Every now and then, rumors float on the market about the upcoming demise or, alternatively, world domination by Tesla. A few months ago I penned a rough analysis of why I believe – financial turmoil notwithstanding – that TSLA will always by supported by Wall St., which I would now like to expand.
This chart represents the value chain of the Automotive Industry in Italy (data in billion euros per year: sources in this post).
Once the transition will be completed, therefore, about 50 billion euros per year will be missing.
Moreover, segments may not belong to the same player category: for example fuel is now sold by oil companies, while electricity is sold by utilities (remember, the majority of recharge an EV is done at night in your home); and the oil industry may play a diminished role also in the generation of said electricity, given the aggressive de-carbonization programs announced by most utilities.
Or, just to make another example, we shouldn’t assume that insurance policies will continue to be sold as they are now, and we could go on.
Summing it up, the transition to electric mobility could set in motion an economic tectonic plate worth between 30 and 70 billion euros per year in Italy alone, a country which knows better than most that earthquakes cause destruction but also create opportunity.
Next consider that Italy represents about 2.4% of the global car market, driving the estimate for the global impact of electrification to about $2,900B or about 3,5% of the world’s GDP !
In the frame, Tesla is the catalyst that’s setting in motion this cyclopic transformation, not so far from the transformation imposed by Amazon on the global 28,000 billion global retail industry.
Obviously it will take time 30, 40, 50 years, offering new players (like OneWedge for example) the opportunity to carve their own niches taking advantage of these huge movements. So, no, Tesla will NOT own it all (like Amazon doesn’t) but I believe that without their constant prodding the industry loses its key stimulus to evolve: the drive to survive.
This is what Wall St. knows better than anyone else, and this is why they will never cease to support TSLA.