Tesla reaps the whirlwind

Fuel crisis sends demand for solar and EVs soaring

In 2022 Tesla stock lost almost half its value in the big selloff that saw sky-high valuations being critically questioned. Triggered by inflation fears and a tightening Federal Reserve, blue chip tech stocks like Alphabet, Apple and Amazon also saw their prices tumble, as investors took a more cautious approach to future earnings forecasts.

But the Ukraine war and the resultant squeeze on oil and gas supplies – and prices – did more than just fuel inflation. As always happens when the prices of base commodities shoot up, alternatives begin to look a lot more attractive. With gasoline hitting US$7.50 a gallon at the pumps, an electric car becomes more than just a way to combat climate change. And Tesla is by far the leading EV manufacturer.

Tesla’s other business is solar panels, solar roofs, and the batteries to back them up. Surging demand for electric cars has also spurred demand for charging stations, and Tesla makes them too. Smart homes and company campuses with solar roofs and parking lots, battery storage, and grid interconnection are helping to balance out the energy crunch.

Central to Tesla’s rampant share price has been its ability to overcome supply constraints of critical materials like nickel and lithium, allowing it to triple battery and car production, and shorten delivery times from more than a year to just a few weeks. With every Gigafactory globally operating at near capacity, Tesla’s dominance of the electric vehicle market is assured.

Fans and investors who supported the company’s stock in its first leap to $1000 almost five years ago have been proven right. It’s not about the fundamentals or the valuation; it’s the vision for the future – and the ability to create it – that makes a company a quantum outperformer.

Warning: Hazardous thinking at work

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