Once people get behind the wheel of an electric car and can drive it in a relaxed manner in their everyday routine, they tend to buy them. Driving is believing. That should tell you something. Just look at the owner satisfaction ratings, whether for Tesla, the Chevy Volt or for that matter the iPhone.
3. Underestimating sales projections
Tesla has guided to 21,000 cars this year and 45,000 cars per year "over time." Most Wall Street estimates show some sort of ramp from 21,000 to 45,000 cars over a whole bunch of years.
These are totally wrong.
The 2013 number may not exceed 30,000 cars, but five years from now Tesla would be capable of selling 200,000 to 450,000 cars per year. By 2017, Tesla will have a car that will cost less than $40,000 in inflation-adjusted dollars.
In the U.S., 16 million cars are sold every year, and 80 million worldwide. If we were talking about smartphones you should see over 50% of these being the new technology well within a decade.
By 2018, half of all drivers will have experienced driving an electric car. Almost all of them will want to buy one. Tesla will, in turn, get some share of these. At 1% of the worldwide car market it would be 800,000 cars per year. That's the approximate level Tesla should end up longer-term.
How many Wall Street analyst models have Tesla selling 800,000 cars per year? I haven't seen one yet.
Here is one thought experiment: Tesla says it can sell 15,000 cars per year in the U.S. Actually, it is off by a fair bit there, too. Tesla can sell those 15,000 cars per year in the 80-mile corridor between San Francisco and San Jose, Calif. At the current sales rate, it is probably doing it already.
So what could go wrong with my ultra-bull Tesla thesis?
There are obviously all sorts of execution risks, all the way to a California earthquake. However, the big one is simple: competition. Every other car maker will be launching very attractive electric cars between 2013 and 2017.
Contrary to rumor, the big car makers are not too stupid. They are watching, and some of them are feeling the pain from Tesla's competitive heat in Silicon Valley sales.
The big car makers may have been off to a slow start, but that will not last forever. In a few short years -- starting with
and GM/Cadillac -- Tesla will eventually end up with significant premium electric car competition. One decade from now, at least 50% of all new cars sold will be electric -- possibly 70%. Almost per definition, the other car makers -- from Ford to VW to Toyota and all the rest -- will have numerous electric cars on the road by then, starting under $20,000.
Here is the bottom line: If you are short Tesla stock and you have not spent any meaningful time driving an electric car (Tesla or otherwise), and you based your observations on electric car adoption outside Silicon Valley, and you think that electric cars in general aren't going to dominate within the decade -- I'm sorry, but then you're an idiot.
Full disclosure: I have spent over 25,000 miles driving every single electric car in the market -- I think -- except for the
. Based on this, I feel like I'm qualified to invest in Apple stock based on being the first guy in line to have bought the iPhone on June 29, 2007.
At the time of publication the author was long AAPL..
This article was written by an independent contributor, separate from TheStreet's regular news coverage.