Tesla Is Driving the Car Industry to Extinction

Traditional car companies are on their way to oblivion. Some will go slowly, others quickly. Whatever the speed, these companies are finished.

Ford is toast. Chrysler is toast. Many European carmakers are toast. Some Japanese carmakers — also toast.

By “toast,” I mean that these companies are on their way to oblivion. Some will go slowly, others quickly. Whatever the speed, these companies are finished, and you should stay away.

And the reason you should stay away is because I believe that the car industry is about to experience an “iPhone moment.” Here’s what I mean…

It’s so long ago now that no one can even remember what the state of the cellphone industry was back before the iPhone came out.

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Here’s what it looked like pre-iPhone: Nokia and BlackBerry phones dominated sales. In terms of what a phone did, they were rudimentary. You could use your phone to call someone. With BlackBerry, you had a messaging system too.

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And then on June 29, 2007, Apple started selling the iPhone.

Nokia and BlackBerry phones stopped selling slowly at first, and then their market shares cratered. The companies’ stocks plateaued and then crashed, and no one even thinks to buy one of their phones today.

The car industry is going to experience the same thing, where one company’s products are going to completely and utterly transform the market. All hell will break loose, not just for car companies, but also for auto parts companies and stores, car dealers, and the entire chain of businesses that revolve around gasoline-based mechanical cars. And this moment is coming soon…

The Model 3 Moment

The event that’s going to transform the car market the way the market for smartphones was transformed … is the coming release of the Tesla Model 3.

I’ve told you in previous articles that the Model 3, an electric self-driving car, is going to be a product that breaks new ground for the car market. And what I mean by breaking new ground is that it’s going to radically alter the cost of owning a car.

Please note my phrasing: the cost of owning a car. That’s different than the cost of buying a car.

You see, the cost of a gasoline-powered mechanical car goes beyond the price you pay when you buy it. You have to get the oil changed every 3,000 miles. That costs $20, and you’ll do that five times a year for $100 total. You’ll need a tune-up every 10,000 miles, and that’ll cost $250. Replacing brake and transmission fluids … another few hundred. Put it all together, and you spend $1,000 to $2,000 on your gasoline-powered car every year.

Then there’s the cost of gasoline, which you have to pump into your car week in and week out. Over five or 10 years, you’ll spend another $10,000 to $20,000 to use your car.

Now, one reason for the extra costs is because your gas car engine transmission has over 1,000 moving parts. Contrast that to an electric vehicle (EV) transmission like the one in the Model 3, which has just three moving parts.

Yes … three! That’s a huge advantage in two ways that tie into why I believe the car industry is ready to be massively disrupted soon.

First, it’s cheaper to build an EV transmission, which means an EV carmaker is going to be more profitable than a traditional carmaker.

Second, the cost of maintaining an EV is lower too because of the fact that their transmissions have so few parts.

And you don’t need to take my word for it. Analysts at UBS, a major Wall Street investment firm, released a research report that laid this out in black and white. Their research shows that General Motors’ Bolt EV was $4,600 cheaper to put together than what they first estimated. GM loses money on these cars now because it is still scaling to build EV cars in big quantities. When production gets up to scale, UBS said it’ll be even cheaper to make these cars … and more profitable.

And UBS’ research on Tesla shows that with versions of the Model 3 that have extra features, Tesla is expected to make a profit. I can tell you that most people in the car industry will be stunned to see this. The stock market, however, gets it … which is why you’ve seen Tesla’s stock soar while the stocks of most carmakers slump, the stocks of most car dealers who deal in gas cars slump and auto parts companies’ stocks slump. Here’s the final kicker: UBS raised its EV sales forecast by 50% — 50%! — for 2025 as a result.

Now, I’ve been telling you about the coming bedlam in the car market since March, when I warned you to stay away from these stocks. That’s been good advice, as the stocks of most carmakers, auto parts companies and auto dealers are down since then … in some cases by double digits. I’ve also been telling you about a secret group of companies in the electricity industry that are going to be massive beneficiaries of this coming shift to EVs … and last week, I showed the best-positioned company to readers of my new service, True Momentum.

Regards,

Paul Mampilly
Editor, Profits Unlimited

P.S. For the majority of my career, I worked with some of the wealthiest men and women on the planet … growing their money at a rate that would later earn my fund a “World’s Best” ranking from Barron’s. But I left Wall Street a few years ago because I had a desire to help Main Street Americans make more money than they ever dreamed possible. And I’ve been so inspired by the success my readers have been reporting that I decided to take things a step further and share my True Momentum strategy. Click here to find out why this aggressive strategy gives you the chance to double your money over and over again.

  • glen thompson

    You talk as though Tesla has exclusive rights to these new cars. Don’t you think Ford, General Motors and ogthers are already following suit? You argument is silly.

  • joe4liberty

    is this guy serious??? first let me disclose that I drive an EV (2012 Chevy Volt). With that said, you can stop reading when you see that he wrote that an EV has “three moving parts” – Haaaa Haaaa… apparently the cars that he’s looking at have no wheels. for a car with four wheels there are four moving parts, and that is only the wheels, let’s not look at the axle with their u-joints, etc… etc… etc… Now it is true that an electric motor has less wear and tear than a Internal Combustion Engine vehicle, to make a statement such as he made makes him woefully unprepared to discuss the topic. As such, the author completely discredits himself befiore he even gets going with his argument.

    But what is most humorious is the assumption that the EV movement will be overtaking the ICE vehicle industry “And this moment is coming soon…” I suppose that depends on your definition of “soon.” As one who drives an EV, I can assure that two things have to happen before consumers will be willing to hand over their car keys to their ICE vehicles. 1) battery range must hit 500+ miles on a single charge, and 2) battery charge time must be under 15 minutes. We are a Loooooong way from reaching either of these goals. I believe that battery technology is advancing at a rate where it may be possible within the next two decades, but I would not call that “soon.”

    Next let’s take on the issue of false sense that EV drivers are somehow “saving the world” with their vehicles, and the flat out lie that Nissan spreads with their “Leaf” in claiming that it is “Zero Emission.” I had a bumper sticker made for my Volt which reads “POWERED BY COAL – Electric cars are NOT ‘Zero Emission'” Each state is different, but here in Colorado Coal produces 62.7% of our electricity, Natural gas 27.4%, wind 5.8%, Hydro Electric 4.1% and solar a whooping 0.03%… so EV’s do not save the earth – yet.

    Now let’s take on his assumption that owning an EV saves money on gas. It takes $2.00 in electricity for me to fill my car. I get anywhere from 20 miles to 38 miles on a charge depending on whether it’s freezing at night and I’m using heat and lights, or warm sunny day. Yet I can get 38 miles per gallon to drive it when the battery is depleted. Thus, unless and until the cost of electricity ever goes down (HIGHLY unlikely), or the cost of gas goes up (possible), it’s actually cheaper to drive an ICE car of a similar fuel mileage rating.

    Where the EV does shine is taking advantage of all of the stupid things that government bureaucrats have put into place. You can get incentives just for buying it (in my case, I got $1,800 for buying a used car in Florida and driving it to Colorado), as well as the “free” charging stations that municipalities have put up all over the place where they steal money from tax payers to give to the owners of EV cars so that they can incentivize the coal industry at the expense of the free market.

    Lastly, the laughter has died down long enough – at least for now – for me to tackle his main point, and that is that owning Tesla stock will EVER be profitable for investors. at more than 100 times sales, there is no way on earth that a single share of tesla stock will ever return a profit. – period. it is juvenile to think that Tesla is going to drive the big three out of business. have I mentioned that my EV was made by Chevy – NOT Tesla??? Tesla is a toy. Only the rich can afford one. In the event that they change that with future model ill only mean that Tesla goes even further into debt. The company has a horrible business model. Musk has a dream, and that is great. He wants to change the world, and hejust might, but as investors, you will never make a dime owning his stock.

  • jrj90620

    You talk about Tesla knocking off the competitors and then mention the Chevy Bolt in the same article.The Bolt came out well before the Tesla 3,which hasn’t come out yet and unknown cost to produce.The big manufacturers have a lot more experience producing cars than Tesla.Wouldn’t rule them dead yet.

  • Steven Sevek

    I thought he said the transmissions in EVs have only 3 moving parts not the vehicles.

  • Noa

    Everything you stated is total ********. You’re a clueless and/or lying dbag.

  • joe4liberty

    You know what Steven, I stand corrected, he did say “transmission”. I retract that part of my comment… my apologies (although I’ll need to look at a Schematic of a EV transmission before I agree that there are only 3 moving parts).

  • joe4liberty

    Really? Which part? The fact that Tesla is so upside down and the stock price is so overpriced that you will not turn a profit? Go for it, buy some (or some more). The part that Tesla will NEVER be able to drive the big three out of business? Go ahead, bet against history. The part that it’s cheaper to drive a gas car today than an EV? Buy a calculator. The part that Americans are impatient and will not be willing to give up the convenience of an ICE car until the battery issues are resolved? Again, buy some Tesla stock. Or the fact that people will not be willing to drive 100 miles and then sit in a coffee shop for 2-4 hours listening to their kids crying and screaming while waiting for their cars to charge before they can continue on their journey cross country to Grand-ma’s house? Go ahead, let your car run down to a quarter tank of gas and then attempt to drive across Death valley, and you’ll get an idea of the uphill battle for EV. Not saying that it won’t become reality, only that “soon” is pie-in-the-sky.
    Look, I drive an EV. I have nothing against them. I’m looking forward to the day when the ICE car goes the way of the dinosaur, the point is that such a move isn’t going to happen “soon” and Tesla isn’t going to be putting the Big-three out of business. Ford, and Chevy, have their own EV’s and are investing more into them that Musk is, the difference is that they will be profitable when it is all over because they are delivering cars at a rate that the market will absorb them. Chrysler will be adding theirs soon as well.
    This is an investing newsletter, not a political newsletter. you can be offended by the facts if you want when those facts do not align with your hopes, but it would be fool heartedly to invest based on your wishes.

  • Robert Schulz

    Tesla is a genius at making money for himself with ideas that don’t make money for his companies.

  • Noa

    You haven’t stated any facts, only total ********.

    Also you don’t drive an EV, you drive a wanna be EV with a gas rex.

  • joe4liberty

    well, when you can refute a single fact that I stated, please feel free to reveal it. and a “total” EV is simply not practical for anyone but a house wife who only drives to the ,market and back, and thus the whole point.

  • Wilhelm

    I suspect that once EV’s reach a certain market share, ICE vehicles will become too expensive for the average person to own. That could happen any year now. Lots of commuters would love to have an electric car, as long as their commute is within the range and they have access to charging infrastructure. Neither of those things is a big jump.

  • rtryon

    Joe is not wrong today! Alas, his assumptions about the next 5-10 years key to coal and he might include natural gas as fuels to make electricity that detract from the argument that its important to escape pollution from ICE by using coal to make electricity. What if you are making your own electricity the way the tree and all other plants do? Cheap, clean, powered by Sun, emulating the leaf is already more than a laboratory curiosity.
    When you can make hydrogen to safely heat with a gas that when escaping only rises vertically even when burning, you will also use it with a hydrogen fuel cell to make electricity to both charge your EV battery but to extend its range. Refueling on a long trip can happen at the same places for ICEs, only the hydrogen can be made at such points and not be shipped to it from plants that are no longer energy hungry users.
    Suddenly what I first saw gliding past me in 1938 is new again? But, a lot different.

  • joe4liberty

    Rtryon, I’m not refuting a single thing that you said. I have long said that hydrogen is the fuel of the future (actually the atomic energy in the vacuum in an atom is the real future… no way to access that yet though). But the point of the newsletter is investing, and the point of the article is that Tesla is going to render the big three worthless. Your points do not discredit mine. Alternative fuel sources are the future, but they are not the reality today. Your points about solar are moot because the solar production has not reached even 1% yet. Add to this the cost of the car AND solar panels, and the vast majority of Americans will NEVER sign up for that (at today’s costs). The only way for EVs to become mainstream is to resolve the battery issue, and the only way to make them cost effective is to resolve the alternative fuel cost issue.

  • joe4liberty

    Both of those issues will be resolved over time, but NOT “soon” as the article implies

  • joe4liberty

    This is completely true, BUT the cost of an EV, even with the market manipulation by the government in the form of incentives and subsidized charging stations is still much higher than ICE. Again, I agree with you, it’s just going to take time… and the article implied that we should dump shares of Ford, Chevy, etc for Tesla. NOT a good investment move right now.

  • joe4liberty

    Exactly!!

  • joe4liberty

    Haa… so true!!!

  • St Croix Free Press

    Show me where I can pick up a used electric vehicle for 2-4K and maybe I’ll get on board. I’ve bought my share of used vehicles that at one time sold for 40K and drove them for years and still sold for 2K. When that happens maybe I’ll be on board.

    Technology of creating ball bearing and moving parts with nano-technology could change the industry far much more the utopian electric vehicle. A 2-3% efficiency of creating a perfectly round ball bearing and creating next to friction free parts could make fuel burning vehicles 20+% more efficient. In fact industry in general would be better. Throw out the CO2 frenzy and there’s something much more substantial to bet the future. You need a hazmed to handle the light-bulb boondoggle, wait till there are car accidents with the batteries required. Get rid of subsidization and the corporate welfare and let the market decide on it’s merits, not its political bs.

  • rtryon

    Thanks for your words! I did not mean to connect solar panels and electric cars. We are rather close to cheap hydrogen and oxygen capture from water by emulating plant leaves in a cost effective manner. It will lead to low p.s.i. storage and chemically driven means of high p.s.i. using hydrogen process. Add storage in small canisters in cars and bingo we have an ideal result. Keep an eye on hyper solar.com

  • James Crane

    since Tesla is new, it does not have all the pensions and overhead the others have. Much like the falling Retailers, Tesla, despite it’s balance sheet looking bad, it has a great product and if Steve Jobs taught us anything, it is great products that sell, sell ,sell

  • Bob Dowell

    The 60 to 80 mpg diesels driven in the rest of the world are never mentioned. Guess why. The rave 4 and rav 5 diesels Toyota sells is more economical than their gas/electric, The really sorry thing about it is the US big 3 manufacturers make diesel that are sold every where else that beat anything sold here. In 1985 I bought a Ford ****** that had a 3 liter Mazda non turbo diesel. It got 55mpg. They sold them for two years them pulled them off the market.

  • steve

    …….in the meantime………60% of all vehicles in Turkey run on natural gas. 65 MILLION homes in America are plumbed to natural gas. How about never going to a filling station again! Just refuel (5-10 minutes) at your leisure. And there is no shortage of natural gas in America! Pollution in some major cities in the world is so bad that the use of ICE is restricted, i.e., if your license tag on your ICE ends in an even number you can drive on Mon, Wed. Fri, etc. When your business starts to be affected by transportation restrictions you begin to look for economical solutions. Check out the CNG fueling stations in California on the site CNGNow to see which what cars will be using for fuel in the future.

  • Steven Sevek

    Thats not nice!

  • Steven Sevek

    Anyone can make a mistake. I make plenty 👍.

  • Noa

    Neither is bullshitting the public. lol Too many sheep out there.

  • Noa

    And by transmission, I believe he meant drive-train.

  • Robert Schulz

    Jobs also sold products with very high margins. Not Tesla.

  • Thomas Corcoran

    suggestion…. go do a stock comparison of Ford, GM and Tesla for the last 6 months… you will be shocked…. a 6 month investment in either Ford or GM is negative currently… not the case for Tesla… which one (or ones) is not a good investment move right now? True, past performance is not necessarily indicitave of future results, but as long as the stock is performing, you run with your winners and cut your losers… that’s what smart investing is all about

  • Thomas Corcoran

    Hey Glen Thompson… Tesla is years ahead of everybody else and they have by far the most advanced vehicles and system in place… go ahead people, sit on the sidelines and lose out on the biggest change ever in the auto industry…. by the time you realize it, it will already be too late…. the ignorance and negativity against Tesla that I have witnessed is absolutely appalling. It has no basis in rationality, but I believe is based in fear. The other major car companies will be in business competing with Tesla, but Tesla has approximately a 2 year lead on the field.

  • Thomas Corcoran

    go look at a 6 month chart comparison between Ford, GM and Tesla…… Amazon…. Amazon moment is what this is… or like what Paul says… an iPhone moment… I am in agreement with his assessment

  • Thomas Corcoran

    At lease someone is paying attention

  • joe4liberty

    no, it wouldn’t surprise me at all. Las Vegas is always full of shiny happy people day or night. That’s what we are talking about here. Tesla is not profitable, and likely never will be. Take out the money that is stolen from the taxpayers to keep the company afloat, and the doors would already be closed. a -72.76 P/E is not investing, it’s gambling. Negative $37,955.00 per employee is not a company, it’s a hobby. Nothing wrong with gambling, I enjoy the rush of a card game as much as the next guy. As you mention, folks can run a Blackjack table from time to time too. This however is supposed to be an investment newsletter, not a gambling newsletter. For all of you who disagree with me, don’t get mad, get even. Sell your solid dividend paying Blue chips, and pile into Tesla – someone has to be the last one to buy the railroad stock at the top before it crashes.

  • joe4liberty

    Buy more Tesla stock. Seriously, don’t listen to me, do it… buy more.
    As I said, I believe that one day we will replace the ICE, but unless and until batteries get longer run times, and shorter charge times, impatient Americans will NOT buy them in enough mass to make a difference. – PERIOD. and there will never be a $35 Tesla (not when you remove the billions in government subsidies and incentives…. that is still cost regardless of how you hide it in the taxpayer’s bill).
    But after Musk has figured out how to improve the charging and maybe even the batteries, the big three will make the cars cheaper and more reliable, and more importantly – at a profit. And THEN we will begin to see the shift away from ICE.
    BUT as someone already mentioned, what if we solve the hydrogen problem first? If that happens, electric cars will be the Betamax of transportation history – a great idea that never really took off.
    But again, don’t listen to m, what the heck do I know? I’m a dinosaur remember? I learn from history books and do math – really outdated methods of drawing conclusions. You really should close this page, go to your trading account and buy more Tesla stock…. unless of course you afraid to back your words with your money.

  • joe4liberty

    only they are missing the “sell, sell, sell”

  • Thomas Corcoran

    It’s not gambling when you have stop losses… this investment, in my opinion, is just getting started… past performance is not indicative of future result… Tesla’s bottom line is about to improve and it really doesn’t matter to me if you want to ignore the facts or not.. yes, Tesla’s past financials are horrible, but at the same time Tesla’s growth rate is astronomical compared to the well established car companies…. but Tesla is years ahead of these established companies when it comes to EV’s…. and EV’s are about to take over… go ahead… be my guest… be ignorant to what is going on…. and we will reap the profits and when the time is right, we’re out… simple as that

  • joe4liberty

    First of all, the purpose of an investment is to make money. “stop losses” are there just in case you are wrong. The goal is not to stop your losses, it is to make money. Therefore, the last step is to put in place “stop losses”, the first step is to do your due diligence about a company that you are going to invest in.
    Next, “Stop losses” does not make a gamble an investment. Most people who go to Las Vegas have “stop losses”… when they are out of chips, they get up from the table – they stopped their losses. The more disciplined – among whom I count myself – use a “trailing stop loss” so that when I am up I will walk away from the table with money in my pocket. But none of that means that I am not gambling when I sit down to play Black-jack. There are no fundamentals to make me believe that I have a strong chance of making money at a Black-jack table, so when I sit down to play, I assume that I will loose, but am hoping that I can win. That is gambling. And that is what playing Tesla is – gambling. The fact that it has been taking off in complete defiance of the fact that they have zero fundamentals, zero chance of turning a profit, and zero chance of recovering their losses, makes this a mania.

    Again nothing wrong with taking that gamble, just don’t kid yourself into believing that it is an investment. People made money “investing” in tulip bulbs in the mania of 1636 – until they didn’t in 1638. People made money “investing” in the dot-coms mania of 2000 – until they didn’t in 2002. People made money “investing” in the housing mania of 2005,2006- until… well, you get the point.
    Look, I have nothing against EVs, I drive one fro crying out loud. I’m just pointing out that Tesla is NOT an investment, it’s a gamble. But hey, it’s already been said, I’m “a dinosaur”. I “don’t know anything”. Don’t listen to me. Buy more Tesla stock. Mortgage your house and buy even more! What could go wrong? You have stop losses after all! Just remember that you read it here… history repeats itself, and this will be no exception.

  • Geowil

    Tesla is crushing the luxury sedan market and the entire EV market. They are selling, selling, selling.

  • Thomas Waldenfels

    A tune up every 10,000 miles? Do you agree with that? It’s nonsense. Try 100,000 miles. When a guy makes up a phony number about something this basic, why would you believe anything else he says? This is hype. Doesn’t make everything he says nonsense, but if you can’t get basic facts straight, don’t expect me to respect his conclusions.

  • Thomas Corcoran

    My stop losses ARE trailing stop losses self managed

  • Thomas Corcoran

    Nothing you stated to me is new or news to me… you have a God complex dude and you are nowhere near God… get off your stupid high horse… I know what I’m doing and you haven’t a clue as to what you’re talking about so get lost and go bother someone else you think you may Ben able to influence… in the meantime I’ll be making money in Yesla and you won’t

  • Thomas Corcoran

    Joe… you are arguing about the stock price of Tesla because you believe it shouldn’t be what it is…. that’s crazy …. it is what it is and you can’t change it by arguing about it… who knows where it goes from here…. I only know how it is behaving presently and it is behaving well for anyone who is invested in it… you cannot argue that point…and it most probably will for the entire month of June up till the time the Model 3’s roll off the assembly line in July… or don’t roll off the assembly line in July

  • Thomas Corcoran

    Just where are you putting your money where your big mouth is Joe? My money is where my mouth is and it would be absolutely stupid to bet the farm on one stock, so I won’t no matter what you say…. is that what you are promoting Joe? – …. is that what you do – bet the farm on one stock?.. I thought you were a ‘smart’ investor… so you claim… I don’t think there’s anything smart about what you are doing or saying… just sayin

  • Thomas Corcoran

    Why don’t you put your money where your mouth is… Cmon Joe…. short Tesla… since you’re so sure the stock is a bubble and doomed to crash

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