Is Searching for “The Next Tesla” Pointless?

People have been trying to find the next Microsoft ever since Bill Gates became the richest man on the planet in 1995. Now, they’re looking for the next Tesla as Elon Musk sits atop the list of the world’s wealthiest people. Moving to America and founding a successful company does wonders for your wealth, and half of the top-ten wealthiest people on this planet founded four of the largest five American companies by market cap.

Those who search for the next Tesla want to think the next electric car success story will come from a company that’s yet to scale manufacturing which seems highly unlikely. What made the Tesla success story so incredible – and so risky – was that Elon Musk built his company from the ground up using first principles thinking. Contrast that to the approach other contenders take where they simply assemble components made by other firms. It seems more likely that challengers to Tesla will come from existing automakers who have the experience, supply networks, distribution networks, and dealerships already in place. And that’s exactly what’s been happening.

Three Types of Electric Vehicle Stocks

Let’s divide the electric vehicle space into three categories:

• Legacy automakers
• Pure-play EV companies that have scaled
• Pure-play EV companies on the cusp