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Let me be devils advocate here for a second... Let's first assume that Tesla succeeds in their production volumes and positive gross margins in the next few qu

Let me be devils advocate here for a second... Let's first assume that Tesla succeeds in their production volumes and positive gross margins in the next few quarters, and is able to solidify and stabilize their financial situation this year. What this article misses is the scope of upside that is what I believe the Tesla bulls are seeing (Disclaimer: I am a Tesla bull). In looking at the next 10 years I see: - Batteries being the primary constraint in progress in volumes of electric cars for automakers (which positions Tesla and vertically integrated companies like BYD well, but traditional automakers without a tight grip on battery production at this point not as much). - By looking at Tesla instead as a battery company, you can see how the vertical integration and scale (with the addition of plans for additional gigafactories in China and Europe) can be a unique competitive advantage against other auto companies. The more expertise Tesla gains by making better, cheaper batteries, the better. - The article you linked and many Tesla bears do not consider the opportunity with trucks, and different segments in the within logistics / transportation market (Tesla could release different truck sizes and modes). Again, we are looking 10 years out, right? - Tesla Energy, which is about grid storage (hint: requires batteries here too) will become a significantly larger market as certain grids around the world increase their share of intermittent energy sources. Grid scale battery systems are already becoming competitive alternatives to natural gas peaker plants. - And don't forget about SolarCity. They could do a lot with SolarCity, and make progress in various segments within rooftop solar, as costs of solar cells continue to decrease in the next decade. Not saying that Tesla is not without immense risk and that they do not have a very challenging few quarters ahead of them - but saying the upper bound of their upside is related to capturing the entire automobile market is not fully putting into account their long term plan and strategy.

maxerickson 8y ago
But why do you expect batteries to be anything other than a boring commodity business? Boring commodity businesses are a fine place to make money, but they aren't so likely to go to the moon.
- deleted 8y ago
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- w0m 8y ago
  but the backbone of moonshots tend to be 'boring commodity businesses' o.0
- croddin 8y ago
  Was oil a "boring commodity business"? Many oil companies made very high profits.
  - xkjkls 8y ago
    It's really about moats. What is the major moat you have around a battery production business? If batteries produced from Tesla versus any other competitor are almost indistinguishable, what is unique about Tesla that those market forces wouldn't suck out all of its profit? In oil, even though it is a "commodity", in that one barrel of crude oil is mostly indistinguishable from another, oil companies can have huge competitive moats by having integrated refining, the ability to distribute, or the fact they can have large monopolies on the resources of very specific areas. Batteries don't have quite the same sort of easy complementary businesses.
    - xapata 8y ago
      > What is the major moat you have around a battery production business? https://www.tesla.com/gigafactory https://www.tesla.com/gigafactory
      - xkjkls 8y ago
        Is that really going to be competitive against Panasonic, LG, or Samsung? All of those are in countries with better access to Lithium and cheaper engineering resources? I'd bet on those guys producing way more batteries.
        bllguo 8y ago
deleted 8y ago
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slg 8y ago
You are also forgetting Tesla's eventual ride sharing platform. Uber's valuation is currently higher than Tesla's. I don't know if Tesla is any closer to self driving taxis than Uber, but their is at least some potential there. Tesla's stock is certainly overvalued compared with their current financials and current competitors. However I wouldn't be surprised if 20 years down the line we think comparing Tesla to Ford was like comparing Netflix's mailing DVDs business to Blockbuster. That potential is what you are paying for when you purchase Tesla stock.
s2g 8y ago
> - Batteries being the primary constraint in progress in volumes of electric cars for automakers (which positions Tesla and vertically integrated companies like BYD well, but traditional automakers without a tight grip on battery production at this point not as much). https://techcrunch.com/2018/03/13/volkswagen-has-locked-down-25b-in-battery-supplies-for-its-electric-vehicle-push/ https://techcrunch.com/2018/03/13/volkswagen-has-locked-down... > Again, we are looking 10 years out, right? The question is if Tesla can survive 10 years. > And don't forget about SolarCity Oh please don't. Don't ever forget that Musk spent company money to bail out family from this shitty company.

maxerickson 8y ago

But why do you expect batteries to be anything other than a boring commodity business? Boring commodity businesses are a fine place to make money, but they aren't so likely to go to the moon.

deleted 8y ago
[deleted]
w0m 8y ago
but the backbone of moonshots tend to be 'boring commodity businesses' o.0
croddin 8y ago
Was oil a "boring commodity business"? Many oil companies made very high profits.
- xkjkls 8y ago
  It's really about moats. What is the major moat you have around a battery production business? If batteries produced from Tesla versus any other competitor are almost indistinguishable, what is unique about Tesla that those market forces wouldn't suck out all of its profit? In oil, even though it is a "commodity", in that one barrel of crude oil is mostly indistinguishable from another, oil companies can have huge competitive moats by having integrated refining, the ability to distribute, or the fact they can have large monopolies on the resources of very specific areas. Batteries don't have quite the same sort of easy complementary businesses.
  - xapata 8y ago
    > What is the major moat you have around a battery production business? https://www.tesla.com/gigafactory https://www.tesla.com/gigafactory
    - xkjkls 8y ago
      Is that really going to be competitive against Panasonic, LG, or Samsung? All of those are in countries with better access to Lithium and cheaper engineering resources? I'd bet on those guys producing way more batteries.
      - bllguo 8y ago

deleted 8y ago

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slg 8y ago

You are also forgetting Tesla's eventual ride sharing platform. Uber's valuation is currently higher than Tesla's. I don't know if Tesla is any closer to self driving taxis than Uber, but their is at least some potential there. Tesla's stock is certainly overvalued compared with their current financials and current competitors. However I wouldn't be surprised if 20 years down the line we think comparing Tesla to Ford was like comparing Netflix's mailing DVDs business to Blockbuster. That potential is what you are paying for when you purchase Tesla stock.

s2g 8y ago

> - Batteries being the primary constraint in progress in volumes of electric cars for automakers (which positions Tesla and vertically integrated companies like BYD well, but traditional automakers without a tight grip on battery production at this point not as much). https://techcrunch.com/2018/03/13/volkswagen-has-locked-down-25b-in-battery-supplies-for-its-electric-vehicle-push/ https://techcrunch.com/2018/03/13/volkswagen-has-locked-down... > Again, we are looking 10 years out, right? The question is if Tesla can survive 10 years. > And don't forget about SolarCity Oh please don't. Don't ever forget that Musk spent company money to bail out family from this shitty company.