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> Toyota's profits are real. GM's profits are real. BMW's profits are real. Tesla's profits might be great in the future - and that risk means the potential pro

by crabasa 10y ago

> Toyota's profits are real. GM's profits are real. BMW's profits are real. Tesla's profits might be great in the future - and that risk means the potential profits are worth less than actual profits. You have this exactly backwards. For instance, you could have made the exact same argument about Walmart versus Amazon. What you're missing is that the investments that Tesla is making, which hurt short-term profitability, literally create new lines of business that power future revenue streams. The fact that car manufacturers are hoarding profits and failing to invest in the future is precisely why they are overvalued.

deleted 10y ago
[deleted]
aerovistae 10y ago
Exactly so.
j7ake 10y ago
You're still making a bet that Tesla will become a top 3 car company in the world. At the moment people there are people who think the price to risk is worth it. Some do not think it's worth it. I would say there are better ways to make money than a 50 percent chance to make 20 percent more. Also these predictions are 10+ years in the future. How often have people actually predicted that far from the future? Almost none. The only ones I can think of are bets on fragility: more downsides than upsides as time progresses.
- arijun 10y ago
  Remember though that Tesla will no longer be just a car company. The battery market is huge and will only get bigger as utility scale projects boost demand (like the 80MW one in Southern California Tesla just installed), and if residential solar takes off, solar city stands to make a decent amount of money.
  - whiskers08xmt 10y ago
    And as solar gets cheaper and cheaper, there's only going to be more incentive to install batteries.
  - ckastner 10y ago
    The larger the battery market becomes, the more competition it will attract. Tesla is certainly starting off with a nice lead, but it would be foolish to underestimate the capabilities of other players who might just not be interested enough in this market yet, and who'll -- for the moment -- happily have Tesla serve as a canary.
    - dragontamer 10y ago
      I'm not entirely sure if Tesla's battery tech is a sufficient differentiator. Tesla is a slave to the Lithium Ion process of Panasonic. If a new chemistry breakthrough comes out tomorrow (ie: Redox Flow has huge potential in the utility space, even if it has little potential in the retail space)... Panasonic will be able to switch to the new chemistry but Tesla's battery tech is basically Lithium Ion only. Tesla's battery technology is literally the battery electronics. Not the chemical cells. Tesla seems to employ chemical experts so that their battery-electronics can better predict the effects of the chemistry... but really... they're only putting together cells. Tesla doesn't make the 18650, Panasonic does. Tesla just puts a bunch of 18650 together, as well as have some sort of algorithm to make them charge / discharge at high efficiency. Tesla is completely dependent on Panasonic's chemistry. The speed at which LG was able to build a "Silicon-Lithium Ion" battery pack of GM's Bolt only demonstrates how "easy" the battery-pack problem is.
- dagw 10y ago
  You're still making a bet that Tesla will become a top 3 car company in the world. Or that they will sell/license batteries and technology to the top 3 car companies in the world.
  - idiot_stick 10y ago
    Also highly competitive, low margin business.
    - deleted 10y ago
      [deleted]
idiot_stick 10y ago
Do you actually know the scale at which car companies invest? Or do you just pretend to know that they "fail to invest" because that sounds fun in relation to Tesla?
- JetSpiegel 10y ago
  If they have profits, by definition they are not investing enough.
  - idiot_stick 10y ago
    >If they have profits, by definition they are not investing enough. So nobody deserves a return on risked capital? That's insane.
- allenz 10y ago
  The other aspect is that investing isn't the end of the story. Nearly all car companies have made investments in green energy--but which are likely to produce results and win the market? Tesla is expected to execute better because it hasn't just set up a department to prototype EVs. Tesla is dedicated to EVs. The company is built on the technology. That results in a lack of legacy distractions, faster iteration cycles, effective vertical integration, and a wholly different culture and brand. It's a classic startup disrupting incumbent story. It isn't a sure thing, but it's enough to make Tesla very valuable.

by crabasa 10y ago

deleted 10y ago

[deleted]

aerovistae 10y ago

Exactly so.

j7ake 10y ago

You're still making a bet that Tesla will become a top 3 car company in the world. At the moment people there are people who think the price to risk is worth it. Some do not think it's worth it. I would say there are better ways to make money than a 50 percent chance to make 20 percent more. Also these predictions are 10+ years in the future. How often have people actually predicted that far from the future? Almost none. The only ones I can think of are bets on fragility: more downsides than upsides as time progresses.

arijun 10y ago
Remember though that Tesla will no longer be just a car company. The battery market is huge and will only get bigger as utility scale projects boost demand (like the 80MW one in Southern California Tesla just installed), and if residential solar takes off, solar city stands to make a decent amount of money.
- whiskers08xmt 10y ago
  And as solar gets cheaper and cheaper, there's only going to be more incentive to install batteries.
- ckastner 10y ago
  The larger the battery market becomes, the more competition it will attract. Tesla is certainly starting off with a nice lead, but it would be foolish to underestimate the capabilities of other players who might just not be interested enough in this market yet, and who'll -- for the moment -- happily have Tesla serve as a canary.
  - dragontamer 10y ago
    I'm not entirely sure if Tesla's battery tech is a sufficient differentiator. Tesla is a slave to the Lithium Ion process of Panasonic. If a new chemistry breakthrough comes out tomorrow (ie: Redox Flow has huge potential in the utility space, even if it has little potential in the retail space)... Panasonic will be able to switch to the new chemistry but Tesla's battery tech is basically Lithium Ion only. Tesla's battery technology is literally the battery electronics. Not the chemical cells. Tesla seems to employ chemical experts so that their battery-electronics can better predict the effects of the chemistry... but really... they're only putting together cells. Tesla doesn't make the 18650, Panasonic does. Tesla just puts a bunch of 18650 together, as well as have some sort of algorithm to make them charge / discharge at high efficiency. Tesla is completely dependent on Panasonic's chemistry. The speed at which LG was able to build a "Silicon-Lithium Ion" battery pack of GM's Bolt only demonstrates how "easy" the battery-pack problem is.
dagw 10y ago
You're still making a bet that Tesla will become a top 3 car company in the world. Or that they will sell/license batteries and technology to the top 3 car companies in the world.
- idiot_stick 10y ago
  Also highly competitive, low margin business.
  - deleted 10y ago
    [deleted]

idiot_stick 10y ago

Do you actually know the scale at which car companies invest? Or do you just pretend to know that they "fail to invest" because that sounds fun in relation to Tesla?

JetSpiegel 10y ago
If they have profits, by definition they are not investing enough.
- idiot_stick 10y ago
  >If they have profits, by definition they are not investing enough. So nobody deserves a return on risked capital? That's insane.
allenz 10y ago
The other aspect is that investing isn't the end of the story. Nearly all car companies have made investments in green energy--but which are likely to produce results and win the market? Tesla is expected to execute better because it hasn't just set up a department to prototype EVs. Tesla is dedicated to EVs. The company is built on the technology. That results in a lack of legacy distractions, faster iteration cycles, effective vertical integration, and a wholly different culture and brand. It's a classic startup disrupting incumbent story. It isn't a sure thing, but it's enough to make Tesla very valuable.