With all the recent talk about Tesla’s valuation following the company reaching new highs, Barclays’ Tesla analyst, Brian A. Johnson, decided to present the “red pill” view of the company – to use the ‘red pill / blue pill’ analogy from “The Matrix”.

He looked at four points, which he referred to as  “articles of faith that Tesla bulls hold dear”, and looked at them with what he presents as a “reality-based (‘red pill’)” approach.

Johnson is a longtime naysayer when it comes to Tesla and a short favorite since he currently gives the company a stock price target of $165 – 44% downside from the current price.

Here are each of his “red pill” points with some of my commentary below as a simple counterpoint to what Johnson is presenting:

1. ‘Tesla has a significant and sustainable cost advantage in battery packs.’ Tesla is likely on its way to a $100/kWh battery cost, but we expect it will take longer than the company says. And while it has a lead right now, competition is narrowing the gap – and a narrower gap in battery cost leaves room for the scale advantages of legacy auto co’s to bridge the overall vehicle cost gap vs. Tesla.

What is important here is that even one of the most pessimistic Tesla analyst is seeing a path to $100/kWh battery cost and that will come back in Johnson’s third point. That it would take longer than the company says doesn’t mean much since the company has never been clear on that goal either. The best we got was CEO Elon Musk saying that he would be disappointed if not reached before 2020 – when the Gigafactory 1 is expected to reach full production.

As for the competition, he has a point that it is increasing, but so far no other manufacturer as announced anything close to the capacity of the Gigafactory 1 and yet Tesla has announced plans for gigafactories 2, 3 and 4. China is where most new battery manufacturing capacity is planned and yet, the entire output of all the new planned factories is about equal to Tesla’s planned production of 150 GWh at Gigafactory 1.

Of course, whether or not Tesla can stick to its schedule for the battery production ramp up at Gigafactory 1 is still a valid question. The company targets 35 GWh of battery cell production and 50 GWh of battery pack output in 2018 and ramping up to 105 GWh 0f battery cell production and 150 GWh of battery pack output in 2020.

2. ‘Tesla has a significant lead in autonomous driving, meaning it will be the first by several years to achieve a fully self-driving vehicle.’ Roll-out of autopilot doesn’t mean that Tesla is ahead of competition – rather, it’s just willing to beta test on customers. And while Tesla has aggregated significant data, the quality is unclear. Tesla still lacks the industrial rigor and scale required for autonomous, in our view.

What Johnson is describing as a “lack of industrial rigor” is actually Tesla’s different approach to self-driving. The company is looking at autonomous driving from the basis of “not letting the perfect get in the way of the better”. Delivering a perfect autonomous driving system is either impossible or a long way down the road, but if you can deliver an autonomous driving system that it at least better than the best human drivers, you are already saving lives.

This attitude is what pushed Tesla to deliver the hardware early and then work on the software while the vehicles are on the roads. It certainly led to frustration for owners, especially since the introduction of the Autopilot 2.0 hardware, but it also enabled Tesla to have the biggest fleet of vehicles equipped with all around sensors on the road today.

3. ‘Tesla will be a dominant market share player in the auto industry, similar to the iPhone in the cell phone business.’ There is no shortage of EV competition entering the market. The bigger issue is around supply – ramp-up and manufacturing inefficiencies (and cash burn) may prevent Tesla from building to its demand.

He is not looking at it the right way. While it is true right now that a lot of EVs are competing against each other in their respective segment, they also compete with the gas-powered vehicles in those segments and they represent a much more significant portion of them – often 99 to 1.

As mentioned in the first point, if Johnson sees a path for Tesla to reach $100/kWh battery cost, then it’s game over for the gas-powered cars. Battery-powered cars will become more economical than gas cars even before accounting for gas savings in most segments.

At that point, “EV competitors” will matter very little and it will all be about stealing the huge market share of gas-powered cars. It will be more about the companies with the biggest electric vehicle manufacturing capacities and this is where we seem to agree with Johnson: supply could be an issue. But does he see any other company having a bigger EV manufacturing capacity than Tesla at that point?

4. ‘Tesla will dominate in areas outside of auto, like energy, mobility, and insurance.’ Competition in energy storage is vastly underappreciated. In mobility, Tesla will have a tough time replicating the complete multi-modal networks that others can offer. And in insurance, others are already offering the usage-based plans that Tesla has talked to.

For the energy storage point, it really comes back to the battery cost. Batteries will soon become a commodity in energy storage. Right now, several technologies are still competing in term of durability, lifecycle and so on, but a few winners are likely to emerge as the industry matures.

As for the other industries, it’s probably too early to tell. Tesla barely announced its foray into insurance and while it gave a broad description of ‘Tesla Network‘, its upcoming mobility platform, we would definitely need more details before judging it.