Are shares in Elon Musk’s Tesla vastly overvalued?
The Inquiry
BBC
4.6 • 1.7K Ratings
🗓️ 8 October 2020
⏱️ 23 minutes
🧾️ Download transcript
Summary
In 2018, the electric car maker, Tesla, was struggling to get the Model 3 electric vehicle off the production line. Its CEO, tech entrepreneur Elon Musk, was working up to 22 hours a day on the factory floor, trying to solve a host of problems on the car he’d bet the company on. It was close to running out of money. Two years later, the company’s doing better. It says it will grow 30-40% this year.
No surprise then that Tesla’s share price has gone up. But the amount may surprise you – up eight fold in the last year, to $400 a share. Making it the most valuable car company in the world.
It’s now worth more than Toyota, Volkswagen and Honda put together. But yet it still manufactures only a fraction of the cars they make. So are shares in Elon Musk’s Tesla vastly overvalued? Sumant Bhatia finds out from our expert witnesses, who include a Tesla owner who’s a shareholder and superfan, a fund manager who thinks the shares are in a bubble, an investor with millions of dollars in Tesla and an expert in electric vehicles.
Transcript
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| 0:00.0 | This is the inquiry on the BBC World Service with me |
| 0:04.3 | Samanthaia. Each week one question, four expert witnesses and an answer. So, picture the scene. |
| 0:16.8 | You're trying to fix severe problems on the production line of the new car you've bet the whole |
| 0:22.2 | company on. You're running out of cash. You're the |
| 0:26.1 | chief engineer and CEO of the company, sometimes working 22 hours a day in the factory. The year is 2018, the car, the model 3 |
| 0:38.2 | electric vehicle, the company is Tesla and you are Elon Musk. The company was bleeding money like crazy and if we didn't solve these problems |
| 0:47.2 | in a very short period of time we would die. |
| 0:50.2 | How close to death did you come? |
| 0:52.2 | Single Ldigit weeks. |
| 0:53.6 | Elon Musk, talking on the television program, Axios, on HBO. |
| 0:59.2 | But recently the companies fared better. |
| 1:01.5 | It sorted out those difficult production problems and for the first time recorded |
| 1:06.4 | four quarters of profit in a row. Its share price? Well, after being static for years, it's done well, perhaps too well. In fact, it's |
| 1:17.0 | risen around eightfold in a year, making it worth around $400 billion. |
| 1:24.0 | So just two years after nearly running out of money, |
| 1:27.7 | it's now the world's biggest car company, |
| 1:30.8 | making it more valuable than the top three car manufacturers put together. |
| 1:35.0 | Yet, it's still only manufactures a fraction of the cars they make. |
| 1:40.0 | So, on the inquiry, we're asking, our shares in Elon Musk's Tesla vastly overvalued. |
| 1:51.0 | Part 1, driving on Sunshine. |
| 1:55.0 | I had a countdown to the date. |
| 1:58.0 | Honestly, it was more exciting than the birth of my first child. |
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