7-6-20 Monday PERDICTIONS

On May 4, 2019 I posted my monthly blog. In that blog I did a 5000 mile review on my Tesla model 3. You'll find the link below. After my extremely optimistic view of Tesla's ability, I did some soul-searching. The question that kept coming up in my mind is, "Put your money where your mouth is". This is always the test when someone is trying to present something, are they personally invested in the product? So, I opened up a trading account and deposited all my liquid assets, almost all, I kept out working capital for my rentals. I purchased stocks twice in one week, the 1st time I just bought shares and then of course I said to myself Frank, don't be a wimp. I went all in with the average stock price at $225 per share. If you look at the stock chart for Tesla whose symbol is TSLA you will notice that the stock was going down after I bought it, all the way through summer, down to the $180 range. I made a decision at that time to be all in, regardless if the stock goes down to 0 or where ever. Below, you will see a one-year chart from today's date which is July 6, 2020. So it does not go back as far as when I purchased the stock in May 2019. But, you can see where this is going. My stock has quadrupled and now it's heading for 5 times original investment. There is a point to the story.

This is my May 2019 blog post if you want to check it out.

https://dudepastor.blogspot.com/2019/05/sat-may-4.html

There are a couple of reasons I did this investment. I missed when the Price Club became Cosco. Or when Amazon 1st started. But I was not going to miss this ride.

PREDICTIONS:

I have a friend Victoria who I've known for 35 years. We've talked about investing over the years and she is well invested in Apple which is a fantastic stock.  Tesla stock was in the $700 range in Feb. Then we had the virus outbreak and everything tanked you can see in the chart March and April were downers. Then Tesla came roaring back to new heights.

I told Victoria back in Feb. that I believe that Tesla is on track for the $1500 by the end of the year. Here are the hard predictions I'm making and if you read this blog you can come back in 5 years and you will know that either I was right or I was dead wrong. I'm projecting Tesla stock to be at $2500 in the Bear scenario and $5000 per share in the Bull scenario (best case scenario right) by the end of 2025.

This leads us to a dire case for what are called Legacy carmakers. They have billions of dollars invested in internal combustion machines factories (ICE vehicles). The cost for them to retool and start making these is again in the billions. Think about it, you own a company that makes and sells millions of gas guzzling cars per year and you make a lot of money, if you start making electric vehicles, technically you have a conflict of interest. On one case you're trying to sell electric cars that are more efficient by two thirds then it ice car, thereby undermining the sale of the gas cars which is your bread-and-butter. By the end of 2025 the 3 major legacy car companies in the United States, GM, Ford and Chrysler Fiat will either be bankrupt or in need of a bailout by the government.

Toyota is the only car company that stands a chance to survive. They have been making the Prius for 20 years and it was cutting edge 20 years ago. And it's a good car it's just that it's not committed to eliminating fossil fuel from the mix. Toyota is talking about making either hydrogen cars or electric cars, but it takes years to develop these vehicles and the cost again is in the billions for development and retooling.

There is a new term that I've learned since I started this adventure about 2 years ago. The term is called, "A Moat". The moat is the separation from a disruptive company that changes the way things have been done in the past. A hundred years ago that would be when the change from horse drawn buggies to the automobile.  Of course the Apple iPhone, is a prime example. The separation between Apple who is the leader and the next one in line in developing and producing smart cell phones was Samsung. The difference between their share of consumers is the moat. Uber and Lyft is another example. Tesla's moat is huge. Here we are in 2020 and there is no electric car in production today that has the equivalent technology and stats as the Tesla model S when it 1st came out in 2012. How can these companies catch up to Tesla? Or can they? I don't think they can, but if they were inclined to do so it would cost them billions of dollars and they would lose revenue of the income because they do not have the software technology in place. As Tesla advances it widens the Moat. In the United States three quarters of all electric vehicles sold are Tesla's, that is a huge market share.

I mentioned this in the previous blog post that Kodak was the 1st one to develop the digital camera, but they put it on the shelf because it would conflict with their sales of film for cameras. Where is Kodak today? They missed it. This same scenario is being played out again before us. Think about it, General Motors had a really good EV and what did they do with it? When people's leases were up on their EV, they had to return them even if people wanted to buy them and GM crushed all of them. I'm sure that they wish they would've proceeded with their EV program now, but it's too late, the same as with Kodak.

So these are my predictions and we will revisit them from year to year to see how it's going. I have just over 20K miles on my Model 3, cost so far as been $2.00 for windshield washer fluid. No oil changes, tuneups and so on. When you are ready to order your Tesla let me know.