“We wanted flying cars, instead we got 140
characters.” With these words, Peter Thiel, the famous
Silicon Valley investor who we have talked about before joins the legions of people
who consider that innovation in the past few years has slowed down somewhat... or that
the time of great revolutionary inventions seems to have been left behind. A good example of this slowdown can be found
in the automobile industry, an industry that has been pretty static for decades. Yes, cars nowadays are better than 10 or 20
years ago, that's for sure, but they are basically the same and they largely work in the same
way. In fact, there is nothing substantial that
you can do with a car today, that you couldn’t do 20 or 30 years ago. And, of course, car’s certainly don’t
fly… And we are not talking about a simple industry
here, but one of the biggest industries in the world… However, hold on a second because everything
suggests that finally, once for all, we're on the verge of a great revolution in the
realm of cars… A transformation that many experts have compared
with the one in the early 20th century by Henry Ford, when he began to use assembly
lines to mass produce cars. Well, today this new revolution seems to have
two key features: the electric car and the autonomous car. And here, dear viewer, we have an unquestionable
star, a company that has managed to start changing things, and knows how to win the
admiration of the many people who see it as an example of a new era that is about to begin. We are talking, of course, about Tesla, the
company of electric cars, that has managed to dazzle investors, governments, and consumers. In this video, we are going to see what kind
of challenges Tesla is going to face in the coming years. So let’s dive in… A HISTORY OF WINE AND ROSES Tesla is a very young company. It was born in 2003 with the mission of producing
an electric car capable of competing… and defeating combustion engines. Since then, it has managed to basically put
on the market four models: The Tesla Roadster, the Model S, the Model X and the newcomer,
the Model 3. Seem to be rather few, right? Well… despite this in 2010, the company
went public and do you know what happened since then? Well, Tesla has become one of the market’s
stars. In these years the price of their shares has
multiplied by 18. Yep, just like that. If in 2010 you had invested $1,000 in Tesla's
shares, today you would have… $18,000! A amazing investment. All this growth has led Tesla to fight for
first place among the most valuable companies in the United States. At the time of publishing this video if you
want to buy it… Prepare your wallet! Today, Tesla is worth more than $50 billion. This is more than the value of Ford, and they
are not that far off General Motors… Look at this chart from Business Insider: What do you think? Not bad right? This is especially the case if we take into
account that it is a company that is barely 14 years old… and that… Well, honestly, doesn’t sell that many cars... General Motors sells 10 million cars each
year and Ford exceeds 6 million… But in 2016 Tesla managed to sell just 76,000
cars. Yeah, okay, so maybe some of you are thinking:
“Well... But so far Tesla has sold only luxury cars". And, yes, it is true, but it’s still just
76,000 cars, 3 times less than even Porsche. This is what explains that while General Motors’
sales in 2016 were almost $170 billion, Tesla remains well below at just $10 billion. And no, do not think that what is happening
is that Tesla has very high margins and is earning a lot of money, not at all in fact. In fact, since the company was founded, it
has not earnt money in a single year… So, at this point you may be wondering: Why, then, is it worth so much money on the
stock market? Why has it been so successful there? And why is the company so famous? Well, the answer has a lot to do with the
revolution in the industry that we have commented on before - electric and autonomous vehicles.
For example, in 2016 there were more than 2 million electric cars on the roads, 60%
more than the previous year… that is to say, we are talking about markets that are
growing incredibly quickly … Technological advances have cut the price
of this type of cars; ”A forecast by Bloomberg New Energy Finance
said that electric cars would become cheaper than conventional cars without government
subsidies between 2025 and 2030.” - New York Times And on the other hand, many countries - including
China itself - are betting on this technology as a way to reduce air pollution in cities
and also as a way to reduce their dependence on foreign oil. Environment and national security? A strange combination indeed but it is how
things are... The point is that, today, Tesla is the great
reference point in this new industry… so many investors understand the future value
that it possesses. The company's own forecasts follow the same
line and expect that production will increase from 100.000 cars in 2017 to 500.000 in 2020,
and more than a million by 2022. It almost seems like we are talking about
the Apple of the automotive sector, right? Well, just wait a moment, because not everything
that surrounds Tesla is... so beautiful and joyful. A CRUSHER OF MONEY Tesla has a problem, a very serious problem:
it is a machine for burning money. Yes, you have heard me correctly. Today the business is not profitable and the
company loses money every day, but not only that… It also has to make a lot of investment in
order to compete - for example it’s factories need pumping with loads of money. If we look at the money that comes in and
out of the cash box at Tesla (as we already did with Amazon) we can say that from 2010,
when it went public, the company has swallowed everything that has entered it: the money
from car sales, and about $10 billion more.. And the truth is that 2017 is not exactly
being its best year… In the first 9 months of 2017 it's swallowed
about $4bn. Yes, really, 4 billion dollars... and not
only that... At the same time its non-financial debt - for
example, suppliers that have not been paid - has skyrocketed… For this reason, lights are beginning to flash
red… Consider this graph: Yes, in the last few months Tesla has lost
16 million dollars every single day. Money, of course, has had to be covered with
debt. But it doesn't stop there, at all. Tesla is also having many problems with its
latest model: “Tesla reveals it has made just 260 Model
3 cars due to production 'bottlenecks'.” DailyMail. It’s also had quality problems, and dismissed
staff…(Which, by the way, is a little bit weird when they seem to need to be making
more cars!) Well, think that’s the worst of it? Well, wait a minute, because the worst of
all is that the competition is moving quickly... In 2016 the Renault-Nissan group sold more
electric cars that Tesla! And all big companies are already working
on electrical vehicles… and autonomous cars, a business where, by the way, companies such
as Apple, Google and Uber are getting into. That’s serious competition! So yeah, Tesla is not the only player at this
game. The difference is that almost all its rivals
earn money and have research budgets at least as big as those at Tesla. “Daimler Steals Tesla’s Thunder With Heavy-Duty
Electric Truck” Bloomberg”. Well, at this point you may be thinking about
what happened with Nokia and BlackBerry when Apple stood out from all major companies with
the iPhone. So I ask you, do you think we can compare
Tesla with Apple? I do not believe the answer is easy, but I
do believe there are at least a couple of differences that we have to take into account: First, Apple was always worried about earning
money with the iPhone, and second, their product was something really disruptive… so much
that even the competition predicted its failure. Consider what Steve Ballmer, the then CEO
of Microsoft said: “500 dollars? I said that is the most expensive phone in
the world. And it doesn't appeal to business customers
because it doesn't have a keyboard. Which makes it not a very good email machine... Right now, we're selling millions and millions
and millions of phones a year. Apple is selling zero phones a year. In six months, let's see how the competition
goes.” Steve Ballmer, former CEO of Microsoft. As we have seen, Tesla does not earn money
or have particularly surprising features. However, it has to be said that making a company
earn money has not been the most motivating element for its CEO, the well-known, Elon
Musk. ELON MUSK, THE VISIONARY A visionary, a genius, ahead of his time… There are many opinions about Elon Musk, an
entrepreneur who has become a billionaire from his ventures. And to be honest there are businesses that
have never worried about money (with the exception of PayPal). Tesla, Hyperloop, SpaceX... Everything where Elon Musk is involved sounds
like science fiction and seen to have an infinite budget! If something is clear it is that, with his
ideas, Elon Musk is influencing us in how we see and build our future. But it does not mean that there is no risk: "Tesla has done a very useful work by opening
the market for electric cars and showing people may like them. Another issue is that it can earn a lot of
money, when it reaches its final goal. I won’t bet on Tesla as an investor, it
is very difficult it can survive". Andrés Allende, Fund Manager Analyst, Cobas
AM. But, this does not mean that the future is
already written. THE OPPORTUNITY So does everything we have seen mean that
Tesla is a company doomed to failure? No, of course not. Saying such a thing is not our intention,
among other things because future is, by definition, uncertain and because Tesla also has many
competitive advantages. For example, today it has an obvious technological
advantage; It is a leader in the development and manufacturing
of batteries, which are the key to any electric car; and very important growth rates. And then there is also… China. Do you know who the biggest market of electric
cars is? Well, you might have guessed that it is indeed
China. In this country more electric cars are sold
each year than on the rest of the planet combined... and its government has clearly opted for this
technology. Well, Tesla is now negotiating the installation
of a big factory in Shanghai, with rather preferential conditions… And, you know what? It seems that negotiations with the Chinese
government are going in the right direction… Anyway, only the future will let us know what
happens. What is clear is that Tesla has been a turning
point for the automotive industry and that it is also a firm which is facing many risks. The last one, for example, comes from Washington. It seems that the fiscal reform of the Republican
Party is going to finish public aid for the purchase of electric cars. We will see how the matter ends, but when
Hong Kong did something like that, Tesla's sales fell markedly. Anyway, now it’s your turn: Do you think
Tesla will be successful and will become the great car company of the future? Leave your answer in the comments as well
as in the survey. I really hope you enjoyed this video, please
hit like if you did and don’t forget to subscribe to our channel for brand new videos
every Monday and Thursday. Also, don’t forget to check out our friends
at the Reconsider Media Podcast - they provided the vocals in this episode that were not mine! And as always, thanks for watching!
