Paul Krugman, winner of the Nobel Prize in Economics, likened Tesla to Bitcoin and said he doesn’t trust Elon Musk.
The economist, who is a columnist for The New York Times, detailed these claims in the article “Did the Tesla story ever make sense?”.
Tesla’s shares rose accelerated, like Bitcoin, between early 2020 and the fall of 2021, but have fallen 73% from their all-time high. At one point Tesla was worth $1.2 trillion. Today the company’s capitalization has reached “only” $350 billion.
According to Krugman, Tesla’s value is, as with Bitcoin, based on trust, enthusiasm and heavy promotion.
The economist says the electric car maker can’t be in the same league as Microsoft or Apple when it comes to market value because it doesn’t benefit from “significant network effects.” He refers to the fact that the two tech giants have ecosystems of devices and apps that users can’t easily leave. Apple has the iPhone and iMessage, and Microsoft has Word and Excel, programs that are the standard in business.
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Tesla, on the other hand, doesn’t have something other electric vehicle makers can’t offer. The company is trying, without much success so far, to develop an advanced system for autonomous driving, called Full Self-Driving Capability. Other services it offers, such as video games available in its cars, are not unheard of in the industry.
According to Paul Krugman, much of Tesla’s popularity was based on the fact that many people saw Elon Musk as a “cool guy.” Today, however, that image is fading, especially after the billionaire bought Twitter. There, Elon Musk fired employees and then rehired them, launched services and then shortly afterwards discontinued them, or without explanation suspended the accounts of popular users.
The economist joked that he wouldn’t trust Musk to even feed his cat.
“I wouldn’t trust him to feed my cat, much less run a major corporation,” Krugman wrote.