Five Graphs Showing $TSLA Has Nowhere To Go But Up

Why I’m betting on Tesla as the future of the automotive industry

The other day I was speaking to @gkurtzman about Teslas. He told me he had recently driven one, and it was “like driving your Mac.” There aren’t too many ways to make a car sound more appealing to me.

But it made me think about how Teslas are in many ways more like computers than like automobiles. Here’s a graph of the energy density of batteries over the last couple of decades.

Battery capacity continues to increase. Is there an upper limit? Probably, but the energy density in a gallon of gasoline isn’t changing any time soon.

Here’s a graph of the cost of batteries over the next few years, in dollars per unit energy.

The fossil fuel automobile analog to this graph is in some ways MPG. (Assuming you don’t want to drive a car with a 100 gallon gas tank.) Let’s take a look at the historical change in MPG of automobiles over the last few decades.

Hasn’t changed much. In many ways this is because consumers have chosen to purchase bigger, less fuel efficient cars than auto makers are capable of producing. But it’s unlikely we’ll see any exponential increases in gasoline MPG over the next two decades.

Then there is the cost of electricity. Here’s a graph.

Hasn’t changed too much. Let’s take a look at gasoline.

There are many factors affecting the price of gasoline, like increasing demand (due to fuel inefficient cars) and geopolitical instability. You can imagine that gasoline prices would drop pretty quickly if 90% of us started driving Teslas. But the point is that, on our current trajectory, not much is likely to change in the world of gasoline automobiles.

Electric vehicles benefit from exponential improvements in technology, much like semiconductors and Moore’s law. But people tend to think of Tesla as being a car company and not a technology company. Much of Tesla’s future operational success is already baked into their stock price. But the fact that the technologies EVs rely on are rapidly improving is less frequently considered. (At least by talking heads on TV.)

I think Tesla has a bright future.

*I own a small number of shares of TSLA.