A little analysis of Tesla : Where it is and where it's headin

Tesla recently made the headlines all across the US following the last delay in the production of its model 3 and, as such, raised a lot of concerns across the financial sphere about the current sustainability of its industrial process. Indeed, making comparison to other big players in the car industry implicate in the electric segment like BMW or Toyota, some analyst like John Thomson from Vilas Capital Management. didn't hesitate to predict the near fall of Tesla by explaining why under every aspect its business plan appears to be doomed to failure. However, all this critics have in common to consider Tesla only as a car company when in reality, the vision of its CEO and the structure of the company is much more complex than that.

Tesla architecture

Currently, Tesla is composed of Tesla Inc and of two subsidiaries : Solar City and Tesla advanced Automation Germany. However, at the oppposite of the common car company structure the subsidiaries are not only at the service of the parent company but also pursue their own goals in order to build, in connection with Tesla Inc, a global ecosystem revolving around electric energy as explained in the following illustration :

Role and interactions of the companies inside the Tesla ecosystem

Solar City : It allows the production of the electric energy powering Tesla's car and Gigafactory through the expansion of its electric grid all across the US and also ensures Tesla to dispose of numerous data on the electric consumption and production in key area in the US in order to locate efficiently its car charging center. Furthermore, in the near future, we can also see that combine with the powerwall technology developped by Tesla Inc and the data collected by this latter, Solar City will be able to distribute adequatly the electric power trough the grid at any given time with the help of its smart grid algorithm.

Tesla Inc : Tesla Inc is binary. On one side, it allows through its hardware branch to build the brand trough the development of cutting edge technologies such as solar tiles, high tech affordable electric cars and powerful batteries which ensure a lot of publicity and focus the attention of investors. On the other side, Tesla Inc is also a software company which is currently gathering an enormous amount of data on driving habits and road networks with its enhanced autopilot and on machine learning via its automate industrial process put at work in the Gigafactory building the model 3.

Tesla advanced Automation Germany : As Elon Musk likes to put it, the role of Tesla advanced automation Germany is to help " building the machines who build the machines ". However, despite the strong value added behind each of those industrial machines, this branch is not only dedicated to the harware production. Indeed, this company is also developping crucial softwares in machine learning and has already filed numerous patents freely available in order to be one of the first innovative player in the development of the future of automated industrial processes that Tesla is currently building and experimenting for now in the car sector via its Gigafactory.

The current situation of Tesla

For the last couple of weeks, we can observe that Tesla has really been put under srcutiny by investors who after the last delay of the model 3 started to see the debt to equity ratio of Tesla ( > 2.3) as a sword of Damocles hanging above their head, leading as such to a major sell off of the share in early April. However, if we look at the explanation behind this last delay it appears that this was primarly due to an over-automatisation as revealed Elon Musk himself on Twitter. So, knowing that Tesla trough its Gigafactory is currently still developping a new automated process for car production it is not very surprising to see some mistakes during the transition toward mass production and as a result some unexpected delays given the fact that if one machine stops the whole assembly line shut down. Also, during the past two weeks we can point out that Tesla reached a production threshold of 2000 units per week which is a good sign and can led to think that the team has now handle part of the problem and understand how to mix human labor with automated processes in order to reach the utmost efficiency in the production line after the current planned break in the production.

So, is it still worth to invest ?

Despite the current bearish movement on the stock it is important to keep in mind the big picture and don't forget that Tesla is far more than just a car company relying uniquely on its car production. As we've explained earlier, the true goal of Tesla is to create a whole ecosystem revolving around the electric energy and the Mobility as a Service (MaaS). Knowing that, Tesla still seems as an interesting opportunity from an investing standpoint knowing the astonishing potential value of the data collected by Tesla trough its three branches on the promising areas that are machine learning, smart grid and AI. Moreover, all the developped cutting hedge technologies and filed patent on the production and storage of solar energy can reveal themselves to become very valuable in the near future knowing the current growth pace of the solar sector. Also, concerning the car industry, despite the delay in production Tesla is for now the only company able to propose a good electric sedan for 35 000 $ and is currently enjoying the first mover advantage in this new segment. So, to conclude, the current fall of the stock could be a good opportunity to invest in Tesla with a long-term focus and as such be able to profit of the future development of the global project envisionned by the Tesla team.

Disclaimer : The information contained in this article relies on my personal beliefs, and the information and/or documents contained do not constitute professional investment advice.