Is buying Tesla, Inc. shares worth it today?

Cibi Chandar

Many investors and non-investors of the stock market alike would have heard of Tesla, Inc. (TSLA) before, but are not aware of what the company is about or what they do. Amongst those who know the company well, the community is split into bulls and bears of Tesla for various reasons. As a proud shareholder of TSLA, this is my humble opinion on why I think this is a stock that everyone should own for the long haul regardless of what may happen in the short term. Do note that this essay adopts a one-sided stance and is not intended to serve as financial advice; do make investment decisions based on your due diligence.

The first reason why you should own Tesla stock long-term is because electric vehicles (EVs) are the future. One may think that the future with EVs is far ahead of us, but many countries are already proposing the banning of passenger vehicles (gas vehicles), and some are already planning to take action. A prime example is Singapore itself, which has set an ambitious target of phasing out all Internal Combustion Vehicles(ICEs) completely and paving the way for greater EV adoption by 2040. EVs are preferred over ICEs as they run on cleaner, more sustainable energy while emitting half the amount of carbon dioxide. Countries want to adopt EVs to reduce carbon emissions and make the transition to using sustainable energy in the future; Tesla is aiming to accelerate this transition. This transition is not probable, it's inevitable. Other automakers have to adapt to this or die - literally. Investing into the top player in this industry sounds like a great idea, doesn’t it? However, you may argue that other EV manufacturers around the world are already established brands such as Ford and BMW. This brings me to my next point.

Although the leading car manufacturers are trying to play catch-up with Tesla, Tesla is years ahead of its competitors. Unlike other manufacturers who just deal with warranties and

recalls, with the introduction of centralised computing platforms, Tesla has effectively built a software-defined vehicle that is a constantly living and breathing platform, evolving with the needs of users and Tesla’s roadmap over time. Car manufacturers are scrambling to respond to Tesla, and many of these companies do not have access to the same hardware, software, and chips that Tesla does. In my opinion, traditional automakers are ill-prepared to compete in today’s software-centred world. They are culturally different from a software company, and they know it. The chairman of Volkswagen - still reeling from its auto-emissions scandal

- has declared Tesla as its biggest competitor. These companies lack the expertise required to compete in the age of the software car; Tesla is clearly 3-4 years ahead of the pack and there is no slowing them down.

My final point to make for Tesla is that it isn’t just a simple car company. Tesla’s mission is to accelerate the global transition to sustainable energy and to create an entire sustainable energy ecosystem. Other than EVs, Tesla also manufactures a unique set of energy solutions such as powerwall, power pack and solar roof, which allows everyone to manage renewable energy generation storage and consumption. Tesla is also clearly a tech company. Software is at the essence of Tesla’s unique infotainment system, user experience and autonomous driving features. Tesla has implemented over-the-air updates for their vehicles for years, while other automakers are just about to try this. Just like how Nokia and Blackberry had only software, but the iPhone was an integration of both software and hardware, overtaking the mobile phone industry and changing how we use our phones today, Tesla is doing this for the auto industry. Tesla’s valuations as a company are closer to that of a tech company than an automotive maker, purely due to their constant innovation and hunger for growth.

To conclude, Tesla’s prospects are spine-chilling to me and its sphere of influence is rapidly expanding. Tesla is a disruptive growth company with huge untapped potential, and it also allows for ethical investing given its mission. It is clear to me that Tesla’s innovative business model represents an existential threat to the auto industry as a whole. Today, if you ask 10 people about Tesla, maybe 2 or 3 people can give you some information about Tesla. On the other hand, if you ask them about Apple or Google, almost all of them will be able to answer you. One day, Tesla too will become a household name and the stock price would have skyrocketed from where it is today. It is a matter of when, not if; and this is why I think buying Tesla, Inc. shares today is absolutely worth it.

Bibliography

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