Why your view of Tesla could be messed up?
Back in 2016, my wife and I realized that our financial situation was not in a healthy place. We owned a rental property that turned out to be a money pit and we began to recognize that we took on too much debt. It was about that time that I started to think seriously about what retirement was going to look like. I had saved some money in my company 401K and I had a partial pension through my 17 years working at UPS, but the numbers were not looking very good, no matter how I crunched them. It was then, I realized that I needed to accelerate my rate of savings, my investment return rate, or both. At that time I was interested in owning more Apple and Lam Research stock.
I then took a detour in my life and spend about a year working at Edward Jones Investments as a financial advisor. I learned a lot there, including how to read company balance sheets and analyst ratings, but their philosphy was very conservative and I was looking for something more. I started spending time with online research tools to try and find the next opportunity that looked more like putting money into Apple or Amazon in 2000. Towards the end of 2019, I started researching Tesla. I had heard all kinds of wild claims about it on TV, including how it was doomed for bankruptcy. Shortly after, I began my Tesla investment journey by purchasing about $1,000 of stock.
Back in 2020, I started to discuss that investment with some of my friends and their responses went something like this:
“Tesla is for tree huggers.”
“EV’s will never replace my gasoline car.”
“Teslas are just for rich, liberal wankers that want to show off their status. Why would you invest in that company?”
The general consensus back then was that Tesla was a company only suited for those that supported climate change.
Fast forward to today and I still ask my friends about Tesla and, oh my, has the narrative changed. In just 5 short years, here are some of the comments and events that I see today, in early 2025:
Keying Teslas and throwing Maltov cocktails on Teslas is now popular with the same people that previously were buying them at an astonishing rate.
Tesla drivers are being called “Nazis”, as opposed to “tree huggers”.
Comments are surfacing online suggesting long time owners of jacked up, gas guzzling diesel burning trucks who swore to never buy an EV, are now looking to add a Tesla to their family to help offset the cost of fuel.
Teslas are now becoming less expensive and more appealing than a comparable, gasoline driven vehicle, with the company on the verge of introducing a $30,000 vehicle that will appeal to a huge, mass market that is currently dominated by companies like Toyota, Honda, Kia and Hyundai.
Here is the key takeaway from this article. While most of the population holds an opinion of the company based on where the populist or political football is bouncing this month, I have stayed focused on the company’s balance sheet. If you stop and take a look under the hood at their financial stability, it’s hard to find a better place to invest your money. Here are some facts to take notice of:
Tesla currently has $19 Billion in cash. Compare that with Apple’s $30 Billion, who has a market capitalization that is almost 4 times larger.
Tesla has a debt ratio of .11 compared to .28 of Apple (A laymen’s term interpretation would be to say 10% of Tesla’s value is tied up in debt, while 30% of Apple is). This shows just how good Tesla is at managing their company budget.
Tesla is the only company producing EV’s at a profit. This fact makes it difficult to compete with them, as it would take billions in financial capital to put the infrastructure in place (BYD has a small profit margin but they are subsidized by their government).
Tesla has been recruiting some of the best engineers in the world, each and every year for the past decade. It’s like being an NFL football team and getting a top 3 draft pick, each and every year. After a while, it just isn’t fair for other teams because they can’t keep up with the talent level constantly coming in. This is where Tesla finds itself today, in 2025. Tesla also has the advantage of collaboration with the team at Space-X and X-Ai, which are both companies owned by Elon Musk and bursting with engineering talent.
My final set of thoughts can be summed up in 2 key take aways. First, Ron Barron is one of the most successful investors over the last 20 years. He has some very insightful thoughts in this 7 minute interview on CNBC. It’s well worth your time to digest what he says. Ron has an uncanny way of telling people what the future holds and then ending up correct, more often than not. Lastly, Tesla is a volatile investment and does have very large swings, both up and down, in the stock market. If you can buy and hold for 5 years or more, without being persuaded by what you see in the media, you will most likely be rewarded handsomely. However, if you are a person who craves something a bit more stable, one of our family favorites has always been Costco stock COST. Costco management is very savvy with managing the business and would be a great investment when the stock market gets a bit choppy, for those who prefer a more conservative investment allocation.
Do you like Tesla? Do you hate Tesla? Feel free to leave your comments below. We would love to hear your thoughts.
