Wednesday, September 28, 2016

AMMA Private Equity Look At The Untold Value Of Tesla Motors Inc

True Innovators harness technology and create solutions to real issues, which is why AMMA Private Equity focus exclusively on raising capital for start-up companies in the emerging tech sector: a sector where real value and growth is being created.

Extraordinary industry leaders like Google may have almost peaked in their value. They have their fingers in numerous pies already, and while they continue to innovate, it is unlikely that investing in Googles Alphabet (NASDAQ: , GOOGL) would provide the type of returns it did to investors in its earlier days. While Google has already seen tremendous growth since it first listed, an up and coming company like Tesla Motors Inc could be a better example of an investment that could return untold potential growth.
Tesla CEO and Visionary, Elon Musk has been very clear from the start that:

“The overarching purpose of Tesla Motors, and the reason I am funding the company is to help expedite the move from a mine-and-burn hydrocarbon economy toward a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.”

In short, the ‘Master Plan’ back in 2007 was this:

1. Build sports car
2. Use that money to build an affordable car
3. Use that money to build an even more affordable car
4. While doing the above, also provide zero emission electric power generation options

When Tesla went public in 2010, it became the first American car company to do so since Ford Motors in 1956. Since its successful IPO, the Tesla stock price has soared, and the company continues to wow with sleek new designs, improved models, and smart new features. All the while capturing the imaginations of the receptive public.

Despite being synonymous with Tesla these days, many may not realise that Elon Musk did not originally found Tesla. Martin Eberhard and Marc Tarpenning were the original founders of Tesla in July 2003, and these two kept the fledgling auto company afloat until Musk joined the board and led a $7.5 million financing round, followed by another $13 million Venture Capital raised in February 2005. Co-led by Musk, they went on to raise another $40 million in 2007 and Musk was eventually appointed CEO in 2008. By this time Musk had invested $70 million of his funds into Tesla Motors.

Tesla continued to cruise along until they hit a significant speed bump in 2013. Three Model S sedans caught fire after being involved in accidents. Though no one was seriously injured and the safety issues were quickly addressed — public perception and stock values took a big hit. After the third vehicle fire, Tesla’s stock price dropped more than 20%.

Fast forward to 2016, and considering their ultimate goal of accelerating the world’s transition to sustainable transport and energy, this year has arguably been the most significant for Tesla Motors Inc.

Due to the overwhelming number of unseen sight reservations for the soon-to-be-released and more affordable Model 3, it is blindingly obvious to the motor industry that there is a massive demand for Tesla vehicles, and others like it. Big manufacturers are doing their best to break into the Tesla dominated space including BMW, Nissan, Volkswagen and even luxury brands Mercedes and Jaguar.

Tesla stays well ahead of the game and have already commenced deliveries of their stationary battery products, opened their lithium-ion battery plant and announced plans to acquire SolarCity to merge it with Tesla Energy. Not to forget the second part of the ‘Master Plan,' which includes a future involving automobile business expansion, integrated solar and storage products, autonomy and ride sharing.

In a nutshell, the second part of the master plan for Tesla goes a bit like this:
1. Create stunning solar roofs with seamlessly integrated battery storage
2. Expand the electric vehicle product line to address all major segments
3. Develop a self-driving capability that is 10X safer than manual via massive fleet learning
4. Enable your car to make money for you when you aren't using it

Sounds like something one may want to be a part of! The importance and value of a brilliant visionary leader like Elon Musk should never be underestimated, and the beauty of his innovative and entrepreneurial background means that Tesla Motors Inc wasn’t created to compete with other car manufacturers. Tesla could almost be considered as much a research firm as a car company – interestingly over 60% of their employees are involved in software engineering, compared to 2% for the average automobile company. Some say that Tesla vehicles are a huge data gathering experiment designed to extract detailed information about customer habits and preferences. Which would put Tesla at a huge long-term advantage over other car companies: an advantage that might eventually pay off very handsomely.

Tesla also plans to become one of the largest global manufacturers of lithium-ion batteries. Tesla’s all-electric ethos makes the company one of the largest consumers of lithium-ion batteries in the world and it also plans to be the world’s biggest producer of same. Some five times bigger than the next-biggest player! By 2029 Tesla’s global fleet is estimated to contain a stored energy capacity of 410-gigawatt hours -  equal to the entire daily consumption of electricity in the nation of Mexico.
And in addition to everything else, Tesla Motors Inc is hands-down the most customer-focused auto manufacturer of them all, with the company’s direct sales model designed to maximize customer interaction and feedback. Tesla constantly innovates to improve their customer experience.

As Tesla becomes a household name and continues to impress with their constant innovations, it seems that the sky is the limit – literally – with Elon Musk at their helm. Undeniably another tech company was poised to do extraordinary things in the future, and another reason AMMA Private Equity continues to support companies in this sector.

AMMA Private Equity is a boutique private equity company based in Australia. They exclusively connect tech start-up businesses with an extensive Accountant network to raise capital.

*Please note that nothing in this article should be construed as constituting financial advice. Professional advice (legal, financial, industry or any other relevant professional advice whatsoever) should be obtained before applying, using, adopting or relying upon the information or content contained in this article. The information or content is not intended to be nor should it be relied upon as a substitute for legal or other professional advice. Please seek professional advice before acting or relying on any of the content.

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