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I think Tesla is less priced for perfection and more priced for the future. Investors expect Tesla to eventually surpass companies like BMW, across the board fo

by ssharp 11y ago

I think Tesla is less priced for perfection and more priced for the future. Investors expect Tesla to eventually surpass companies like BMW, across the board for each model. By betting on Tesla, they're betting on Tesla being the dominating player in electric vehicles as well as electric vehicles dominating ICE vehicles in passenger categories. I also think the price includes things like their rapidly improving battery technology that could be used for things other than cars, like storing energy from sources that can't provide a steady stream of energy, like solar. So, there's certainly a lot going on with Tesla that isn't going on with a company like BMW.

hugh4 11y ago
How rational is it to bet on Tesla continuing to dominate the electric car market once the electric car market becomes mainstream? There are much, much bigger players waiting on the sidelines for market conditions to change.
- adventured 11y ago
  They do have a significant head-start over most competitors. When companies like Porsche talk about launching their 'Tesla killer' - it's set for years into the future. It's definitely not rational to think Tesla will dominate, as no company actually dominates the auto industry. Toyota arguably comes closest and they don't dominate, they have a modest market share compared to what traditionally dominate companies have. Can they one day do $20 billion in sales and ~$1.5 billion in profit? Probably. That would justify their present valuation (they will very likely carry a higher valuation than most car companies, for the same reason companies like Google carry a higher valuation than IBM). The real problem for investors, is it may take eight to ten years to justify their present valuation.
- marvin 11y ago
  They'll have to build some billion-dollar battery factories first. (Or someone else must). This will take some 5 years per factory, so that's a clear leading indicator. Also, most new cars will be electric in 20 years, and that's a lot of cars.

by ssharp 11y ago

hugh4 11y ago

How rational is it to bet on Tesla continuing to dominate the electric car market once the electric car market becomes mainstream? There are much, much bigger players waiting on the sidelines for market conditions to change.

adventured 11y ago
They do have a significant head-start over most competitors. When companies like Porsche talk about launching their 'Tesla killer' - it's set for years into the future. It's definitely not rational to think Tesla will dominate, as no company actually dominates the auto industry. Toyota arguably comes closest and they don't dominate, they have a modest market share compared to what traditionally dominate companies have. Can they one day do $20 billion in sales and ~$1.5 billion in profit? Probably. That would justify their present valuation (they will very likely carry a higher valuation than most car companies, for the same reason companies like Google carry a higher valuation than IBM). The real problem for investors, is it may take eight to ten years to justify their present valuation.
marvin 11y ago
They'll have to build some billion-dollar battery factories first. (Or someone else must). This will take some 5 years per factory, so that's a clear leading indicator. Also, most new cars will be electric in 20 years, and that's a lot of cars.