Comments on current event and TESLA

Starting from this article, I would like to talk about specific event or company. Here is the structure for the future article, one discussion on current event followed by a company comments.

Poor and rich

Recently, many media companies showed their worries about the gap between poor and rich. They reported that “Richest 1% own nearly half of world's wealth” (US today), "Wealth of 85 people equals that of billions of poor, charity says" (The Seattle Times), etc. However, they actually missed one important different between the wealth and living condition, which they have different concept.

The living condition is mainly based on consumption, which the wealth will include the investment. Firstly, we should take a look at the proportion of the total consumption to the total GDP, which means the consumption is the better indicator rather than income. According to this point, the consumption in 2010, 2011, 2012 had increased 3.6%, 4%, and 3.5%, respectively (World Bank). Even we take the inflation for account, it seems like the average living condition in U.S. was increasing stably.
Secondly, only one situation that can the rich people will harm the poor people is the rich people have the competitive consumption to the poor people. For example, the rich people use the grain to produce bio-fuel, which lead a price increasing of the grain. In this situation, the poor people will suffer from the expansive food. Hence, it is better to check the structure indicators like Engel's Coefficient. In 2012, U.S. Engel's coefficient is just 7%, which is much lower than the 12.7% in 2008. It shows a great improvement for the low class people because they used less money in the food and basic consumption. Why we say a lower Engel's coefficient benefits the poor people? The reason is the rich people who make lots of money has a limitation on the basic consumption. There will be a big different between unemployment and millionaire on their food and dress. However, this different will disappear between millionaire and billionaire.
As long as the rich people didn't have a competitive consumption to the poor people, the living condition of poor people won't be worse.
Thirdly, the rich people may have irrelevant consumption or even positive consumption. For example, the rich people may spend lots of money on luxury car, or they may go to Las Vegas for several night, which are mostly irrelevant to the normal people. This consumption will not harm to the poor people. Nevertheless, those consumption like charity funding (Gates-Melinda Fund) or free private museum will benefit the public. It a good thing.
Hence, people should pay attention on the news. The government should not use the gap between rich and poor to start  a redistribution plan.

TESLA
TESLA is a hot topic because it combined the new energy and "iron man" founder, Elon Musk. I respected Elon Musk because he had wise viewpoint on the future development, which are Internet, new energy and Space technology. Although we have one different, we still have two in common.
He got great success on PayPal, but he didn't persist on that, which he miss a great opportunity to develop a new commercialization of the Internet. Alibaba developed this idea with ALI-PAY, which it became the new way of Online payment and investment in present.
Mr. Musk started his TESLA company and also got a great success. I also admitted this company has brilliant future. However, I believed TESLA has been over-estimated.
I have three reasons.
Firstly, the TESLA has difficulty on productivity and cost. By the end of 2013, the total productivity of TESLA is only  round 22000 (Green Car Report), which is far more less than the Big automobile company. The total revenue is only 1.7 B USD, while the GM is 154 B, the Volkswagen is 84.3 B, and  the Toyota is 67.07 B (Yahoo Finance). It is tough for TESLA to challenge the traditional automobile companies with one technology in few years. The cost of TESLA indicates that the model S and model X can not be a popular car in the market. Few people choose the TESLA as their first car or only car because they mostly treat TESLA an artifact or toy rather than a vehicle. The market share and the diversification of the product chain are the Achilles heel of the TESAL.
Secondly, the gross margin of the TESLA is only around 18%. As a luxury product, this gross margin can not be satisfied. This number also shows, the new energy technology is still not mature.
Thirdly, I think the other automobile companies is catching TESLA on the new energy technology. German and Japan are very competitive on their energy saving. They don't worry about the TESLA because its market share is too small to be a threat. In the long term, TESLA can hardly be the leader in the new energy technology area because GM, Volkswagen and TM have more capital on R&D and human resource.

As a conclusion, I believe the best time for TESLA is for next three year because this is the only time for TESLA to expand their market share, diversify its product chain and lower the cost with the help of it leading battery technology. The price of TESLA will hit the top 350 USD after the Model X comes up by the year of 2015. And then, with the more competitive of the automobile industry, TESLA will stay in the minority of population or Luxury brand, which is similar to Hummer, Maserati or Bentley. The reasonable price of TESLA will be around 150 USD.

P.S. Elon Musk is called Iron Man. Can he lead another innovation revolution that can excess the other company 10 or more years?