The “3 U’s” to Tesla’s Big Future: Unknowns, Uniqueness, and Unbelievable Growth

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Tsai discussed The “3 U’s” to Tesla’s Big Future: Unknowns, Uniqueness, and Unbelievable Growth. Here’s an excerpt from the episode:

Christopher: But longer run, we’re modeling 17.5% percent right now in terms of profit margins. And we think that the revenue potential is gigantic, it’s still very much in the early stages. And that’s not just cars. We’re talking about electricity, you’re talking power storage and generation. And then, you have the software piece. And then, there’s a whole element of Zeckhauser in this because there’s so much optionality. And I don’t think you’re paying for that optionality today.

Tobias: What’s Zeckhauser?

Christopher: So, Richard Zeckhauser said that big returns come from the unknown, unique and unknowable, the three U’s. And in this case, there’s so many unknowns because of that optionality. All these different verticals that the company can go into. And then, they’re creating an ecosystem, similar to what Apple has done, where you’re getting an increasing lock-in of the customer base and you’re able to cross-sell. So, if you think about, you buy a car, what do you want? You want a charging station in your home, so you’ve got that. But now, you’re also generating electricity, which you can give back. There’s revenue associated with that. There’s revenue associated with charging. There’s revenue associated with other individuals who are not driving Tesla, who are charging increasingly on the Tesla infrastructure. So, there are all these verticals, there’s robotics, there’s insurance, which I think is a lot smaller than a lot of people think. But there are these areas that the company is going into, and there are a lot that we don’t know about. So, that’s the unknowable.

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