Blain’s Morning Porridge – August 23rd 2021: Elon Musk’s Great Plan Revealed
“One Gazillion Dollars….”
This morning: Elon Musk’s robot left us all giggling over the weekend, but may just prove to be the stunt that breaks Tesla. The suspension of disbelief that’s fuelled unicorn tech valuations in the face of reality these past many years feels like its breaking-down as reality bites.
So…. Now we know what Elon Musk has really been up to… It’s utterly brilliant… Distracting and misleading us, hiding his utterly evil plan in plain sight, he’s built up the world’s most dangerous AI-driven Robotics company, a means of controlling the whole planet, and now he about to launch his legions of killer ‘bots upon us with promises they can’t travel faster than 5 mph.
M’wa-haha.. As global domination plans go, its all coming together rather nicely.
Silly us. Here we were thing thinking Tesla was just an overpriced car company, SpaceX launched rockets, Star-Link was a broadband provider, his mind-machine link devices were fascinating but irrelevant, and the brand new all-singing, all-dancing Tesla Bot will relieve us of the tedium of physical work.
I can see it now. Armies of Elon-Bots flying in on Space X rockets directed by Musk’s brain-waves carried instantaneously around the globe by Starlink, and all facilitated by Telsa’s unmatched automated driving AI, all of which will crush mankind beneath its plastic heal. (If I could work out the role of hyperloop-tunnel digging Boring-Company in this – for it surely does – then I might fully comprehend how Musk’s domination of the planet is nearly complete.) It reads like a Matrix reboot.
James Bond or Dr Evil? The latter. It’s not real. None of it is.
The secret sauce of Musk’s success has always been simple confabulation: Find a theme, magnify it, innovate someone else’s invention, surround it in a constellation of grandiose promises and undeliverable dates, and deliver an almost empty cup while loudly declaring the next one will be full. All the time declaring himself to be the smartest, most insightful being on the planet. He must be. He’s the second richest man on the planet.
Give Elon Musk this – he might be the greatest showman since PT Barnum.
Electric cars were replaced by more efficient internal combustion engines back in the 1900s. Hyperloops were originally conceived by Victorian engineers. The first communication satellites were orbiting the Earth in the 1960s – Starlink was predicted by Sci-fi author Arthur C Clarke in 1945. Rockets flew us to the moon 50 years ago.
When it comes to delivery…. The best equipped university engineers have spent decades trying to replicate the fine control of human muscles and they are nowhere close trying to mimic our range of movement with the servos, sensors and hefty batteries that power a Tesla’s functionality. Human looking robots exist only in Sci-films like Bladerunner. If its ever cracked it will be done by bio-engineers and geneticists.. not car salesmen.
Musk doesn’t even present Tesla as a car company anymore. It’s an AI powerhouse, and leader of the gazillion dollar Automous Driving sector. That’s probably a smart move. There are plenty of Teslas on the streets these days – and guess what? They look like cars. They do what cars do. And everyone is making electric cars now – today as good as Teslas. Tomorrow? Better, cheaper and all doing what cars do.
You might almost think the undeliverable promise of a Tesla-bot (actually a bloke dressed up in a spandex suit and some bad daddy-dancing moves), was a deliberate distraction from the current investigations into automated driving accidents, and the number of journalists chasing down how Musk has misled investors, juiced the fanboys, and repeatedly lied about the functionality and imminent delivery of Full Service Driving (FSD) ever since someone else first had the idea and Musk saw it as salvation for his near-bankrupt Tesla.
The reality for Tesla, and its flatlining stock price, is eventually any big lie or undeliverable promises, are uncovered. The financial logic behind the attractions of autonomous driving according to Musk is simple – if you can persuade people to pay for something then how much can you charge them? Its incredible how many Tesla owners paid over full $10k for FSD software that has never been anywhere ready, or now pay $200 per month for the service – that still isn’t anywhere ready. Tesla is currently at Level 2 autonomous driving which means drivers remain fully engaged at all times – which is driving. Plain and simple.
Must has been promising FSD Jam tomorrow for years and is nowhere close to delivering a level 5 experience. He’s discovering that no matter how many giga-flops of data the integrated Tesla on-board systems and date collecting computers can process, the issue of how to control the position of a moving car relative to other fixed and moving bodies is anything but simple. Engineers and computer geeks understand that…
Financial types don’t. The Tesla fanboys lap it up. They sincerely believe that if Musk says it can be done, it will. Once he gets FSD sorted (tomorrow – apparently) then Autonomous driving will be worth a multiple of the actual cars… $2400 per annum of guaranteed revenue stream for the life of a car. Which is a mighty big assumption to make.
For Autonomous driving to work every car will have to have it. If not, then how would the AI cope with predicting how a single rogue human driver may act? Or how cyclists, scooterists or pedestrians may behave? Or what if other car makers decide to make their AI free? The revenue streams are not that secure or predictable – which is the key risk when buying any Asset Backed asset.
However, it’s not just Musk’s promises that underlies the success of Tesla and a host of other Tech related investments. It’s all about timing and the behaviour of crowds. Barnum knew that. So does Elon.
We are acutely aware the pace of change in society has never been so rapid. The internet has absolutely changed the way we live, inter-react and do business. In such a rapidly evolving environment its easy to sell snake-oil get rich quick schemes. We forget the basic rule of evolution – 99% of mutations/new species/new niches won’t last or succeed. When we see internet based commerce take off, when we are promised the future is all about AI, Robotics, Bio-Engineering, 3-D printing… whatever.. no one wants to miss it.
And that’s the real trick of Elon Musk, Cathie Wood, Soft-Bank, the Crypto-shysters and the rest. They’ve been presenting a view of the future where successful new tech companies, new business sectors and even new money can’t fail to make early adopters phenomenally rich. It’s a difficult story to refute. Who doesn’t want to get wealthy, or as the crypto-sharks remins us: “who wants to stay poor?”
But real investment success is not about falling for the brightly coloured and excellent presentations of the next tech unicorn or the crypto that’s going to replace everything. Investment success is about hard work, understanding reality and deep diving every aspect of any new deal to understand the truths behind the bunting.
The reality for Tesla is going to be fascinating. Good cars. But under enormous pressure from competition and the threat the bubble bursts as the long-promised future income streams that underly the future prosperity of the firm prove illusory. Tesla’s top to bottom integrated AI and data from years of driving is certainly worth something – but enough to justify its current stock price? At a time when its sales into China are stalling, it faces the same supply chain problems as other autos, and it’s under the regulatory cosh?
Electric cars may be about to get a massive boost. There is a fascinating article in the Torygraph this morning: “The radical potential of nuclear fusion exposes the folly of our net zero deadline”. It suggests the unlimited power of fusion may no longer be as long away as its been – that in 15 years we may be able to actually power electric vehicles! Read the piece – it’s fascinating.
Softbank and Ark are even more interesting from the snake-oil perspective. They’ve had their successes – selling on their tech investments to the greater fools at the top of the market. What happens when they become the greater fool – they guy who paid the top of the market for the company that’s future isn’t actually as wonderful as the prospectus promised? It feels like it’s happening.
There are certainly tech diamonds out there still to be found. But all that glitters is not gold.
Five Things to Read This Morning
Out of time, and back to the day job..
Strategist – Shard Capital