and now I'm very bullish on the stock and the company. I think the stock could be over $700 in 5 years or less. Having spent nearly a decade in the auto business I looked at Tesla with some skepticism. Now I have moved into a different industry and am trying to be less biased. Here are some rambling thoughts on Tesla.

Here is what I was wrong on which I posted back in 2016. The post didn't age well.

What are the second owners of Teslas willing to pay for their used Teslas?
This has been a question I have wondered about ever since a few years ago when Elon Musk guaranteed residual values on the Model S. Should a Model S hold is value as well as a Mercedes, BMW or Audi like Elon thought they should? Time will tell.

I didn't believe that a Tesla, which competes with other luxury sedans, could have higher residual values than other brands.

This is one reason why Tesla Motors, with a three-vehicle lineup that boasts the most miles per charge among all current EVs, boasts excellent resale values. The top EV in this regard is the popular Tesla Model 3, with a 310-mile range in its Long Range iteration, It’s expected to retain 64.3% of its original worth after three years. That’s within striking distance of the model KBB cites as having the best three-year trade in value among all vehicles, the Toyota Tacoma pickup truck at 69.4%.

Here are other reasons why Tesla continues to distance themselves from the mainstream auto manufactures that are just starting to produce EVs.

1) Tesla is winning on range. A few months ago Tesla acquired Maxwell Technologies, which had patented a different way to build the battery that will add 15% to the current range capable by Tesla and provided a "roadmap to double the range."

2) Tesla will continue to win the battery cost battle. Right now they have a partnership with Panasonic to build the batteries at the Gigafactory. With the acquisition of Maxwell, Tesla could sever the relationship with Panasonic and make their own batteries. Not only will the cost of the batteries decrease and range increase, Tesla will be vertically integrated and not have to share profit with Panasonic. This is a very big deal and you can look into the acquisition of Maxwell if you are interested. The mainstream media didn't talk about the acquisition much.

3) Tesla will win on the Capacitor front. This deserves a post all of it's own, but a capacitor is a parallel technology to the lithium ion battery technology, not a replacement of it. Both are meant to charge and discharge energy, but a capacitor can charge very quickly and dump power quickly. So you could see a situation in the future where Tesla could have both capacitors and Lithium batteries in their cars. The capacitors would be used for acceleration and regeneration braking, and the lithium ion batteries would be there for long distance use. Maxwell technologies was also one of the worlds leaders on this technology. So Tesla got a two-for-one with the acquisition.

4) AI and miles recorded. The lifeblood of AI is data. Tesla is so far a head of the competition in regards to miles recorded that it's laughable. Tesla has over a billion miles of data, the next closest company is Google, with over a million. I used to work for a Cadillac Dealership and was very impressed with Cadillacs Supercruise, but it can't possibly keep up to the constant updates and improvements Tesla can make to autopilot because of the massive amount of data Tesla feeds its AI. Tesla has a chip as well as proprietary software they use for the AI. No other major auto manufacture has taken this approach so Tesla will continue to dominate in the self driving area for the foreseeable future.

5) Over the air updates. Have you ever purchased a car that wasn't a Tesla that could improve with time without you paying more money to boost performance or fuel economy?

6) Other features exclusive to Tesla: Summon feature, Sentry mode. Oh and the audio sound is great because it's basically an unbranded Bang & Olufson. Teslas cheapest cars come with sound systems that far surpass nearly every other car. Bose systems, which is what GM uses are terrible. I heard the saying from audio guys long ago, "No Highs, no lows, must be Bose"



7) So far Tesla hasn't had to spend any money advertising. Social media and the buzz that surrounds the product is so strong that advertising hasn't been needed so far. Look at how much buzz the Cybertruck created. I'm convinced that in a few years the data will show that the Cybertruck is eating away at Ford, GM and Ram, all without paying for advertising. In case you are curious, Ford, GM and Ram all pay around 800 to 1100 in advertising per truck that sells.

8) Residual values, which is was the whole point of the post in the beginning. Consumers have long felt that 100K to 200K was the lifespan of a car. Now Tesla is closing in on producing batteries that can be used for a million miles. A used Tesla with 100K miles will be viewed more favorably than an ICE engine with 100K miles because you won't be concerned about gaskets, timing chains, turbo chargers or any of the other hundred of parts that people start to worry about on a high mileage internal combustion engine. To be fair, the battery will be very expensive to replace on an EV, but the overall cost of ownership in terms of maintenance will be dramatically cheaper. This is a big reason why an EV will have a higher residual value than a comparable ICE vehicle.

The bottom line is that Tesla products, which are already well loved by consumers are going to improve and the competition as of writing this, isn't catching up. In all meaningful areas of EVs, Tesla continues to out-innovate other auto manufactures.