Tesla won't fail for one simple reason

August 31st, 2018

Name a time in history when a company with an industry-defining product, and huge demand, failed under the weight of cash flow, or regulation.

I haven't been able to find any examples. Despite that, claims of Tesla’s impending demise are prolific. The web is filled with:

1) Anecdotal claims that the demand isn't real, despite lots of evidence to the contrary.

2) Subjective opinions that none of the Tesla products are industry-defining. NOTE: when media headlines use the phrase Tesla Killer for any competing electric vehicle, it's fair to say Tesla has defined the industry.

3) Examples of large, old businesses that have gone bankrupt. There's a mountain of those. Did they have an industry-defining product with huge demand? If they did, it wasn't in the decade before they went bankrupt.

4) Guarantees that regardless of Tesla objectively looking good, Elon is surely going to bone it up.

5) "There's a first time for everything." That's a great attitude if you're trying to win the lottery. Do you want to use that same philosophy for your investment strategy?

All this unfounded Tesla hate reminds me of the launch of the original iPhone.

Right after the Steve Jobs keynote, Microsoft's then CEO, Steve Ballmer, [in]famously laughed at its relatively high unsubsidized price of $600. It was so unreasonable, Ballmer claimed, he didn't see any way it could succeed. Then the iPhone changed the world.

Regardless of the questionable motivations behind wanting a company that employs 40,000 people to fail, the lesson we continue to learn is: never bet against a good product.