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Tesla [TSLA] Retail Investors Have An Advantage: Here’s Why (Part 1)

The day after Tesla’s long-anticipated Battery Investor Day, Tesla stock fell about 10%, and it remained at that price for a while. Elon Musk admitted the media reaction to Battery Investor Day made him “sad,” and that not enough credit was given to manufacturing.

The day after Tesla’s long-anticipated Battery Investor Day, Tesla stock fell about 10%, and it remained at that price for a while. Elon Musk admitted the media reaction to Battery Investor Day made him “sad,” and that not enough credit was given to manufacturing.

If you ask me, I don’t understand what Wall Street anticipated and didn’t receive on Battery Investor Day. Tesla shared information on new battery manufacturing techniques, a highly optimized manufacturing process for those batteries, and how much less it would cost to produce these batteries. We learned the timeline for Tesla to start manufacturing their own battery cells, new structural plans for how those cells would be placed into future vehicles, and the range and weight efficiencies that would cause.

We even learned that Tesla has a test line currently in production, and has solid plans to build new lines for these batteries at their future facilities.

For whatever reason, it seems that the financial press didn’t want to hear about a 56% decrease in cost, or the ways that Tesla could increase production to the terawatt level, seemingly walking away disappointed that these battery lines were not already up, running, and producing terawatt-hours of batteries … even though I can’t understand for the life of me how they would have expected Tesla could have kept that quiet.

Seriously — with the exception of not hearing anything about vehicle-to-grid implementation, Battery Day exceeded my expectations by a lot. The batteries are coming faster and cheaper than I expected. Once again, the Tesla engineers and execs took a visionary look at how they wanted the future to look, created a roadmap to get there, and then shared it with everyone.

In the weeks since Battery Investor Day, I’ve been thinking about why both the press and Musk were disappointed with the presentation, and it made me realize that Tesla does things completely differently than standard companies, and that difference puts retail investors on the same footing — or perhaps even gives us an advantage — over the traditional Wall Street financial media.

Here’s why…

Tesla Actually Works Toward Their Mission

A lot of companies come up with flowery mission statements that everyone more or less forgets the majority of the time. For instance, GM’s mission statement is: “We envision a future of zero crashes, zero emissions, and zero congestion, and we have committed ourselves to leading the way toward this future.”

Okay, that sounds great, but what concrete movement has GM made to further that statement? As I’ve pointed out, GM when combined with Ford expects to produce about 320,000 electric vehicles. In 2026.

“But wait!” you and the financial media shout! GM has made updates to that — it is now suddenly pouring $27 billion into its EV program, and it is now hoping to sell about 1 million electric vehicles! In 2025.

Seriously, in the time that I’ve been stuck in “real life” and haven’t been able to write (this article was started over two months ago!), I almost decided to write an article about how poor I feel GM’s ambitions still are — yet if you read the financial media, it was screaming that GM was a better EV investment than Tesla in the last couple months. Let’s face it — GM’s “zero emissions” mission is just garbage it puts out there for press coverage. Before GM’s updated goals, if we use the 320,000 number and assume Ford puts zero cars toward that 320,000 goal, GM was planning to transition 4.15% of its global sales (using its 2019 sales number of 7.71 million vehicles as a baseline) by 2026. Depending on your source, California right now is selling somewhere between 6% and 8% of all new cars as electric, which means that as recently as two months ago, GM wants to “lead the way” by selling fewer vehicles by percentage in 2026 than California averages today.

Even with its new numbers, GM is only hoping to sell 13% of its production as electric vehicles by 2026. And let’s be real, the Hummer isn’t selling millions — GM plans to sell really cheap, short-range cars in the Chinese market to make up most of this.

It’s because of the disconnect between the mission statement and what is really going on that the financial media doesn’t take mission statements seriously, and instead looks at snapshots of the business instead. How can you say that your mission is “zero emissions” when, in 6 years, your goal is to still sell 87% of your fleet as is?

In contrast, Tesla is laser-focused on its mission statement. Here’s the transcript of Battery Day. Go there and do a search for the word “transition” in the transcript. You’ll find it 13 times, and every single time is Tesla discussing its mission. In fact, consider how Musk thinks we should measure Tesla’s success. Here’s what he said at 1:25:53 in that transcript:

“The battery stuff we’re going to talk about is truly revolutionary and essential to Tesla’s goal. The fundamental good of Tesla, it’s like, if you look back in history and say, ‘What good did Tesla do?’ The good will — by how many years did we accelerate sustainable energy? That’s the true metric of success. It matters if sustainable energy happens faster or slower, and so that’s really how I think about Tesla and how we should assess our progress. By how many years did we accelerate sustainable energy? And what we’re going to talk about with batteries and a few other things will really explain how we’re going to make a step change improvement in the acceleration of sustainable energy.

This is the entire key to understanding why Tesla held Battery Day when it did. Not just because Musk wanted to share the breakthroughs Tesla has made, but also because he is pressuring other companies to jump in to challenge Tesla. We saw the same thing when the Semi was unveiled. Tesla unveils products early to get the world to start talking about the change that will happen, and to hopefully get other companies to follow along.

So, going into Battery Investor Day, I didn’t expect to hear what they were doing that would benefit the 500,000ish vehicles that they are making now. I expected a road map for them to solve the battery constraint, which is a huge problem that, without addressing, would stop the transition in its tracks.

Tesla did more to address GM’s supposed mission statement on Battery Investor Day than GM ever has done.

How Does This Give Retail Investors An Advantage?

Wall Street is generally extremely focused on the next quarter, and not the long term. Most companies have adjusted to this reality, and those companies provide Wall Street analysts with short-term goals and quick analysis of how those changes will directly impact their upcoming quarter or maybe year. It’s extremely rare to see any company constantly addressing time horizons longer than that with any real vision beyond, “Hey, we’re going to have zero emissions! Wooooo!”

Wall Street analysts are made to handle that sort of thing. It’s why we have analysts like Adam Jonas, who has said things like he thinks GM’s electric vehicle division could be worth $100 billion. Jonas sees the stuff that GM sends out, hears how it is actively working toward its mission statement, and then figures that they must be legit plans and tries to go from there. GM may — and probably does — provide additional information to Wall Street analysts who ask for further details about their plans, which allows them to go back and try to make predictions on their future based on the details they have provided.

And, to be clear, this is how a publicly traded company is more or less expected to do things. I’ll compare how Tesla’s information releases are different from other companies’ in part 2, but the short thing to know for now is that companies feed analysts specific information they want them to share, and encourage them to share it. Stock analysts are expected to follow multiple companies or even full industries, so getting help from the companies can be helpful.

Conclusion

The point is that Wall Street analysts have been groomed to sort of wink and nod at mission statements compared to what the company is actually doing. If GM actually cared about the “zero emissions” part of its strategy, and was out front publicly discussing how difficult the transition would be, how it intends to make it happen, and backed that up with execution that clearly prioritized it, people might believe it, and suddenly GM’s electric vehicle division might actually be worth $100 billion like Jonas claims.

Instead, no one trusts GM is working toward its mission statement because its actions do not back it up. This is the same company that recently sued for weaker emissions standards because they saw it as politically expedient to do so. This is the same company that has announced 15 new models or model refreshes for the US in 2022 … only two of which are EVs.

If GM actually worked toward its mission statement, you’d see almost no vehicle refreshes in 2022, because that money would be going toward EV programs instead. But let’s be clear — GM isn’t. Its mission is PR spin.

Wall Street analysts don’t really care, though. They are conditioned to know mission statements are PR bluster, and so they instead look at what is happening now. An analyst like Jonas — and sorry to keep calling him out, it’s just Jonas makes a great example for this and he is better known than most — looks at GM, says, “yeah, they’re moving toward EVs because of their mission statement,” and then happily digs into what the new GM three-row giant SUV will do for the bottom line, not acknowledging that the two sides are at fundamental odds with one another. Their training and experience looking at companies in the past taught them that this doesn’t matter.

So, this is the first spot that we as “retail” investors — I personally don’t like that term, I like “individual” more, but whatever — have an advantage. Tesla has presented us with a lot of information that show it is not lying about its mission, and that mission is truly the core of everything Tesla does. Because of that, we analyze Tesla sort of “backwards,” by asking how its next move will further its mission, not how it will change things for the next quarter.

When you use the same method of examining how a company like GM’s moves affects its mission statement, it instead shows how fundamentally detached these companies are from the future they proclaim to expect. When I saw the article about GM’s 15 new vehicles or vehicle refreshes, I saw the company spending tons of resources on technology its mission statement implies is outdated.

And that’s the first big advantage that retail investors have when it has come to investing in Tesla — without as much experience knowing how disconnected mission statements are traditionally from actions, we believe Tesla is working tirelessly toward its mission and examine the company through that prism.

Next Time On …

I’ll be discussing the way companies often give analysts information, how companies use that method to benefit themselves as well as analysts, and how Tesla does things wholly differently … once again giving retail investors a huge benefit.

*Disclaimer: I am a Tesla [NASDAQ:TSLA] shareholder who has purchased shares within the preceding 12 months. Research I do for articles, including this article, may compel me to increase or decrease stock positions. However, I will not do so within 48 hours after any article is published in which I discuss matters that I feel may materially affect stock price. I do not believe that my voice could or should influence stock price by itself, and I strongly caution anyone against using my work as your sole data point to choose to invest or divest in any company. My articles are my opinion, which was formulated using research based on publicly available data. However, my research or conclusions may be incorrect.

 
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Written By

A businessman first, the Frugal Moogal looks at EVs from the perspective of a business. Having worked in multiple industries and in roles that managed significant money, he believes that the way to convince people that the EV revolution is here is by looking at the vehicles like a business would.

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