Tesla Motors Inc. (TSLA) designs, develops, manufactures and sells fully electric vehicles. Tesla reported what we considered to be strong results in the first quarter, but investor reaction was negative and we took the opportunity to add to our positions when the stock price dropped in early May. Tesla continues to make progress with battery cost reduction and regulatory approvals to sell its cars directly to consumers. Both of these developments were viewed positively toward quarter end. We view Tesla as a “once in a lifetime” disruptor to the car industry and believe this justifies its premium valuation. (Gilad Shany)
We had told you about our purchase of Tesla Motors Inc. shares in the previous letter. During the quarter, we increased our level of confidence in Tesla’s superior engineering and design, which we believe will lead to mass market appeal. Right after Tesla’s annual shareholder meeting, CEO Elon Musk announced Tesla is opening all of its intellectual property to third parties, in order to induce the electrification of the auto industry (to date, electric car programs at the major manufacturers are small to non- existent).Tesla is confident in its ability to out-innovate its competitors due to its most formidable competitive advantage - people. As of today, we believe Tesla is the only car Original Equipment Manufacturer that is able to hire talent away from top tier technology companies.The ability to keep this talent busy and engaged for the greater good, with consistent execution and commercial success, will, we believe, build Tesla’s moats for years to come.We often say “we invest in people.”Tesla invests in people, too. (Gilad Shany)
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