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It's a super volatile stock and very expensively priced. The current stock price assumes a successful Model 3 launch, and also growth beyond the Model 3 in the
by marvin 10y ago
It's a super volatile stock and very expensively priced. The current stock price assumes a successful Model 3 launch, and also growth beyond the Model 3 in the shape of new models, much greater market share and considerable likelihood of success with battery pack sales and solar installations. Tesla's current market cap is equal to Ford's, so a bull scenario would require Tesla to operate at higher margins, and/or higher total market-share, relative to the competition. Possibly combined one or more of the biggest traditional auto manufacturers fumbling the transition to electric and going under. (And obviously, a central thesis is that most people will want an electric rather than a combustion engine-powered vehicle in 5-10 years).
On the other hand, in the best-case scenario Tesla has huge room to grow. The 4 largest auto manufacturers sell on the order of 10 million vehicles per year, to Tesla's 100.000. Note that if Tesla were to grow production this much, it would have to happen either with favorable capital raise terms, requiring less capital than is generally understood, or by having very high margins and reinvesting very aggressively.
Tesla also has ambitions to become a leading energy supplier, under the thesis that solar installations will not be a commodity, but a product where superior user experience and system integration will be in demand. The bear case for this is that demand for solar installations will be limited to the cheapest supplier slapping the cheapest panels on a roof and calling it a day, or that a well-integrated solar system will be so simple to design that many companies will do it. We don't have the answer here yet, since this market is not mature. It also hinges on solar being at a tipping point where it is poised to displace a large amount of fossil power generation due to rapidly decreasing costs in cell and battery storage.
Tl;dr: you wouldn't invest in Tesla today unless you have a very big risk appetite and also believe that the transportation and consumer energy landscape will look very different in 10 years.
- petra 10y agoOn Tesla growing to millions of cars per year: at those volumes, most likely the government won't give subsidies anymore. So this means a car needs to be priced at the area of $20K( from $40k today) for a 200 miles range, and that means batteries below $100/kwh. Whether this is possible with Tesla's li-ion is a big question, some predictions i saw talk about $150/kwh as the limit, graph[1], from this nature article[2]. On the other hand, musk is predicting they will be below $100/kwh in the 2020's[3] - but that doesn't sound like a really reliable source. Also, there are possibly other battery chemistries, like li-sulfur , which could probably reach $100/kwh. Assuming it works, will it stay the giga factory(will it even fit?) with exclusivity for Tesla cars ? or more likely be available to more companies(with many new giga factories that will become established) - leading to a great situation, but maybe not a happy one for Tesla stock owners ? [1]http://energypost.eu/wp-content/uploads/2016/04/Schalk-Cloete-figure-1.png http://energypost.eu/wp-content/uploads/2016/04/Schalk-Cloet... [2]http://www.nature.com/nclimate/journal/v5/n4/full/nclimate2564.html?WT.ec_id=NCLIMATE-201504 http://www.nature.com/nclimate/journal/v5/n4/full/nclimate25... [3]https://forums.tesla.com/forum/forums/how-soon-can-tesla-get-battery-cell-costs-below-100-kilowatt-hour https://forums.tesla.com/forum/forums/how-soon-can-tesla-get...
- Retric 10y ago60kwh * 150$ / kWh = 9000$. Also, electric cars can be more expencive to buy as they are much cheaper to operate as many people lease making it a pure cost per month calculation.
- Retric 10y agoA very important caveat when comparing car companies is they source a lot of components from a network of suppliers many of whom are worth billions. So, if Tessa is supplying the battery systems for Ford etc they can still make significant profit from that relationship without selling any cars.
- MegaButts 10y agoDoes Tesla sell batteries to GM for the Bolt?
- dragontamer 10y agoNo. LG Chem does.
- MegaButts 10y ago> Tesla's current market cap is equal to Ford's While I think Tesla's valuation is high, it's worth mentioning that Ford's valuation might be exceedingly low. They live in alternate universes. Tesla's stock price is based on everything going right. Ford's stock is based on everything going wrong, with a P/E ratio of 7 (roughly half of the industry standard). Investors are already baking the subprime auto loan problem into the stock price. Personally I'm more interested to see how GM fares against Tesla now that they're selling the Bolt. Everybody says it's a great car (never tried it), but I don't think anyone expects it to sell like a Tesla. Whatever happens, it's fun to watch from the sidelines.
- dkrich 10y agoThis is my take as well and I actually have the largest percentage of my stock portfolio invested in them (also have a decent % in GM). Ford makes huge profits and sells hundreds of thousands of vehicles a year, including the F150, which is has been the best-selling vehicle in the US for some time (and quite profitable too). They're also a very innovative company despite reports to the contrary. Tesla's stock price accounts for lots of assumptions about the auto market that still remain to be seen. One other thing that I think people discount is brand loyalty, which is stronger in the auto market than in most industries. People who like a brand tend to buy most or all of their cars from that manufacturer, and that's a very difficult thing to overcome for a new market entrant. Every time Tesla releases a brand new vehicle it's an enormous risk. Market demand for cars is pretty predictable for well-known brands, which is why major car manufacturers have continued re-releasing new generations of the same models for decades. Each model has its own brand that is worth millions (in some cases, billions). A brand new model has to build that demand from scratch. A new version of an existing model already has a huge market that already know about and want that car.