to electrify everything from pickups to busses to 18-wheelers."  This model of vertical integration is similar to what Rockefeller did to control the oil market over a hundred years ago.  This promise of unlimited potential vertical growth (think the 21 Century Standard Oil) is what is driving the valuation of Tesla not what it is presently producing.  Investors have driven the price of Tesla stock up wanting to get in on the ground floor.
      So while Trump is promising to produce more coal, yesterday's energy, and bringing back blue collar jobs, yesterday's jobs, investors are putting their money on Elon Musk and Tesla as to where the future energy and jobs markets will be.

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