Great earnings report from Tesla, this time without relying on regulatory credits and Bitcoin to deliver much of the oomph. (Tesla stock still has a P/E ratio of 670 so investors beware: There is plenty of room for a downward swing. Current average S&P 500 P/E ratio? 46.)

We drove past the Tesla lot in the Bay Area and there are thousands of cars parked there. Speculation is that they’re being held up by parts shortages, but I don’t know. All I know is they are sitting there and order times are long (per people on the Tesla subreddit, it’s 8 to 14 weeks). Parts shortages seem like a reasonable guess. It doesn’t seem to be lack of demand.

To that point, I’ve seen a lot of Teslas up and down the west coast (Seattle area, Oregon, and Bay Area). The electric car market is just beginning, so it remains to be seen if Tesla’s first mover advantages—and they are many—will be sufficient to persuade most people. I continue to think a price point well below $40k—today’s cheapest Model 3—will be necessary to hit mass market success. I will not be surprised if another company, perhaps VW or a Chinese concern, achieves this first.

I poked about a VW ID.4 a week or so ago and it looks very nice. The fit and finish is better than Tesla’s, though all things being equal I’d easily (at this point) take a Model Y over an ID.4. But all things are not equal. Would I take a Model Y for $60k over an ID.4 for $38k? Uh, probably not. And with current tax incentives, that’s the calculation. Unless the federal tax credits get renewed for Tesla (because Tesla has used theirs up and other manufacturers haven’t), Tesla faces a short-term headwind mitigated only by the fact that their cars are better. Maybe that’s enough to beat back the large number of electrics headed to the marketplace. 

We will see.