Tesla (TSLA) Bear Shifts Gears
Barron's noted that GMO’s Jeremy Grantham issued positive commentary on Tesla recently. The analyst said:
I recently took a drive in a GMO colleague’s Tesla from New York to Boston. Now, I am about as far from a car freak as you will easily find. I just turned in a 12-year-old Volvo that unfortunately had been sideswiped, for otherwise it was good for years more. But I have to say that my recent Tesla journey was my #1 car experience ever. Three years ago I test drove a Tesla in Boston and it was a tinny, rattly, super-expensive toy. Its battery alone cost $50,000! Last month, its chief engineers suggested its cost today is $22,000. In three years they and other experts are confident that the battery will be less than $15,000 and probably its weight will have fallen also….at $10,000 to $15,000 per battery in three years plus some economies of scale, there will probably be a $40,000 vehicle that even die-hard cheapskates like me will have to buy. (Our stopgap Jetta diesel, which gets an honest 41 miles to the gallon, was $24,000.) One can easily see that in 10 years there could be a new world order in cars…
In short, with slower global economic growth, more fuel-efficient gasoline and diesel vehicles, more hybrids, cheaper electric cars, more natural gas vehicles, and possibly new technologies using fuel cells and, conceivably, methanol, it is certain that oil demand from developed countries will decline, probably faster than expected. Some emerging countries, notably China, are likely to take more dramatic and faster steps to reduce demand than we have ever thought about. Already they have 200 million electric vehicles – mostly motorbikes – almost as many as the rest of the world squared. Total global oil demand at current prices or higher is likely to peak in 10 years or so. At much lower prices we would fairly quickly lose most of our high-cost production: deep offshore, fracking, and tar sands. Times may be changing faster than we think. My guess is that oil prices will be higher than now in 10 years, but after that, who knows? The idea of “peak oil demand” as opposed to peak oil supply has gone, in my opinion, from being a joke to an idea worth beginning to think about in a single year. Some changes seem to be always around the corner and then at long last they move faster than you expected and you are caught flat-footed.
(Full disclosure: I regrettably have owned no shares in Tesla.)
Along with Toyota's debut of its fuel-cell powered vehicle and more auto companies partnering with Tesla for its battery technology, Grantham thinks the era of reliance on fossil fuels might be coming to an end.
Shares of Tesla are positive in early trading Friday.
We present: a bear on a bicycle:
