[Editor’s note: “How to Play Tesla’s Inevitable Demise” was previously published in June 2021. It has since been updated to include the most relevant information available.]
Fortune favors the brave. Hope fortune favors me when I say maybe it’s time to bet against You’re here (TSLA).
Full disclosure: We own TSLA stock in our Innovation Investor wallet. How could we not?
Elon Musk & Co. are at the forefront of three of the most disruptive technological changes in the world today: electric vehicles, solar and battery storage.
But I have given serious thought to finding innovative and disruptive tech companies with 2X, 5X or 10X and more earning potential.
While Tesla still has upside potential, we think there’s a much, much bigger opportunity elsewhere.
I am increasingly optimistic that Lucid Motors (LCID) is about to eat Tesla’s lunch. And as a result, Tesla stock will struggle in the coming years, while Lucid Motors stock will rise.
It’s a bold assertion, I know. I also know the dangers of betting against someone as visionary as Elon Musk, or a company as talented as Tesla, or a stock with as much momentum and support as TSLA.
The graveyard of short sellers is full of capable people who got suckered into betting against Tesla and got burnt out along the way.
However, as they say, past performance does not guarantee future results.
While shorts have been wrong about Tesla’s stock for years, maybe it’s finally time for them to shine.
See, I’ve been a huge bull on Tesla shares. And I tagged my readers 2000% or more comes back in the name. So my sudden bearish stance on TSLA does not come from a place of hatred for the company.
Rather, it comes from a handful of unbiased observations that Tesla capital and brand perception have been diluted. Without forgetting that its technological advantages have been Shrunk. All set the stage for Tesla to lose significant market share to a new entrant.
And who could he be? Action Lucid Motors.
Here is the story.
Erosion behind the scenes at Tesla
For years, the bullish thesis on Tesla has revolved around three critical competitive advantages:
- Talent. As an influential visionary, Elon Musk is a cutting-edge talent magnet. Historically, the smartest engineers on the planet have wanted to work for him and at Tesla. This gave Tesla an unparalleled confluence of talent to build electric vehicles.
- Technology. Thanks to its unparalleled confluence of talent and enormous head start in space, Tesla cars have always been the most successful cars on the market. Their market-leading battery technology has unlocked longer ranges and faster recharge times.
- Mark. Tesla is the world’s only “cool” car brand under $100,000. And the company got to this point by developing an aura of exclusivity and uniqueness that made everyone want their car.
These advantages are now eroding.
Tesla has actually lost a bunch of talent over the past few years. Some went to work in other automakers. But most of these talents have actually jumped in to start their own electric vehicle startups, on the idea that they can build cars to rival Tesla cars.
The crème de la crème of these Tesla-inspired startups? Lucid engines.
Lucid Motors brings the talent
The company is managed by Pierre Rawlinson, the former chief engineer of the Tesla Model S. Yes. He’s the tech brain behind Tesla’s flagship car, the one that started it all.
He is backed by an impressive team of former Tesla, Audi, Apple (AAPL), Samsung, Ford (F), Intel (INTC), and GM (GM) frames. We’re talking about people who helped start Tesla and make it what it is today. And on top of that, there are some very influential people behind some of Apple’s flagship products, like the iPhone.
This is the most impressive confluence of talent in the electric vehicle industry outside of Tesla – and it’s not even close. Lucid Motor’s management team also compares itself to the titan. And given the current trend of Tesla losing talent and Lucid Motors gaining talent, the latter will have a lot more talent than Tesla by 2025.
And indeed, with this remarkable engineering and design team behind it, Lucid has developed, tested and refined some of the most impressive technologies in the industry.
To answer your question, yesthis technology Beats Tesla’s EV technology on every key performance indicator.
We’re talking longer ranges, more power, denser motors, faster acceleration, tighter control – the works.
Tesla is outdated
Over the past 10 years, Lucid has built an all-in-house business Lucid Electric Advanced Platform (or LEAP, for short). It includes key competitive technological advantages, including:
- A low-floor, wide-base EV skateboard deck enables the company’s ultra-spacious “Space Concept” interior design and allows for more interior cabin space per square foot of vehicle deck than a Tesla car.
- An incredibly power-dense drive unit that produces the EV industry’s most efficient battery at 4.5 miles/kWh (compared to ~4 miles/kWh for Tesla Model S), and therefore unlocks driving distances more than 500 miles farther (that’s on par with Tesla’s new super premium Model S Plaid version), with no compromise in performance.
- An in-vehicle fast charging technology dubbed “Wunderbox” that enables ultra-fast charging rates and bi-directional power, which includes vehicle-to-grid and vehicle-to-vehicle charging.
This world-class technology platform is based on 403 patents – of which more than 80% have already been delivered.
In other words, Tesla’s technology is no longer alone in being the best in the industry. Lucid Motors offers a technology portfolio that, pound for pound, rivals and even exceeds that of Tesla.
Here’s the thing about cars. We don’t all want to drive the same. What’s particularly important to Tesla is that high-income people want to drive nicer cars. It is a status symbol of their wealth.
There is a reason Porsche (POAHY), maseratiand Lamborghini don’t make $20,000 cars that everyone can afford. They want to maintain premium brand equity. But Tesla dreams of democratizing the ownership of electric vehicles. And as part of that dream, the company is working tirelessly to bring the price of its cars down to $20,000.
On the one hand, it’s great because it means Tesla will unlock demand for consumer electric vehicles.
But on the other hand, it’s bad because it means Tesla is diluting its premium brand equity.
After all, there are tons of millionaires out there who just won’t buy a car that a kid fresh out of college could afford as a first car.
Of course, there is a difference between the Model 3 and the Model S. But the apparent difference is not that big. (I have to look closer to discern if it’s a Model 3 or a Model S on the road with me.) And it’s certainly not big enough to save Tesla from the inevitable erosion. of the premium brand’s capital as its cars become cheaper and cheaper.
Still, demand for electric vehicles in the premium channel isn’t going anywhere anytime soon. If anything, it will only increase – which means there is a unique and irresistible opportunity over the next few years for a new brand of electric vehicles to eat Tesla’s lunch in the premium channel.
Enter Lucid Motors
Lucid positions itself as a so-called “post-luxury” brand that emphasizes elegance and modernity rather than the traditional focal points of heritage – opulence and indulgence. The company has designed its cars with this post-luxury vibe in mind. Earth tones. Sustainable materials. Simple controls. Connected ecosystem. End-to-end customer experience. Avant-garde. Peaceful atmosphere. These are attributes that consumers place high value on today. And Lucid Motors knocks them all out of the park. It’s the dream car.
Above all, for the next few years at least, it will be a car that only the wealthy can afford. And as such, the Lucid Air will be the most demanded premium electric vehicle in the early 2020s…
The last word
Lucid Motors has the Talent, Technologyand Mark not to compete with Tesla in the high-end electric vehicle market but to beat him at his own game.
Does this mean Tesla is dead? No. Far from there.
Tesla will grow like wildfire over the next few years as the company sells a slew of Model 3 and Y cars all over the world, expands its solar business and makes a successful inroad into the world of energy storage. .
But at its current valuation, Tesla stock is priced perfectly and more. I am increasingly skeptical about what will happen. If not, Tesla stock could be stuck in place for the next few years.
The investment implication?
Maybe it’s time to forget about TSLA stock. Buy stock in companies that are stealing market share from Tesla, like Lucid Motors.
As I said, fortune smiles on the daring. If we’re right, this could be the most profitable decision we’ve ever made.
Be at the forefront of this epic shift in next-gen mobility and make monster gains.
As of the date of publication, Luke Lango had (neither directly nor indirectly) any position in the securities mentioned in this article.