Tesla and the Temple

November 27th, 2017 Posted by Thought Tools 15 comments

Though I am not an expert on stock prices, least of all on the price of Tesla stock, I am going to make a prediction.  And with the passage of time, I’ll either pull out this Thought Tool and wave it proudly to remind you of what I wrote, or else I’ll eventually bury it and hope nobody remembers it.  Meanwhile, I’ll provide some information so you can make up your own mind.

What makes me write about Tesla stock is not only that at the start of 2017 it was about $200 a share and by mid-year it was nearly $400 (though it has now sunk back to about $300).  I am interested in it for a more fundamental reason. You see, even at $200 it made no sense to me.  Tesla’s market capitalization, the value the market places upon the company, $60 billion, is now about the same as General Motors or even a bit more. However, last year Tesla sold about 75,000 cars while General Motors sold about ten million!  Although Tesla took in about $7 billion in sales revenue, overall it lost over $600 million.  Meanwhile, good old GM took in over $150 billion in sales on which it made a profit of nearly $10 billion.  Yet, the price of General Motors stock has fluctuated between $35 and $45 this year.  Doesn’t something seem off?

In all fairness, I must tell you that a dear friend in Los Angeles recently took Susan and me for a drive in his Tesla.  I have owned some wonderful automobiles and have driven in many other impressive, cutting edge cars, but I was blown away.  The acceleration was more like a Lamborghini than like a Prius.  The technological virtuosity was overwhelming. The ‘cool-factor’ was off the scale.  Still, even with government subsidies (which won’t last forever) it remains a very expensive car.

Regardless, how can a company which loses money selling a handful of cars be worth more than a company that makes $10 billion selling millions of cars?  How can a stock that pays no dividend be worth about ten times more than a stock that has been paying a steady yield for decades?  One possible answer to these questions is the founder of Tesla, Elon Musk.  Perhaps investors believe that Musk can do to General Motors what Steve Jobs of Apple’s iPhone did to cell phone leader, Nokia, ten years ago.

In order to discover whether Elon Musk is a good enough explanation for Tesla’s valuation, we need to examine some ancient Jewish wisdom. 

At the start of the sixth chapter of I Kings, Solomon begins to build the temple.

And it was…in the fourth year of Solomon’s reign over Israel…
he began to build the house of the Lord. 
(I Kings 6:1)

At the end of chapter seven, Solomon completes it.

And so was ended all the work that king Solomon made for the house of the Lord…
(I Kings 7:51)

It would have been a rather straightforward two-chapter-long construction story were it not for two anomalies; two incongruous insertions that interrupt the construction narrative.

(i)  God warns that He will only inhabit this Temple and reside among the people of Israel if they faithfully adhere to His Commandments (I Kings 6: 11-13)

(ii)  The Temple construction story is interrupted by twelve verses describing the construction of Solomon’s personal residence in terms that sound very similar to the building of the Temple. (I Kings 7:1-12)

These two interruptions serve to teach two invaluable lessons for each of us.

Ancient Jewish wisdom explains that every successful person and every successful enterprise needs a ‘story’.  It needs a purpose for existing outside of itself.  One of the questions routinely asked of presidential candidates is, “Why do you want to become president?”  Back in 1979, Ted Kennedy sank his candidacy by being quite incapable of answering that question.  Ikea, the Swedish furniture giant doesn’t say that its purpose is to give thousands of people jobs or to provide economical quality furniture to millions.  Instead, its mission is, “To create a better everyday life for the many people.”  God reminds Solomon that the purpose of the Temple is not just to build a gloriously impressive structure.  The ‘story’ behind the construction is for God to reside among the people. 

The second lesson is that the builder must feel comfortably linked to his creation.  Solomon didn’t live on a houseboat on the Sea of Galilee or in a cliff dwelling in the Negev Desert.  He didn’t build his own home of experimental mud or imported bamboo.  He focused on building a Temple of wood, stone, and metals.  His home was also built of the same substances, close to the Temple.  The work of the Temple progressed well partially because Solomon was also building his own home.  He was integrated with his projects.

Elon Musk and Tesla certainly have a story.  The story is the vision of one day owning the electrical vehicle industry, the industry that builds the batteries that drive those vehicles and the photo-voltaic cells that charge those batteries.  A comprehensive electrical solution to mankind’s need for transport. Nobody knows if it’s a plausible story or a fairy tale.

But how about the second lesson?  The creator must feel comfortably linked to his creation.  Here perhaps Elon Musk doesn’t cut it.  He’s not focused exclusively on Tesla.  He’s building space rockets.  He’s building artificial intelligence machines and robots.  He’s building a tunnel boring company.  And he personally drives (and crashes) many types of cars other than Teslas.  Furthermore, he is scared of automation.

Musk believes (and has stated) that the threat from mechanical robots gone wild is so real that only strict government regulation can save humanity from our own creations.  Yet, this man is building a car that is equipped to drive itself.  Even now, Elon Musk wants you to take your hands off the steering wheel of your new Tesla as you barrel down the freeway.  This is not a man comfortably integrated with his own creation.

So, my personal prediction, for what it’s worth, is that without Elon Musk, Tesla fundamentals do not support the current valuation of the company.  And I suspect that Elon Musk is neither wise enough nor integrated enough to carry Tesla safely and profitably into the future.  Obviously many very smart investors disagree with my view which is why in the final analysis, all must decide for themselves.

Yet, the timeless truths of ancient Jewish wisdom have stood the test of time, so, though I wish Tesla no harm, I think that in time to come, I may be brandishing this Thought Tool and saying, “Remember, you heard it here first.”

Scripture is not a history book; it is a blueprint for life. It shouldn’t surprise you that economic and business principles jump off the pages any more than it should surprise you that there are messages for organizing society or structuring family life. 

 

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15 comments

The ideologies of Elan hit home for me yet notice he seems like an athiest of sorts. And why is he hanging out with dress wearing muslims all the time Rabbi.

Im really big into new energy and semiconductor technology. The best energy source even better then nuclear is solar hands down, now if we can solve the battery problem we will all have more economic utility.

I’m really not sure why such an obsticle seems to be in the path of progress. Recall silicone dioxide is litterally melted sand, im sure if we try to melt more sand it will work just like the last gazzilion times, why not melt more sand? Just like Rand Paul why not try freedom for a change??? It seems Trump supports big oil, yet for some reason it also seems that he secretly would love us to be on the leading edge of new energy technology. We must solve the torque problem with batteries then its game over!!!

Happi Holi-days Rabbi!!! God Bless You!!!

Rabbi Daniel Lapin says:

Thanks for writing Toby–
actually the one thing that electrical motors do well is deliver a completely smooth torque curve. Internal combustion engines develop maximum torque well up in their RPM range which is why they need gearboxes. I don’t think there is any transmission on a Tesla. Just electrical motors that develop full torque upon start up and also at max RPM. I do believe myself that nuclear energy is far more practicable than solar–for the time being anyway. But the terrible Fukushima tragedy spooked the whole world.
Cordially
RDL

Carl from SC says:

Rabbi, your opinion on Thorium (LFTR) please vs Uranium
Thx

Rabbi Daniel Lapin says:

Dear Carl—
In my view we are a long way from practical thorium reactors if we ever get there.
Cordially
RDL

Don Gher says:

Good piece, my friend. I, too, have marveled at Telsa’s stock price as investors have bet on the man who seems to be the real life Tony Stark (aka Iron Man). It is a bit reminiscent of the 1999-2000 period of any stock with a dot com connection soared. While Solomon said, “All the rivers run into the sea; yet the sea is not full” but Warren Buffett said, “Only when the tide goes out do you discover who’s been swimming naked.” So, while the sea may not be full, the tide will eventually go out and we will see if Tesla, and Musk, is swimming naked.

Rabbi Daniel Lapin says:

Dear Don–
you’re the one person I would have wanted to run this piece by prior to publication as nobody understands this topic better than you. We need you to be doing more writing yourself!
Cordially
RDL

Teena says:

Rabbi; Oh my. Mr. Musk is uncomfortable with his own mortality. It appears, he is questioning Who the Creator is. It is ultimately destructive behavior if he doesn’t find an answer. He’s confident because, like Dr. Frankenstein, he KNOWS he has the ability to create a powerful machine. Yet he’s in fear because he (fore) tells us that it can go terribly wrong. Do you think he needs to be introduced to The Living and Loving Creator of the Universe in order to have a positive purpose? Solomon, wisest man ever, ultimately had everything taken away from him.

Rabbi Daniel Lapin says:

Dear Teena–
Intelligence or IQ are nowhere near the same thing as wisdom. The former is far easier to obtain if you win the ovarian lottery and have smart parents. Wisdom can only be gained by study and fear of God.
Cordially
RDL

celesta says:

Rabbi:

2 words for what I think about Elon Musk and Tesla: Hidden Agenda. Or maybe Ulterior Motive. Or maybe Cain’s Mark. Or maybe Tubal Cain. I guess that’s 8 words now.

Rabbi Lapin, a good few years ago you put out a very interesting Thought Tool that told about how the SAND (and you used the sand in the Silicon Valley which is being used to rapidly increase computer tech as an example) was somehow equated to unrighteousness using Ancient Jewish Wisdom. Can you expound on that any more, in light of man’s rendezvous with destruction as he hurtles himself faster and faster into a godless existence chock full of techno-gone-wild? And I guess his faster and faster hurtling parallels the ever-so-smooth, hands-off (and brains-off) ride he takes in his brand spanking new TESLA, of course. 🙂 or maybe 🙁

Rabbi Daniel Lapin says:

Dear Celesta–
The sand reference (in the blessing to Zevulun) was a prophetic reference to a time in history (now) when vast fortunes would be made from sand (silicon). I wrote about it in the seventh chapter of our book Thou Shall Prosper-10 Commandments for making money.
Cordially
RDL

Brian F. Tucker says:

Dear Rabbi,
I agree with Teena. When I was in the navy we had a lot of college grads who thought they were experts about every thing. We called them educated idiots. We had one fellow discharged from boot camp because he could not march. He didn’t seem to know his left from his right. No joke that really happend.

Brian

Rabbi Daniel Lapin says:

Dear Brian—
William F Buckley famously said that he’d rather be governed by the first 300 names in the Boston telephone directory (remember what those were?) than by the faculty of Harvard. He was of course right. Whenever you hear someone saying something incredibly stupid you can safely bet they have an advanced academic degree. The more time you spend on an American university campus, the less you know about how the world REALLY works!
Cordially
RDL

James says:

Regrettably I must return to this prophetic Thought Tool much after the fact, due to ailing eyes. But its insight is remarkable. Like you, dear Rabbi, I marvel at folks who seem comfortable with their insides not matching their outsides: i.e., being neither intellectually or morally consistent. Many propound standards for our world that they themselves are unwilling to meet. The world seems full of modern prophets whose hemispheres do not connect or whose brains click entirely out of sync with the Creator and His Creation. Your comments remind me of a book I own about leaders, movers and shakers. In its title are the words ‘Humbuggery’ and ‘Manipulation.’ Another great position for psychopaths, so some say, is upper management. God forbid!

Timothy Jones says:

Musk, borrowed 1.16 billion, bought Tesla stock to increase the price then sold off much of what he bought. It’s pension plans, 401ks and the like that will be hurt badly when reality comes knocking at Tesla door.

Rabbi Daniel Lapin says:

Haven’t followed that part of the story you cite, Timothy,
Thanks
RDL

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