Electric vehicles may be the future. A lot of people think so. I haven’t seen an electric vehicle that both has the range I need and anything close to the towing capacity I want in a vehicle. (Some of us do more than run back and forth to the grocery store and work!) Electrocuted | Energy Matters
The referenced article is interesting, but the attached graph is what really caught my eye. Tesla’s market capitalization is nearly that of GM. But the number of vehicles they sold in 2016 is dwarfed by GM. And Ford. And everyone.
I saw this kind of thing in 1990s during the .com bubble. People – who were otherwise intelligent – told me that it was OK that internet companies were so small… they were building the future! Or something. But of course it does matter.
But then when you start to talk to them about the statement of cash flows, their eyes glaze over because they are only buying the sizzle. Do you know what a statement of cash-flows is, where to find it and how to read one? Are you familiar with the equation Assets = Liabilities + Owners Equity? (Do you know where you might see that equation?)
Maybe Tesla really is worth as much as GM. Maybe they have the secret sauce that will let their electric cars be so much better than the ones from Volvo, or Toyota, or Ford, or Honda, or anyone else, but in my humble opinion, there is something wrong with the way the markets are viewing Tesla.
For the basics on the Efficient-market hypothesis, see Wikipedia, but remember it is the Wiki. For an alternative view on the rationality of markets, the standard text is Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay, published in 1841. It details such things as the “South Sea Bubble” that hit England, “The Mississippi Scheme” that hit America and Tulipmania that hit Holland.