Understanding Tesla’s Great Story

Tesla is one of those companies that defies expectations. Its stock appears to be wildly overpriced. Indeed, because of the inflated price, Tesla — and company that makes and sells very few cars — has a market cap that is bigger than Ford.  Huh?

Ford, btw, is a well-run company.  Starting around a decade ago, Ford has made very smart investments in quality products. So it is hard to figure out why Ford’s stock performed so badly while Tesla’s stock is soaring.

Except when you think about the future. Tesla is all about the future. Tesla promises a better future. It promises a future that many folks want to be part of. Ford is all about the present. Nice cars, no big deal.  And when given a choice, people are showing that they want to bet on the future.

Ironically, there was a time when Ford’s story WAS about the future. Henry Ford woke up America to the idea of affordable cars. But the auto industry is now the victim of its own successes in bringing that future to us.

Will Tesla deliver on its promise? Maybe it will. And maybe it will not. But only a fool would ignore that power of the story that Elon Musk is telling.

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