In the years since I published my Tesla Thesis in July 2020, Tesla’s share price has done well, increasing by c. 4.4 times or c. 32% annualised return. It is the second best-performing “Magnificent Seven” stock after Nvidia.

By comparison, the S&P500 and Nasdaq indices yielded a meagre 15% and 16% annualised return respectively. In asset management parlance, Tesla’s stock has outperformed its peers and comparable equity markets.

As the fine print goes, past performance is not indicative of future results. Where does Tesla go from here at a c. US$1.43 trillion market capitalisation (seemingly overvalued as implied by a price-earnings ratio of c. 230)?

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At c. US$700 billion, Tesla’s lofty market capitalisation is buoyed by promises of fully autonomous vehicles. Elon Musk’s original masterplan (now removed from the Tesla website) was to “develop a self-driving capability that is 10X safer than manual via massive fleet learning” and to “enable your car to make money for you when you aren’t using it“.

So far, these have been a pipe dream. The 10th October “We, Robot” event is meant to assuage critics. Judging by the share price drop of c. 8% the following day, market participants are not convinced by Tesla’s autonomous future.

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I’m not a car guy. When I got the Tesla Model S (with the wife’s permission), it was out of my love for tech, and my genuine belief in the environmental ethos of zero-emission electric cars. The love affair started the moment Elon Musk unveiled the Model X. I fell for the car hook, line and sinker when Elon (yes, we’re on first name basis in a parallel simulated universe) promised autonomous driving capabilities.

The Model X was love at first sight. Alas, a car is a financial liability and the Model X, with the then base price of around £95,000, was the epitome of financial folly. So I settled for a modest Model S with a 75 kWh battery pack.

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