If one reads the following headlines, “Tesla powers an entire island with solar to show off its energy chops, Tesla solar root will be cheaper than a regular roof, Tesla issues bright forecast for Solar Energy,” one may be eager to buy some Tesla (TSLA) stocks overnight with a view to benefiting from the great future promised by its charismatic CEO Elon Musk. Nobody doubts that Musk is a brilliant man who has been repeatedly able to start great projects and think out of the box. Unfortunately, dreaming is good, good return is better.
Indeed, whatever goes wrong at Tesla – its impending merger with SolarCity has shown the extent of the financial gap between objectives and the capital-intensive reality – there’s always a large number of reporters ready to give Musk the very positive media coverage he seeks. Media have been so charmed that it got up to the point that they might well be misleading each other in what could be the harsh reality of Musk’s financial universe, that is a large communication plan with too little industrial capacities, few customers and very optimized tax sheet.
The Tesla stock remains overvalued compared to competitors like BMW, Volkswagen, Ford, and Jaguar whose electric car innovation and production keeps building up progressively, possibly eclipsing Tesla for good in the future. What Musk, the great communicator, failed to realize is that other carmakers, those selling millions of units each year rather than a mere 50,000 units including delivery issues, have been observing how Tesla’s business has been developing all along in order to not make similar mistakes.
Summing up, they watch Tesla and they don’t fear it. They know that if good well-chosen words can convince media, real long-term costs, sustainable quality, financial results and profits will separate the strong from the weak. Whatever qualities Elon Musk has, his business – SpaceX, Tesla, SolarCity – is media strong and financially weak.