For some time now, I’ve been discussing Tesla’s valuation with fellow academics who specialize in finance and strategy: irresponsible skeptics trying to convince their students that the company is overvalued, that its price is the result of some kind of collective hallucination, and that Elon Musk is little more than a charlatan who has amazingly managed to fool a lot of the people for a lot of the time. For a company founded in 2003 and that went public in 2010, things aren’t looking too bad at all. At what point, to borrow Matthew Henry’s famous question, will the deaf hear, the blind see, and the skeptics understand that we are talking about a different kind of company, one that can only be assessed on its quest to change the world we live in?
Tesla is today’s true automotive trendsetter. Its exclusive commitment to developing electric cars, instead of irresponsible hybrids, has forced the industry to speed up its plans to dispense with internal combustion engines as soon as possible. The interior of more and more cars even look like the Model 3, no longer stuffed with useless clocks and buttons like the cockpit of a jet, but opting instead for a large central display and a completely redefined interface. And far from being an expensive, exclusive or a minority design icon, it turns out that the Model 3 is selling like hot cakes around the world as the company strives to build new factories in China or Germany.
What is a company capable of turning entire industries upside down and ultimately changing the world worth? According to the markets on Tuesday, $420 per share, making it worth $75 billion, greater than traditional carmakers such as Ford or GM. But in practice, Tesla is worth more, much more. Understanding this comes down to really wanting to hear and to see. And that means accepting the evidence and that one was wrong, which in turn requires a certain level of intelligence that still seems to be sadly lacking in many quarters.
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