time machines—visiting one is a trip to 1985. These entrenched third-
party dealer networks, the limited ability to modify or enhance the
vehicle after it has left the factory, and an industry focus on moving
the steel off the lot have created a gulf between car companies and
consumers.
Tesla’s most revolutionary change to the auto industry is not its
electric engine—everyone is building those—but its proximity to the
customer. From Musk’s livestreamed product announcements, to their
owned dealerships, to the regular, over-the-air product updates, Tesla
understands that a $50,000–$100,000 purchase is the start of a
multiyear relationship with Tesla, not John Elway’s Claremont
Chrysler Dodge Jeep Ram. If Tesla can maintain quality customer
support in the face of its rapid growth, Tesla’s superior repeat
customer rates will become a static part of the story that enables
access to cheap capital, which will provide resources to enhance the
customer experience, increasing repeat purchases, and so on, and so
on.
Tesla trades now at nine times revenue vs. Ford and GM at less
than .5 times. In April 2017 Tesla surpassed Ford in market value
despite selling 80,000 cars in 2016 vs. Ford’s 6.7 million. Tesla has
returned to the public market for secondary offerings regularly since
its 2010 IPO, most recently raising $1.5 billion to fuel production of
the Model 3—despite never recording a profitable quarter.^18 It does so
because investors respond to Musk’s vision; they buy into his story.
This is a guy who says he’s going to put rockets into space,
revolutionize the car industry, and transform the power storage
industry. Oh, and build hypersonic trains on evenings and weekends.
What if you could go back and invest in Thomas Edison’s ideas? Well,
here’s your chance.