"Cash for Moat" - Tesla's ‘Gummi Bear’ Pivot

The Blind Squirrel's Monday Morning Notes, June 12th 2023.

Musk sacrifices Tesla’s moat for some ‘stimmy’ cash. Oops indeed.

Summary

• I have stayed away from the “third rail” that is Tesla since starting this letter- even when writing about the EV sector!

• However, I believe that the announcements last week about Tesla opening up its North American charging network to GM and Ford (and eventually others) creates existential issues for the company in the longer term.

• EV penetration in the US will certainly accelerate as a result of this charging deal, but at the expense of Tesla’s market share. Musk has just given away his only real moat in return for some ‘stimmie’ cash from the Biden administration. The timing of the announcement is also probably cynical.

• Those analysts that are now furiously adding billions of dollars to Tesla’s forecast ‘Services Revenue’ line and 10s of dollars to their share price targets need to give their heads a wobble.

• Most of the time, the fundamentals are irrelevant with this stock. I am not going to bet against the pot…