On Friday, shares of Tesla rebounded as the company announced it had removed many of the manual processes from its Model 3 production line, improving efficiencies and expectations that the company will be able to hit its targets down the road.
As a general rule, Tesla has always set very high bars for its production targets – in so doing, the company has often set itself up for failure, providing little wiggle room for slowdowns or unexpected issues with suppliers. As the company moves toward becoming a fully-scaled auto producer, having nearly fully-automated its production process will be one of the key competitive advantages the company will rely on to compete on price and deliver world class electric vehicles to the market at a lower cost of production than its larger rivals.
The innovation and long-term investments Tesla is making certainly warrant outsized expectations; that said, at this point in time and at this valuation multiple, I believe Tesla is simply too expensive for long-term investors to make any sort of significant wager on Tesla’s long-term performance.
Invest wisely, my friends.
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