Why I Sold my Tesla
It got worse. My next AI investment is Amazon. Subprime loan debacle courtesy of Carvana
I sold my Tesla Model Y and 75% of my TSLA shares.
When I bought my first Tesla five years ago, I was all-in on the stock. Back then, people would ask me, Who makes Teslas?
I would say, Tesla.
They would say, Who owns Tesla?
And I would say, Me.
Much has changed. Everyone knows about Tesla. The cars are everywhere, and the company valuation is around 1.4 Trillion. I’m stoked. It was a big success.
Now people asking, Why did you sell your Tesla?
I wanted to try no car life. Lasted a month.
I switched apartments and no longer have home charging. Supercharging costs more than gas and it’s a nontrivial time commitment.
Teslas are depreciating a lot.
The product got worse. They turned on the internal cabin camera to watch my eyes and beep at me if I didn’t monitor the car while self-driving was engaged. If I did not comply, the car would slow down and stop and suspend me for 1 week from using the self-driving features. The days of self-driving around America eating, sleeping, and watching movies are over.
Costly. I was chewing through thousand dollar sets of tires. Teslas are heavy and have high torque, and eat tires for breakfast. Plus, I got two flats last year, which wasn’t cheap. Tires, insurance, taxes, and supercharging makes Tesla ownership more expensive than I’d like, considering I would only get 200 miles of range in the winter.
The truth is, I don’t give a shit about electric vehicles.
I bought two Teslas for the same big reason I’ve purchased five iPhones. The software experience is the best. Tesla autopilot was, and still is, an amazing feature. But the gap between Tesla and legacy auto has narrowed.
Legacy automakers copied Tesla’s superior software experience, as best they could, adding a larger touch screen, Apple/Android CarPlay, variations of autopilot, and a useful smartphone app. It’s not as good, but it is competitive.
To me, it’s worth it to pay 50% more to get an iPhone. It’s only a few hundred dollars more. But for cars, 50% more is like $15,000+. It doesn’t seem worth it now, and/or people just don’t have the money.
I sold my Tesla, traveled for a bit, enjoyed taking the T around Boston for a week, then found a great deal on a hybrid through a friend. I filled my car with gas for the first time in over 5 years, adding 400 miles of range in 90 seconds. It felt like a huge upgrade compared to 200 miles of range in 20 minutes. What’s more, I sold my Model Y for $25k and bought the hybrid for $12k.
I’m happy.
Teslas have depreciated a lot and I think it will continue. I’m seeing long-range Model 3s, great condition, low mileage, selling for around $20k. Three years ago, I sold that exact car to CarMax for $48k.
My dad, who used to drive a Model 3, bought a 2025 hybrid Camry.
My mom, who has a Model 3, said she can’t get anyone on the phone at Tesla to help her service her car, and she’s trading her Tesla for a hybrid Toyota RAV4.
Meanwhile, the TSLA stock price has doubled over the past 5 months.
In zero-interest-rate 2021, the stock went on a manic rampage to $420. I didn’t sell any shares. I borrowed money to pay expenses and make more investments.
I watched my portfolio fluctuate wildly, then drop 80% in Fall 2022. Because of the margin debt I accumulated, I almost lost everything. The small amount of discipline I had to not go completely crazy with borrowing saved me from bankruptcy. Some of it was just luck.
Now, despite a poor outlook for Tesla’s auto business and uncertainty in the robotaxi and humanoid robot projects, the stock is back on another manic rampage to the moon.
I feel like God gave me a second chance to do things differently.
Over the years, I’ve motivated a few close friends to also invest in Tesla. I texted them the update:
Sold my Tesla shares for $420.69
Not joking
Also sold my Tesla
Friend 1: Taxes next year bout to go crazy
Friend 2: Should I dump mine for that too lol
I’m seeing delusion at an all time high among Tesla bull accounts
One person told me there’s no way the stock drops below $400 😂
I’ll considering buying back under $250.
The robotaxi thing is taking longer that we thought
Feeling rly grateful the price doubled for us
On Instagram, I DM’d a TSLA uberbull about the stock price
Richard: No chance won’t go below 400 ever again
Me: Would you put money on that?
Rich: I have ~60k in calls on the line
Me: Nice. I’d make a bet it drops below $400 in 2025
Rich: 100 push ups it won’t, I’ll send a video
Also what’s your reasoning for it dropping below 400? I’m curious
Me: The short answer: What would make you think that the most volatile stock in the game couldn't drop 10%?
I sent a longer answer too, full message here. My favorite paragraph:
From a customer’s perspective, I am not happy with the total cost of ownership or the current FSD user experience. Supercharging is more than gas with an efficient vehicle. Teslas chew through expensive tires for breakfast. The FSD films your fucking face and beeps if you blink.
I sold a big chunk of my shares at $420.69, then another chunk on 1/18, for $432.10. If the stock price continues rising rapidly without merit, I have more shares to sell.
A trillion dollars of valuation is riding on Robotaxi and Optimus. Two products that are generating $0 in revenue and no earnings. I’m betting that these projects don’t deliver accelerating earnings in the near future.
If I’m right, I think there will be an opportunity to invest in Tesla at a substantially lower valuation, a handful of years before the launch and scale of two of the most significant products ever. I wrote about this in Tesla AI.
It’s a weird trade because I believe the company is likely to experience extreme growth over the next 10 years, but decline substantially over the next 18 months. I could do nothing and just hold. But instead, I sold the majority of my shares.
All outcomes are acceptable. The stock goes up, great. The stock goes down, great.
A week after the Instagram convo, the TSLA share price dropped below $400 and I won the bet. I asked Richard if he’s done his push-ups.
How I’m spending and investing
I buy a lot of stuff on Amazon, including this MacBook Air I’m typing on. Yesterday, I couldn’t find a supplement at the store, so I bought it on Amazon, free shipping, and it was at my house five hours later. I could even track the driver as he drove it to me.
I’m accumulating more Amazon shares this year. The ecommerce business is incredible, but it’s Amazon Web Services and its position to benefit from AI that has me most excited. I like what I’ve heard so far from CEO Andy Jassy. He seems like a smart, balanced, forward-looking innovator.
I’m still deciding what I think is a fair valuation for the entire company. Reading Amazon’s 1997 letter to shareholders, it strikes me that even today, almost 30 years later, we are in the early years of computing, the internet, cloud computing, AI, and robotics. I think the winners in these industries will continue winning.
Amazon and Tesla are the only companies I own. The majority of my portfolio is in high-yield savings with my brokerage, Public. It feels good to earn 4.1% on cash, waiting patiently for great buying opportunities.
I laughed at Bezos and Musk, the founders of my two investments, standing together at President Trump’s second inauguration.
I sold your car and your stock, Elon, but thanks for making me rich.
Thanks for same-day delivery, Jeff.
Love you both.
Subprime Loan Debacle Incoming
During the 2020 lockdowns, I read a report from Hindenburg Research on fraudulent EV company, Nikola. I still laugh at the name. Trevor Milton, the fraudster founder, rolled a semi truck down a hill pretending it was a self-driving EV. He eventually went to jail.
A week ago, a Tesla analyst brought to my attention Hindenburg’s latest investigation: Carvana: A Father-Son Accounting Grift For The Ages
Initially, only read the part about the auto market at large, because it pertains to Tesla. But I’m glad went back and read the entire thing because it’s a remarkable story of a convicted felon collaborating with his son to do clever business tricks, profit billions, and screw over banks, customers, and soon shareholders. The felon father, Ernest Garcia II, is now the richest man in Arizona.
I decided to see for myself.
On the Carvana website, I clicked on a $30k car. I gave them my name, address, and made up a fake number of $40,000 annual income. Seconds later I was approved for a $30,000 loan with $290 down, $600/month for 78 months at 12.75% interest. They did not check my credit. I made up the salary. They assume the applicant is honest and doesn’t experience a drop in income. A $600/month is more than double a reasonable car payment for someone living on $40,000 / year.
A section of the Hindenburg report:
Repossessions are nearing an all-time high. The party is coming to an end.
Carvana is due to start paying massive interest payments on their debt starting in February.
On January 17, Carvana was trading at a $48 billion valuation and 25k Price/Earnings ratio. The share price is up from $4, two years ago, to $230.
I will likely short Carvana stock, just for the hell of it and the life experience. If I make a profit, I will give away ten percent to people who inspire me/people in difficult situations.
Have a great rest of your day.
New Song from Mac!
Affiliates:
If you like this story, you might like my book, All Outcomes Are Acceptable. It’s about true wealth, AI drone battles, Amish people, and beating up my roommate. Readers are loving it.
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Photos from Arizona
Great post. I always thought Carvana was a terrible idea. This further validated it (with data and scary info on their qual process) that I didn’t know about.
Disruptor for the used car biz is about like meeting your new “girlfriend” at a casino nightclub. A “disruptor” for an industry that has forever been cliche as being one big grift shop is a double red flag. Add in how capex heavy the model is and it just seemed like a disaster of a concept. I guess we’ll always have WeWork, and Beyond Meat, and Frank 😬
I like the Carvana short idea - it does remind me of TSLA awhile back though actually. A car company that has an insane unjustified P/E multiple. and we know how bad of an idea it was to short TSLA. I could see CVNA go way up before it goes down.
Gonna short a few shares here at 242 and see what happens. Thanks for sharing - enjoying your writing!