Tesla's rise causes rivals to misallocate spending, analyst says

Tesla's investors “live in a different world,” analyst Max Warburton said.

Photo credit: Luca Riva Studio

While many credit Tesla with pushing the industry toward electrified powertrains and autonomous driving features, analyst Max Warburton of Alliance Bernstein said the company could be responsible for causing automakers to make a significant misallocation of their capital.

Warburton points to the massive investments many established brands are making in electrification, autonomous driving and mobility services. "The kind of spending that we’re seeing is quite terrifying, and Tesla has been a very significant problem," Warburton told the Automotive News Europe Congress in Turin.

"If you’re a German premium carmaker, every time you meet an investor you get asked: Why don't you take on Tesla? What are you doing? And so on. I think quite a lot of the electric products you will see coming from traditional car companies are in response to that pressure." A lot of the money that is being spent is going to have been wasted in retrospect, he said. This includes investments in autonomous driving, a field that he believes will have few winners. "There will be a limited number of entities that get to the answer, probably roughly at the same time," Warburton said.

Warburton, who is a longtime critic of Tesla, shared his view on why the company founded by Elon Musk has a market value ($54 billion) that exceeds Ford Motor ($48 billion).

"Investors in Tesla are very different people from automotive investors. There is a huge community out there that is quite tribal," he told the Congress. "I don't think those people necessarily read financial statements," he added, "and I don’t think they talk to automotive people. They live in a different world."

Warburton, however, sees a silver lining from all the technical disruption: The industry’s players have learned a lot. "They are beginning to lay out a roadmap for electrification. They are beginning to make it clear they understand electric vehicles. The Jaguar I-Pace is a seminal product. We will see others that will show what the traditional industry is capable of doing."

You can reach Andrea Malan at amalan@autonews.com.