T<\/p>\n
HIS week Elon Musk, the chief executive of Tesla who is often described as a maverick, became the second richest person on the planet (ours, not his).<\/p>\n
The latest surge in the shares of the car maker took his fortune to almost $130 billion, nearly 100 billion.<\/p>\n
That puts him above Bill Gates and second only to Jeff Bezos, though we are sure none of them look at it in such a tawdry manner (they totally do).<\/p>\n
Tesla shares have risen six-fold this year. At the time of writing they are at $563, valuing the business at $533 billion.<\/p>\n
But a point of view: he wont stay second richest in the world, perhaps not even for very long.<\/p>\n
Here is why: Tesla shares are absurdly overvalued. The price rests on a belief system, a matter of religious devotion, both to the man and to cars which in truth are not much more than iPhones on wheels.<\/p>\n
If you ask Google how many cars Tesla has sold, the answer varies but seems to come out at about a million since it was founded in 2003.<\/p>\n
Normally, you would check this with the press office, but Tesla dissolved its PR department last month in the latest sign of its maverick genius.<\/p>\n
If you divide one million by the market value of $533 billion, that puts the value of each car sold at $533,000. Racy.<\/p>\n
Tesla has nearly always lost money, though it has had quarterly profits lately that dont begin to justify the valuation.<\/p>\n
The reason for the share surge is, of course, a bet on the future. Investors have noticed that electric cars are quite the fashion.<\/p>\n
Traditional car companies are moving away from petrol engines, prompted by changing consumer tastes, ever more urgent calls for action on climate change, and ensuing government rulings.<\/p>\n
Tesla has won so far because it was ahead of the curve, it has had the luxury electrical car market almost to itself until now.<\/p>\n
Mercedes, BMW, VW and others are now getting their act together and can go to school on Teslas mistakes and lessons.<\/p>\n
The German, Japanese and indeed the big American auto firms have been around a while for good reason. They are really good at making cars.<\/p>\n
As a car driver one problem with Tesla cars, aside from their price is this: they look boring.<\/p>\n
From a practical point of view, Tesla does not have enough European presence.<\/p>\n
Which means they are likely to run into all sorts of problems with transporting their wares and with tariffs.<\/p>\n
Moreover, if you have an accident in a BMW, the dealership up the road can get you the replacement parts you need very quickly. It might take Tesla months.<\/p>\n
One thing Tesla has benefitted from is massive flows into ESG funds those that invest in companies that have good environmental, social and corporate governance credentials.<\/p>\n
That favouritism will unwind once Mercedes and the rest are no longer making petrol vehicles.<\/p>\n
So congrats to Elon Musk. Enjoy that $130 billion. Spend it while you can.<\/p>\n
<\/p>\n
Read more from the original source:<\/p>\n
Why Elon Musk wont be the second richest man in the world for long - Evening Standard<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" T HIS week Elon Musk, the chief executive of Tesla who is often described as a maverick, became the second richest person on the planet (ours, not his). The latest surge in the shares of the car maker took his fortune to almost $130 billion, nearly 100 billion. Continue reading