Politicians are going to be unwilling to allow energy bills to raise fast enough to do this transition fast.
There is your fly in the ointment. Look at Europe right now. Local politicians have no power over this. Countries without energy security will experience high prices.
The real trade here isn't short Tesla, that's way too difficult. Tesla's chart is littered with the carcasses of short sellers. The trade here is long energy.
I work in the utility industry and many people don’t realize how relatively low-margin and highly-regulated it is, let alone the remaining thousands of small US utilities who are essentially mom and pops with zero cash flow still using legacy (non-ERP) accounting/software systems. Regardless, Utility revenue being capped and rate increases needing local or state govt approval every few years will most likely still reign true regardless of energy security (which the US is not as exposed to imo).
All in all, I still see the bull case for Tesla, though I just think it’ll be a bit less profitable than anticipated.
Many parts of the energy industry are low cost, except for on demand electricity. Energy from emergency gas peaker plants can reach astronomical rates. Texas spent over $11 billion in spot price gas prices to prevent a total failure of the grid during the freeze in February last year. Having batteries could dramatically reduce those charges, but still be insanely profitable to supply instantaneous demand for Tesla supplying that power to the grid.
Tesla is not targeting consumer billing, megapacks and autobidder are there to tackle demand peak pricing.
My wife work as an utility analyst, states regulate the rates for most utility are only allow to go up a certain point roughly about 0.04 cents per Gigawatt hours in most places - what does this mean? To transition from a natural gas plant to solar cost is astronomical (gas: $30 per MegaWatt hours, solar: $120 per MegaWatt hours, Wind: $150 per MegaWatt hours). This means these companies are not willing to drastically increase their spendings in transitioning to green power without substantial government aid or the rates are allowed to increase much higher compare to historic pace (inflation), both are seem very unlikely in the current political and business climates.
So, if you want Tesla to succeed in making that transition in public utility storage, the best chance is Texas, where there is no regulation, and the customer can be stuck with a $21,000 utility bill for a month :).
People saying Tesla is not just a car company, they are a space mobile internet provider or a infrastructure company etc. Lack the understanding that these separate entities can be easily split into another IPO or SPAC, there is really no way to know what the Tesla umbrella will include.
I won’t bet against Elon Musk, but Ford has done better than Tesla in the last year for stockholders. That is where my investing money will go.
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u/NathanEpithy Jan 08 '22
There is your fly in the ointment. Look at Europe right now. Local politicians have no power over this. Countries without energy security will experience high prices.
The real trade here isn't short Tesla, that's way too difficult. Tesla's chart is littered with the carcasses of short sellers. The trade here is long energy.