Tesla Stock: Investing In The Future

The recent performance of Tesla stock suggests that shares in the Silicon Valley company will continue to rise as the market rewards its innovation.

With global warming, fossil fuels and pollution at the centre of many debates, investors are increasingly interested in Elon Musk, who seems to be an entrepreneur with all the answers.

Musk dominates the industry not only due to his visionary ideas, but also because he has created one of the most important brands in the world, which further reinforces its position at the top. Tesla is ranked third, after Apple and Google, in the world’s Top 50 Most Innovative Companies. Consequently, Tesla enjoys near-monopoly status, although rivals are attempting to compete with the company.

Overpriced?

As this chart shows, Tesla already has the fourth largest capitalisation in the world. Elon Musk has revolutionised thinking about the future and in doing so created a company, which in just 10 years has reached a capitalisation equal to Ford Motors.

However, it should be noted that Tesla is a loss-making company and posted a loss of $397 million last year. Some economists think it is a financial bubble, citing the fact that although Ford and Tesla have equal capitalization, the former produced 76 million cars in 2016 while Tesla produced only 84,000, indicating that sales did not justify the exponential rise in share value. Perhaps the market is rewarding the brand and its innovative ideas. On the flipside, if the market loses confidence in Musk there could be dire consequences.

Tesla’s Energy Storage

In addition to these projects, others are equally striking. Examples include the Uber bus, and providing energy for entire cities through renewable energy. This last project was realised on Kauai Island, Hawaii where using 55,000 panels, they are providing the energy needed overnight with the largest storage system ever built. The next challenge is to increase energy storage capacity worldwide.

According to Bloomberg, Tesla has launched 5 different projects in the Pacific on Ta’u in American Samoa, Monolo Island in Fiji, and Kauai and Oahu islands in Hawaii.

Lyndon Rive, president for global sales and service at Tesla’s energy division, recently said it makes perfect sense to convert every island to a solar storage facility. Indeed, island micro-grids currently represent 36 percent of Tesla’s total power storage capacity.

In 2016, a total of 157 megawatt-hours of energy storage capacity has been installed and a further 17 megawatt-hours in the first quarter of 2017.

The Donald

Despite professing his support for fossil fuels, Trump is aware that sooner or later they will be replaced by renewable energy.

As a businessman, he will surely not try to interrupt a process that is already happening. However, he will probably ignore the Paris deal as he seeks to stimulate the American economy and prioritise energy jobs over environmental concerns. The US has invested heavily in oil reserves and the increase in renewable energy could cause billions of losses for the nation.

From an economic point of view, Trump will try to milk the economic benefit of these resources before they lose their value as the energy revolution takes place. He wants to remove regulation and bureaucracy so as to reduce energy costs. In addition, environmental constraints and climate policies that are seen as slowing the economy will be removed as he seeks to engage in energy policies that cut costs and boost energy security. The Environmental Protection Agency will be refocused on the core mission of protecting air and water.

Above all, Trump has set the goal of achieving energy self-sufficiency and no longer depending on OPEC or hostile nations.

Matteo Spiller