Tesla is a great company that builds exciting cars and is a leader in artificial intelligence. It has been an amazing growth story over the last 10 years, but sales are slowing. In 2024, sales are coming in flat year over year, a first in Tesla’s history. Tesla cars are fast and fun and appeal to people that care about climate politics. Tesla builds around two million cars per year. To keep growing, the company needs to expand sales outside of California and Norway. I still rarely see a Tesla in the Midwest. Talking with Tesla owners, everyone loves the driving experience, and the cars are comfortable, but there are some pain points. The cars are heavy, so they go through tires quickly. The tech is new, so every repair is more expensive than a traditional vehicle. The battery degrades over time and works poorly in cold climates. TSLA trades at 5.5 times sales and 45 times earnings. It is expensive, but a leader in self driving technology and next generation manufacturing technology. It also has long shot bets like Optimus robots. I like the company, but it is expensive. Following a Peter Lynch method, growth at a reasonable price, I would pass on TSLA stock and look for a better entry point. I own shares and recently added to my position. To understand why, read on.

 

Elon Musk grew up in violent South Africa with an abusive father. He was beat up in school and lost fights bad enough to be hospitalized. At age 18, Elon escaped South Africa and moved in with family in Canada. He studied physics at Queen’s University at Kingston and at the University of Pennsylvania. In 1995 he and his brother Kimbal Musk moved to California. He looked for engineering work and could find nothing. Elon and Kimbal rented a tiny office that held two desks. They worked and lived in that office for the first six months creating Zip2, a yellow pages replacement web application. In 1999, they sold the company to Compaq Computer for $307 million. Elon says that his bank account went from $5,000 to $22,005,000 overnight. 

 

Elon was now a millionaire but his desire to work hard and make a dent in the universe was growing strong. In 1999 he founded X.com to bring banking services online. X.com ended up merging with Confinity in 2000 to form PayPal. In Oct 2002, eBay purchased PayPal for $1.5 billion. Elon pulled in $100 million from the PayPal sale. He was now mega rich. A good moment to take a break and smell the roses. Nope. Not Elon’s style. 

 

In 2001, Elon is 30 years old and worth about a $100 million. He has no experience in aerospace. No rocket experience. He thinks it would be cool to send men to Mars. The odds of success are so small, why even try? Today SpaceX is worth $180 billion, and Boeing is worth $103 billion. The company has put 6,000 Starlink satellites into orbit. In 2024, 90% of the mass going into space is done by SpaceX. The next generation rocket, Starship, will give SpaceX a near monopoly on space travel. The Starship rocket is fully reusable. Elon estimates it will get 200 metric tonnes into orbit for $2 million dollars per flight, and each rocket will fly more than once per day. The Space Shuttle program cost $209 billion and had 134 flights. The cost per flight was $1.6 billion. SpaceX is getting mass to space for 1/1000 the cost. SpaceX is making science fiction real. Mankind is becoming a space faring species because of one man.  Elon Musk is the greatest businessman in history.

 

I own Tesla shares because Elon Musk runs the company. I will buy shares in SpaceX and/or X(Twitter) when either one goes public. I’m not betting on electric cars. I’m not betting on Tesla’s existing business. I’m betting on the greatest businessman to ever live. I’m betting that the richest person in the world knows a thing or two about making money. I love to bet on Elon Musk.

 

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