There it was, in black and white: a few weeks ago, fleetingly, Tesla was the most valuable car maker in the world, based on its stock price. In these tumultuous times, investors have been backing it like never before, pushing it beyond Toyota and the Volkswagen Group (it had long since eclipsed Ford, General Motors et al).
It’s a remarkable tale that I can validate only through talking with my 12-year-old. Where I see sales figures over 17 years that have only recently topped one million, full-year financial results that have never seen a profit, an endless (but admittedly reducing) stream of quality complaints and aftersales issues, plus a borderline relationship with common sense as far as Autopilot is concerned, he sees the future. Emboldened by Top Trumps, he and his mates are genuinely more excited if I bring home a Model 3 than a Ferrari 488 Pista, such is Tesla’s playground cachet.
And there’s the rub. So-called experts have spent recent days trying to justify Tesla’s dizzying valuation, citing everything from it having more advanced battery technology than its rivals (hard to believe) through to it now producing a credible, decent-selling four-car line-up globally (hardly impressive against the opposition). But my suspicion, in the absence of any genuinely hard facts, is that the stockbrokers have caught playground fever.
And that’s not a criticism. There’s no rational reason why ‘legacy’ marques can’t make EVs just as capable as Tesla’s (or better, if you want to argue the toss over the likes of the Jaguar I-Pace and Porsche Taycan). But while the perils of listing on the stock market are all too obvious (just ask Aston Martin), the latest evidence suggests that, by moving first and fast, Tesla has seized the initiative for a generation or more. There isn’t a car maker on Earth that wouldn’t like a sprinkle of its stardust right now.
Where will it end? The straight-talking ex-BMW, Chrysler, Ford and GM boss Bob Lutz recently labelled it “psychosis”, suggesting that the constant ramping of hype just keeps pushing the price higher, generating more hype and so on. To heavily summarise Lutz’s views, bubbles always burst.
However, just 18 months ago, Lutz claimed Tesla was “heading for the graveyard”. I wouldn’t have bet against him then. But now? I’m not prone to committing the thoughts of stockbrokers or children to print, but even if that market valuation is grounded in turning fiction into reality, and even if reality ends up biting hard, you have to acknowledge that Tesla is probably both too big to fail yet small and well-funded enough to adapt to a rapidly changing landscape better than most.