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At $50B Market Cap, Tesla should be delivering at least $2B Annual profits. It's clear Tesla has run through higher margin demand. There aren't many people in

At $50B Market Cap, Tesla should be delivering at least $2B Annual profits. It's clear Tesla has run through higher margin demand. There aren't many people in the world who can afford a $50,000 car. Tesla is a niche market car, but priced as a mass market (like iPhones) product. Expect Tesla's sustainable profit to be around $500 Mil per year and it's share price must be cut in half to justify that

dominotw 8y ago
Wouldn't they be used as self driving pods in future? 50k is low end for that.
- IshKebab 8y ago
  In the far future. Tesla is unlikely to be able to wait 20+ years for driverless cars to become a reality.
- astrodust 8y ago
  The future as in 2030 or the future as in 2090?
btian 8y ago
> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits. LOL what? Show me another company with $50B market cap growing at 50% a year on the top line to deliver $2B in profits. I'll wait.
- qroshan 8y ago
  Huh? Did you compare Q3 and Q4 numbers, the growth has pretty much reached steady state. 90,000 per quarter is what Tesla will be and probably 500 Million annual profit. 50% profit growth is delusional at this stage
  - jacobkranz 8y ago
    I think OP's point is that Tesla isn't just a car company but they're also an energy storage & solar producer. While the car biz may have be leveling off (and that's not accounting for the semi & modely Y launching this year and next respectively), their energy storage is starting to take off along with the solar roofs so this provides huge growth opportunities in the future.
  - 300bps 8y ago
    Q32018: 55,800 Model 3s delivered. Q42018: 63,100 Model 3s delivered. That's a 13% growth rate in a single quarter which is more than 50% growth rate annualized.
    - gamblor956 8y ago
      If Tesla was expecting 50% annualized growth, or even growth comparable to their recent historical trends, they would not have cut the price tag on every model of car they sell.
      - mulmen 8y ago
        That... isn’t how economies of scale or elasticity of demand work.
        gamblor956 8y ago
        I think you might need to brush up on your understanding of demand elasticity curves. Tesla is dropping the sticker price of their vehicles because they think that demand for their cars is at least somewhat elastic with respect to sticker price, and they're in a better position than you or me to have the data and analysis on this. (Tesla has also announced that this is why they're dropping the price so I'm not sure why you're arguing this point?) Economies of scale are not related to this drop in price. Economies of scale refers to it being cheaper to product an product at scale due to efficiencies in the use of the largely fixed-cost capital expenditures. Companies don't usually drop prices due to EOS until at least a quarter or two after they've reached that point in the production cost cycle, largely to confirm that they've actually reached EOS operationally, and some company's retain the efficiencies from EOS as profit until/unless they need to for competitive market reasons.
- dang 8y ago
  Please don't post in the flamewar style to Hacker News. It degrades discussion, regardless of how right you are. Your comment would be fine with just the middle sentence. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
lazyjones 8y ago
> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits. When Amazon reached that mark in 2009, their annual profit was slightly over 1B... And the car industry isn't famous for particularly high margins. > Expect Tesla's sustainable profit to be around $500 Mil per year and it's share price must be cut in half to justify that There are no such rules for share prices, especially with this kind of revenue growth. Nobody knows where Tesla will be in 5 years but most shareholders expect easily an order of magnitude higher revenues and possibly profits.
- beatgammit 8y ago
  Yeah, there are plenty of avenues for Tesla to increase profit, such as: - new vehicle markets (def. semi trucks, perhaps boats and trains as well) - solar - military They don't have a ton of baggage like their competitors, so they can pivot their battery business in a variety of ways without too much additional investment. The real question is if they can stay ahead of competition as they expand.
  - lazyjones 8y ago
    > The real question is if they can stay ahead of competition as they expand. So far they have not only expanded their lead (e.g. Nissan Leaf used to be a bestseller), they've also proven that they got their priorities right from the start. Look at the new Audi e-tron, the Mercedes GLC and the i-Pace: they're all suffering from horrible aerodynamics that cost them 20% or more range at freeway speeds compared to Teslas. They have no fast charging networks able to support similar sales numbers even to Model S/X. Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines. They are now making expensive mistakes that Tesla avoided altogether, so I'm confident about Tesla's leadership.
    - gamblor956 8y ago
      Nissan has sold nearly every Leaf it has ever made. It simply doesn't make many of them, since it was first intended to be a compliance car and a loss leader for the brand. You can't even buy a Leaf in most of the country, so if you were to scale up sales of the Leaf to the same geographic territory as Tesla sells to, the sales would be about comparable. Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines. Ah, proper planning. That certainly explains the billion-dollar line collecting dust, the year-long delay on every model, and their inability to properly deliver finished cars to their customers when promised (i.e., basic logistics). The cars you've mentioned aren't meant to have maximum range at high speeds; they're meant to have X range at commuter speeds while providing a luxurious ride. You'll also have to demonstrate (with cites) that the aerodynamics will cost them 20% of posted range, since those aerodynamics have already been factored into their range as part of the federally-mandated testing.
johnvanommen 8y ago
Once Jaguar, Porsche and Audi are able to produce electric cars in quantity, things are going to get interesting. For instance, I was recently looking at the Jaguar I-Pace, and was stunned by how long the wait and how high the markups are. Clearly there's a demand for a $100,000 electric car, but things are going to get difficult for Tesla once the competition arrives.
- Nursie 8y ago
  The i-Pace makes me drool far more than Tesla... but it's going to be a while before I can afford either so it's rather a moot point!
- luckydata 8y ago
  Competition has been arriving for quite a while though. Having just bought a Tesla, I can tell you I'm starting to appreciate more than just intellectually the huge network of chargers and other infrastructure that company has laid out. It's not perfect but anyone else wanting to play in this market will need the same, and Jaguar is in no position to do it. I don't think anyone at Tesla is losing any sleep over Jaguar TBH but they might be looking intensely towards Toyota.
  - gamblor956 8y ago
    I live in a nice part of LA and I see as many iPace's as Teslas, and the iPace has only been available for about 3 months locally. And the iPace owners are absolutely glowing in their reviews of the car in a way I've never heard Tesla owners get. Indeed--while most Tesla owners I know talk their heads off about the charging network[1], they tend to be defensive about the actual quality of the car itself in ways that luxury car buyers shouldn't be. [1] While Tesla has a geographically large charging network, it's density is pretty horrible. In DTLA for example, you're 9 miles away from the closest Supercharger, and condo/apartment dwellers are SOL for installing their own unless they want to pay excessive fees to have one installed in their parking spot. There are a number of standard EV chargers through the downtown area, and the number of non-Tesla chargers exceeds the number of Tesla-only chargers by a factor of at least 10:1.
JumpCrisscross 8y ago
> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits P/E ratios aren’t effective for high-growth or quickly-declining companies. The PEG ratio attempts to compensate for this.
- qroshan 8y ago
  Exactly my point. US demand growth is done. There will be International pent up demand will be done in Q1. Q2 and Q3 will show that Tesla has pretty much plateaued. Profit growth is even lower
  - JumpCrisscross 8y ago
    Companies can grow in a shrinking market by stealing share. I’m no Tesla bull, but you’re casting a loose prediction with far more certainty than it merits.
    - toufiqbarhamov 8y ago
      It is a concern though, and as a Tesla supporter I’m a little worried. Tesla is also going to be looking at serious and sustained competition from giants like VW, so if they want to steal market share they’d better do it fast. I accept the argument that such competition is a good outcome for the planet, but I’m not so sure it’s a good outcome for Tesla the company.
_ph_ 8y ago
As deliveries are to the US and Canada only at the moment, at worst they have cut through the higher margin demand of those two countries. Deliveries to other contries are going to start in Q1 of course with the highgest margin cars. And of course, while demand for the high margin versions might drop somewhat in the US there is no reason to assume it was completely addressed in just two quarters. This was just the demand by people who could afford to buy their car in that time frame. But that is only a fraction of the possible customer base - most people buy a new car when their old one breaks down, they have the money ready or the lease of their current car runs out. So it is not clear to me that the demand for the high end configurations is going to drop significantly at all.
dmode 8y ago
>>At $50B Market Cap, Tesla should be delivering at least $2B Annual profits There is no rule like that on a growth stock. You don't value growth stock on a P/E ratio, but some measure of future discounted cashflows.
- querulous 8y ago
  tesla already has a market cap bigger than both ford and gm. you have to believe tesla is going to be the sole major north american car manufacturer in the near future to think tesla is a growth stock
  - dmode 8y ago
    While we can argue whether the $50B market cap is too much, i was only commenting on a hard rule around valuation and earnings for a company in growth mode. I mean, I haven't looked at the P/E ratios but I bet Amazon's will look out of whack compared to Walmart's

dominotw 8y ago

Wouldn't they be used as self driving pods in future? 50k is low end for that.

IshKebab 8y ago
In the far future. Tesla is unlikely to be able to wait 20+ years for driverless cars to become a reality.
astrodust 8y ago
The future as in 2030 or the future as in 2090?

btian 8y ago

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits. LOL what? Show me another company with $50B market cap growing at 50% a year on the top line to deliver $2B in profits. I'll wait.

qroshan 8y ago
Huh? Did you compare Q3 and Q4 numbers, the growth has pretty much reached steady state. 90,000 per quarter is what Tesla will be and probably 500 Million annual profit. 50% profit growth is delusional at this stage
- jacobkranz 8y ago
  I think OP's point is that Tesla isn't just a car company but they're also an energy storage & solar producer. While the car biz may have be leveling off (and that's not accounting for the semi & modely Y launching this year and next respectively), their energy storage is starting to take off along with the solar roofs so this provides huge growth opportunities in the future.
- 300bps 8y ago
  Q32018: 55,800 Model 3s delivered. Q42018: 63,100 Model 3s delivered. That's a 13% growth rate in a single quarter which is more than 50% growth rate annualized.
  - gamblor956 8y ago
    If Tesla was expecting 50% annualized growth, or even growth comparable to their recent historical trends, they would not have cut the price tag on every model of car they sell.
    - mulmen 8y ago
      That... isn’t how economies of scale or elasticity of demand work.
      - gamblor956 8y ago
        I think you might need to brush up on your understanding of demand elasticity curves. Tesla is dropping the sticker price of their vehicles because they think that demand for their cars is at least somewhat elastic with respect to sticker price, and they're in a better position than you or me to have the data and analysis on this. (Tesla has also announced that this is why they're dropping the price so I'm not sure why you're arguing this point?) Economies of scale are not related to this drop in price. Economies of scale refers to it being cheaper to product an product at scale due to efficiencies in the use of the largely fixed-cost capital expenditures. Companies don't usually drop prices due to EOS until at least a quarter or two after they've reached that point in the production cost cycle, largely to confirm that they've actually reached EOS operationally, and some company's retain the efficiencies from EOS as profit until/unless they need to for competitive market reasons.
dang 8y ago
Please don't post in the flamewar style to Hacker News. It degrades discussion, regardless of how right you are. Your comment would be fine with just the middle sentence. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

lazyjones 8y ago

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits. When Amazon reached that mark in 2009, their annual profit was slightly over 1B... And the car industry isn't famous for particularly high margins. > Expect Tesla's sustainable profit to be around $500 Mil per year and it's share price must be cut in half to justify that There are no such rules for share prices, especially with this kind of revenue growth. Nobody knows where Tesla will be in 5 years but most shareholders expect easily an order of magnitude higher revenues and possibly profits.

beatgammit 8y ago
Yeah, there are plenty of avenues for Tesla to increase profit, such as: - new vehicle markets (def. semi trucks, perhaps boats and trains as well) - solar - military They don't have a ton of baggage like their competitors, so they can pivot their battery business in a variety of ways without too much additional investment. The real question is if they can stay ahead of competition as they expand.
- lazyjones 8y ago
  > The real question is if they can stay ahead of competition as they expand. So far they have not only expanded their lead (e.g. Nissan Leaf used to be a bestseller), they've also proven that they got their priorities right from the start. Look at the new Audi e-tron, the Mercedes GLC and the i-Pace: they're all suffering from horrible aerodynamics that cost them 20% or more range at freeway speeds compared to Teslas. They have no fast charging networks able to support similar sales numbers even to Model S/X. Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines. They are now making expensive mistakes that Tesla avoided altogether, so I'm confident about Tesla's leadership.
  - gamblor956 8y ago
    Nissan has sold nearly every Leaf it has ever made. It simply doesn't make many of them, since it was first intended to be a compliance car and a loss leader for the brand. You can't even buy a Leaf in most of the country, so if you were to scale up sales of the Leaf to the same geographic territory as Tesla sells to, the sales would be about comparable. Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines. Ah, proper planning. That certainly explains the billion-dollar line collecting dust, the year-long delay on every model, and their inability to properly deliver finished cars to their customers when promised (i.e., basic logistics). The cars you've mentioned aren't meant to have maximum range at high speeds; they're meant to have X range at commuter speeds while providing a luxurious ride. You'll also have to demonstrate (with cites) that the aerodynamics will cost them 20% of posted range, since those aerodynamics have already been factored into their range as part of the federally-mandated testing.

johnvanommen 8y ago

Once Jaguar, Porsche and Audi are able to produce electric cars in quantity, things are going to get interesting. For instance, I was recently looking at the Jaguar I-Pace, and was stunned by how long the wait and how high the markups are. Clearly there's a demand for a $100,000 electric car, but things are going to get difficult for Tesla once the competition arrives.

Nursie 8y ago
The i-Pace makes me drool far more than Tesla... but it's going to be a while before I can afford either so it's rather a moot point!
luckydata 8y ago
Competition has been arriving for quite a while though. Having just bought a Tesla, I can tell you I'm starting to appreciate more than just intellectually the huge network of chargers and other infrastructure that company has laid out. It's not perfect but anyone else wanting to play in this market will need the same, and Jaguar is in no position to do it. I don't think anyone at Tesla is losing any sleep over Jaguar TBH but they might be looking intensely towards Toyota.
- gamblor956 8y ago
  I live in a nice part of LA and I see as many iPace's as Teslas, and the iPace has only been available for about 3 months locally. And the iPace owners are absolutely glowing in their reviews of the car in a way I've never heard Tesla owners get. Indeed--while most Tesla owners I know talk their heads off about the charging network[1], they tend to be defensive about the actual quality of the car itself in ways that luxury car buyers shouldn't be. [1] While Tesla has a geographically large charging network, it's density is pretty horrible. In DTLA for example, you're 9 miles away from the closest Supercharger, and condo/apartment dwellers are SOL for installing their own unless they want to pay excessive fees to have one installed in their parking spot. There are a number of standard EV chargers through the downtown area, and the number of non-Tesla chargers exceeds the number of Tesla-only chargers by a factor of at least 10:1.

JumpCrisscross 8y ago

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits P/E ratios aren’t effective for high-growth or quickly-declining companies. The PEG ratio attempts to compensate for this.

qroshan 8y ago
Exactly my point. US demand growth is done. There will be International pent up demand will be done in Q1. Q2 and Q3 will show that Tesla has pretty much plateaued. Profit growth is even lower
- JumpCrisscross 8y ago
  Companies can grow in a shrinking market by stealing share. I’m no Tesla bull, but you’re casting a loose prediction with far more certainty than it merits.
  - toufiqbarhamov 8y ago
    It is a concern though, and as a Tesla supporter I’m a little worried. Tesla is also going to be looking at serious and sustained competition from giants like VW, so if they want to steal market share they’d better do it fast. I accept the argument that such competition is a good outcome for the planet, but I’m not so sure it’s a good outcome for Tesla the company.

_ph_ 8y ago

As deliveries are to the US and Canada only at the moment, at worst they have cut through the higher margin demand of those two countries. Deliveries to other contries are going to start in Q1 of course with the highgest margin cars. And of course, while demand for the high margin versions might drop somewhat in the US there is no reason to assume it was completely addressed in just two quarters. This was just the demand by people who could afford to buy their car in that time frame. But that is only a fraction of the possible customer base - most people buy a new car when their old one breaks down, they have the money ready or the lease of their current car runs out. So it is not clear to me that the demand for the high end configurations is going to drop significantly at all.

dmode 8y ago

>>At $50B Market Cap, Tesla should be delivering at least $2B Annual profits There is no rule like that on a growth stock. You don't value growth stock on a P/E ratio, but some measure of future discounted cashflows.

querulous 8y ago
tesla already has a market cap bigger than both ford and gm. you have to believe tesla is going to be the sole major north american car manufacturer in the near future to think tesla is a growth stock
- dmode 8y ago
  While we can argue whether the $50B market cap is too much, i was only commenting on a hard rule around valuation and earnings for a company in growth mode. I mean, I haven't looked at the P/E ratios but I bet Amazon's will look out of whack compared to Walmart's