Investors Don't Care About Tesla's Recall

Tesla recalled 362,00 cars that have the company’s self-driving system. The National Highway Traffic Safety Administration posted a warning that the system could cause the self-driving program to work in an “unlawful and unpredictable manner.” Tesla’s stock rose as the news hit and has risen all week.

There have been complaints about Tesla’s self-driving technology since it launched. Tesla and Elon Musk have been criticized for promoting it. Several engineers have said it does not work as intended at all. The New York Times recently wrote, “Safety experts have often raised concerns about the Tesla systems and similar technology offered by other automakers.”

Tesla stock cratered over the last year but recovered recently. The trigger for the recovery was better than expected earnings and a forecast that Tesla could sell two million cars this year. (These are the most efficient cars on the market.)

In the last month, Tesla’s shares are up 60%. It is a testament to the fact that, despite setbacks, the consensus is that the company will rule the EV market, even as it becomes wildly more competitive. And that is Tesla’s strength. The company’s market value is $660 billion, about ten times the figure for either GM or Ford.

Tesla’s brand strength keeps its shares high, and this strength remains intact despite growing competition from every large car company in the world. Despite minor fallout from Elon Musk’s purchase of Twitter, EV buyers want Teslas. (These are the most efficient cars on the market.)

Tesla’s brand strength should be compared to Apple’s. Buyers have the option to own Samsung phones or others, which include the Google Pixel. Even at lower price points, these cannot draw enough buyers to worry Apple’s management.

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Perhaps the greatest problem Tesla’s rivals have is that they are still brands associated with gas engines, as they have been for as much as a century. Ford has two relatively popular EVs–the F-150 Lightning and Mustang Mach-E. Together, they are a tiny fraction of Ford’s sales. (These are the 13 biggest electric vehicles business failures in American history.)

Tesla trades for $208. It has a long way to go to reach its all-time high of $384. The amazing part is that it would be a bad bet to think this is impossible.