6 ms·

Tesla is close to becoming the most valuable car company

47 points by theBashShell 6y ago

coldcode 6y ago
It has declining revenues, increasing liabilities, and sell expensive cars in a strange recessive economy. Its stock is being treated like early Facebook. Sure it might have some magical future where it dominates auto sales forever, but supporting this valuation is nuts.
- sp332 6y ago
  They're in a massive growth phase. Look at their revenue compared to this time last year.
  - Silhouette 6y ago
    The problem is that, as every investment firm reminds us, past performance is not a guarantee of future returns. This year is not going to look like last year, for just about anyone in business.
- CrazyStat 6y ago
  Declining revenues? I want some of what you're smoking.
  - bhupy 6y ago
    I think it's incorrect to say that their revenues are declining, but in this past year Ford and GM sold 60-70x more cars than Tesla did, each. Tesla would have to monopolize car production on the entire planet to justify their valuation, at least as a car company. If you were to price this company as a combination of auto (Ford/GM) + energy (Chevron) + ridesharing? (Uber/Lyft), then you could maybe justify this valuation in the long run, but Tesla is yet to really prove any real revenue in energy and ridesharing, at scale. The current value is pure hype and expectation, and remains to be seen who ends up being correct in the long run.
    - SEJeff 6y ago
      at least as a car company Is their justification justified if they are treated as more than a car company? Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. Tesla is a car company. Plus a static energy provider (powerwall, powerpack, megapack). Plus a solar provider (solar panels + solar tiles) Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. Plus a software company. Even if you want to joke about AP not being full self driving. Find a car you can buy right now that does all of the things that a Tesla on autopilot can do (in specific, stop lights / signs, smart summon, and navigate on autopilot). Last I checked, the closest was Mercedes's supercruise, which is very good and still doesn't have 1/2 of the functionality of Tesla. The OTA updates really are game changing. When I purchased my Model 3 in November 2018, it lacked an alarm system (Sentry Mode), dashcam (Tesla Cam), etc. I got this and a ton more functionality, for free via OTA updates. Unlike every other automotive company, I didn't have to wait for their next year's model. This is a radical rethink of the industry. Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are.
      - bhupy 6y ago
        > Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. I don't doubt that Tesla is a great car, I plan to buy one myself. The question is whether this justifies that kind of valuation. Cars are a commodity, and for as long as they've existed, there have always been great cars, shitty cars, and everything in between. Re: cybertruck. Ford already has already demonstrated its F-series all electric pickup prototype. I don't doubt that the semi truck market is huge, but again I ask: what specifically does Tesla have that would make it a monopoly here? Seems like another commodity market. > Plus a static energy provider (powerwall, powerpack, megapack). > Plus a solar provider (solar panels + solar tiles) In theory, yes, but in practice they haven't sold much of this at all. Remember, the current revenue growth is on the back of their car revenues. Vast majority of their opex is in car manufacturing and sales. > Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. This is a strong point, but I'm not sure that it's really that much of a competitive advantage. While you're right that Tesla has a huge lead on everyone, that's just because the vast majority of consumers still drive ICE cars, and get the energy for that from Chevron/Arco/Shell/BP pumps sprinkled all over the world. The world will gradually shift away from ICE -> electric, but installing electric chargers at gas pumps isn't a huge lift for your Chevrons of the world — they already have the humans, capital, and real estate. > Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are. I don't doubt that Tesla will continue to exist and be hugely successful — I'm even rooting for Elon because he is IMO the most interesting industrialist of all time. It still doesn't necessarily mean that they are worth $200B+. [1] https://www.youtube.com/watch?v=jAlIfWcCJdI https://www.youtube.com/watch?v=jAlIfWcCJdI
  - alextheparrot 6y ago
    A more productive comment would’ve taken the statement at face value and tried to learn where the disconnect is. I assume that the first sentence, including declining revenues, is in reference to the current state vs expectations. The disconnect may be in what “Declining revenues” was intended to mean, in this case it makes sense if it is against expected revenue instead of the global value.
    - CrazyStat 6y ago
      You're very generous with your assumption.
  - xkjkls 6y ago
    In the US they’ve been posting revenue YoY declines
samfisher83 6y ago
The valuation on this stock is insane. However shorting it is also insane.
- StavrosK 6y ago
  What word would you use to describe thinking that those sentences can both be true at the same time?
  - deleted 6y ago
    [deleted]
  - kod 6y ago
    Sane. "There's too much risk either direction, stay away from it" sounds pretty sane to me.
  - OldHand2018 6y ago
    How about the famous quote: "The markets can stay irrational longer than you can stay solvent"
  - ABeeSea 6y ago
    The one where shorting requires debt and a massive risk premium on the time value of money. Not to mention the unlimited risk piece. The two bets aren’t symmetric
  - deleted 6y ago
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  - CrazyStat 6y ago
    A recognition that the market may continue to be irrational for a long time, so even if you believe a company to be extremely overvalued it may be unwise to short it unless you have infinitely deep pockets. If you insist on a single word, may I suggest "experience."
    - gpm 6y ago
      And even if you have infinite money, a short squeeze in the meantime can mean that you permanently lose money on shorting the stock before it goes down.
partiallypro 6y ago
If you think this is insane, look at Nikola, an electric car company that has never produced a single vehicle...is now worth more than Ford (as of yesterday.)
- zaroth 6y ago
  I would guess that the paper value market cap of Nikola is an artifact of extremely tight supply of their new stock.
- tenpies 6y ago
  And if you want to see even more insanity, look at market cap versus profit. Tesla - who has not even made $1 BB of profit in its 15 years despite billions of government money, tax credits, regulatory credits, and untold favours - is now valued at $185 BB. Musk's bonus this year is bigger than all the profit Tesla has ever made. It is absolute insanity.
  - deleted 6y ago
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  - xkjkls 6y ago
    You can add up every quarter they had a profit, and ignore the fact that they had losses every other quarter and it’s still not equal to his $750 million pay package
  - Cthulhu_ 6y ago
    Modern capitalism doesn't work with basic maths apparently; companies run off investor money for years, if not decades (AMD is one of those companies that has been running a net negative for a long time - not sure how they're doing of late though). Personally, based on a very superficial understanding of economy, I... don't actually mind - as long as their personnel, suppliers, and taxes are paid timely and adequately, they are doing their 'contribution' to the economy.
- dhosek 6y ago
  I'd never heard of them before. Here's wikipedia on them: https://en.wikipedia.org/wiki/Nikola_Motor_Company https://en.wikipedia.org/wiki/Nikola_Motor_Company It appears that technically, your statement is incorrect in that they've produced some prototypes. And they have orders (not sure if that counts as sales), but they've not actually delivered a production vehicle yet. Which makes their market cap seem insane, but it seems like most publicly traded companies have had insane market caps since the 90s.
pbreit 6y ago
Elon is the greatest entrepreneur of the era and possibly ever. Stockholders are paying for a large piece of his attention and interest.
sixQuarks 6y ago
Do the fundamentals justify Tesla's market cap? No. Is Tesla just a car company? No. Does Tesla still have an exponential growth outlook? Yes. Has Tesla been able to meet their stated goals in the 1st 10 years? Yes. Do you think Tesla will meet their stated goals for the next 10 years? Probably This is why Tesla market cap is nearly 200 billion.
- sschueller 6y ago
  "Has Tesla been able to meet their stated goals in the 1st 10 years? Yes" Where is the full self driving car? They are selling a feature that most likely will never exist.
  - nickik 6y ago
    That there is so much tech conservatism on Hacker News is quite baffling. The idea that self driving cars will not exist is just nonsense, and Tesla is best place to exploit it.
    - bhupy 6y ago
      Honest question: why is Tesla in a better place to "exploit" self driving than Waymo?
      - mucle6 6y ago
        I've heard that whenever someone uses autopilot on a Telsa, if they override the autopilot, it sends the car's video and commands from before, and uses the override as the "correct" decision. If Tesla has every one of their cars feeding their models more data, it does feel like a natural conclusion that they will be able to overtake waymo. *Disclaimer: I'm not an expert in ML
      - sixQuarks 6y ago
        billions of miles of real-world driving data from a million and growing fleet of vehicles. Tesla has built their own chip optimized fully for self-driving. all-in on vision based full self-driving, which seems to be the only way to solve all the edge cases. Even if google accomplishes self driving with lidar, lidar will never be able to compensate for all edge cases. Human vision already compensates for all edge cases, thus the case for vision based self driving.
davedx 6y ago
Despite the production chaos, missed deadlines, over promises and general CEO fuckwittery, Tesla is a massive success story that was in the right place at the right time and completely changed an industry. I have huge respect for everyone who worked there and helped build it. I was a (small time) shareholder from around 2013 until last year when I happily liquidated my position and put in an order for a Model 3. I don't think anyone can really say whether this share price is justified even with all the future growth priced in. This is a company that has been at least partly responsible for some quite fundamental changes in mobility, and they're nowhere done yet. (I'm more excited about the Semi than Cybertruck). They've also helped drive the price/watt of batteries right down which is having a multitude of knock-on effects across many industries. Without Tesla, would we have seen battery powered airplanes starting to be built? Maybe we would, but they would probably be at the least more expensive. I can't wait to see what the future holds for Tesla, and despite all his shortcomings, I'm happy Musk is still in charge. This all simply would not have happened without his insane drive and determination. (Strangely, HN, that loved Apple in Steve Jobs' glory days, seems to have a lot of irrational hatred for Tesla).
- Traster 6y ago
  Steve Jobs went on stage and announced the iPod on October 3rd 2001, they were on sale Nov 10th. He announced the iPhone Jan 2007, it was in people's hands by June. Elon Musk announced fully autonomous cars about 17 times in the last decade and sold software packages to people for it and has still hasn't delivered. I'm not sure Jobs could be any further from Musk in terms of how they manage(d)their companies.
- fsloth 6y ago
  "(Strangely, HN, that loved Apple in Steve Jobs' glory days, seems to have a lot of irrational hatred for Tesla)." Jobs was vocal in public about products they have already launched. They delivered products that were obviously best at what they were intended for. Musk is vocal about - well, apparently everything - and ICE:s are still a superior option for a large category of car owners. I think the biggest gripe is probably about overpromising autopilot capability years before it's actually production ready. Still, Musk is up there with Ford on a list of industrialists who made a dent in the universe in my books.
tibbydudeza 6y ago
Talk to me again when they make something for the common folk like the Toyota Corolla or VW Golf ... sure they will become an important player but it will be like Volvo.
- AlanSE 6y ago
  The valuation basically assumes that the Corolla of Tesla will come around sometime in the next 10 years, otherwise volume won't be enough. But not before they run out of all the most profitable markets. Thus the consumer-level truck.
- megaman821 6y ago
  I think it is pretty likely in the next 10 years they will be selling the Model 3 for around $25. That is definitely mass-market pricing.
- fomine3 6y ago
  As an outside of US person, I won't expect US car manufacturer going to record top sales on all over the world. In EV era, I expect Tesla would get BMW position but not Volkswagen/Toyota.
syllable_studio 6y ago
People will never understand Tesla's value if they don't understand that Tesla is more than just a car company. (But no comment on the current stock value.)
- u10 6y ago
  What kind of company are they?
  - mschuster91 6y ago
    A software company (where they are lightyears ahead of everyone else), an AI company (they've got far more real world training data than everyone else) and a battery management tech company (again, they have the most experience). The fusion of these three strong parts and their car knowledge (where their advantage over the competition is not the experience but the agility) is what drives the valuation. Tesla only has to solve scale (which they're beginning to do) and spare parts availability (which is going to solve itself but it needs time to build out a network) to utterly dominate the car market of the future.
    - u10 6y ago
      They don't sell software though... they sell cars augmented with software. If they don't have cars to sell they don't have any software to sell. Sure, one could argue the valuation is pricing in the value of the patents but that doesn't mean that Tesla is not overvalued. Not to mention most of their RnD and their capex goes towards manufacturing cars.
    - Traster 6y ago
      Huh? Tesla has to actually solve self-driving to justify their valuation. All the things you've listed might put them at an advantage solving that problem, but what their software does today doesn't justify the valuation. If it turns out that Tesla are probably 1 or 2 steps ahead of most fo the competition towards self-driving. It may turn out that we're a thousand steps away from self-driving, in which case their AI and software advantages simply aren't going to map to massive profits.
u10 6y ago
The world has gone insane... treating a manufacturing company like it's a tech company and applying the "appropriate" multiples. People are going to lose their shirts on this one.
- deleted 6y ago
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- the-dude 6y ago
  Tesla is by no means just a manufacturing company.
  - u10 6y ago
    Their core business is manufacturing. The vast majority of their RnD and capex goes into manufacturing. They don't sell software, they sell cars.
- alextheparrot 6y ago
  Couldn’t you apply this same principle to Apple from ~2000 until current? It seems, at least in some pocket markets, there exists an intersection where manufacturing and technology combine to be highly profitable. Maybe car manufacturing isn’t one of those places, but I feel like that’s more difficult to dismiss as flippantly.
  - u10 6y ago
    Not really, for one Apple outsources their manufacturing to various companies (TSMC, Foxconn, AMD, Intel, etc). This allows Apple to focus on design and software (ie, the hardware design follows the software, unlike Tesla where the software follows the hardware, so to speak), and not get bogged down in the manufacturing process. Apple handles the design and software, not the manufacturing.
- jeffreyrogers 6y ago
  The more things I've seen like this, the more I realize the wisdom of Keyne's quote, "the market can stay irrational longer than you can stay solvent", or something to that effect. There have been a number of publicly traded companies I've seen with outrageous valuations, that've shocked me by how long they've maintained them. I've probably been right about the eventual outcome about 70% of the time, but I would have lost a ton of money trying to bet against them.
deleted 6y ago
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A4ET8a8uTh0 6y ago
I want to love Tesla, but between messing with car setup OTA, issues with getting parts and basically treating car like a software release, it is difficult for me to consider it for purchase ( and I do want an EV ). Eh, I really hope other manufacturers deliver.
zaroth 6y ago
Most of all it’s important to understand the headline is totally false. The “value” of a company is not represented in its equity market cap. Other car companies finance their operations through debt instead of equity. It directly effects their market cap. It doesn’t directly effect their “value”.
- bryanlarsen 6y ago
  Correct. Toyota enterprise value: $325B Tesla enterprise value: $200B https://ycharts.com/companies/TM/enterprise_value https://ycharts.com/companies/TM/enterprise_value https://ycharts.com/companies/TSLA/enterprise_value https://ycharts.com/companies/TSLA/enterprise_value
martythemaniak 6y ago
Tesla is an industrial conglomerate that will power the 21st century. At the moment they are a small, luxury car maker, but much like Apple was a small, luxury computer maker, Tesla's ambitions are great and their stock price is a function of how much the market believes that they will be able to achieve that. The parts of this conglomerate are: * The vehicle manufacturing. This one is obvious - they have a big lead on other automakers in producing EVs and this lead is not closing. They will keep expanding their portfolio of models and markets until they're near the top. * The mobility service. This will grow out of their Autopilot efforts and take on Uber et all. This will be much wider though, as it will include public transit services with the Boring Co, private cars, and even taking on rail with fleets of Semis. * The electricity utility business. This one is simple as well - there's a ton of cheap solar and wind power. Pairing it with batteries and Tesla's management software means they'll be providing the infrastructure utilities use. They likely won't become a utility themselves, as that requires local certifications etc. * The homes business. Your home needs a battery, a roof that makes power and a geothermal HVAC system. Tesla wants to sell them to you all tied up with great software. * Planes. Electric flight needs the best batteries and electric motors, Tesla would be pretty crazy not to pursue this. No, they're not going to take on Boeing or Airbus, but small, regional commuter planes (range of several hundred km) are within reach in 10 years. Anyway, it's pretty simple. If you believe the above, go long. If you think it's BS, go short. If you think this is a bit too out-there/WTF, then just sit back and enjoy the show.
stunt 6y ago
Stock market is just a money game now. Don't try to make sense of it.

47 points by theBashShell 6y ago

It has declining revenues, increasing liabilities, and sell expensive cars in a strange recessive economy. Its stock is being treated like early Facebook. Sure it might have some magical future where it dominates auto sales forever, but supporting this valuation is nuts.

sp332 6y ago
They're in a massive growth phase. Look at their revenue compared to this time last year.
- Silhouette 6y ago
  The problem is that, as every investment firm reminds us, past performance is not a guarantee of future returns. This year is not going to look like last year, for just about anyone in business.
CrazyStat 6y ago
Declining revenues? I want some of what you're smoking.
- bhupy 6y ago
  I think it's incorrect to say that their revenues are declining, but in this past year Ford and GM sold 60-70x more cars than Tesla did, each. Tesla would have to monopolize car production on the entire planet to justify their valuation, at least as a car company. If you were to price this company as a combination of auto (Ford/GM) + energy (Chevron) + ridesharing? (Uber/Lyft), then you could maybe justify this valuation in the long run, but Tesla is yet to really prove any real revenue in energy and ridesharing, at scale. The current value is pure hype and expectation, and remains to be seen who ends up being correct in the long run.
  - SEJeff 6y ago
    at least as a car company Is their justification justified if they are treated as more than a car company? Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. Tesla is a car company. Plus a static energy provider (powerwall, powerpack, megapack). Plus a solar provider (solar panels + solar tiles) Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. Plus a software company. Even if you want to joke about AP not being full self driving. Find a car you can buy right now that does all of the things that a Tesla on autopilot can do (in specific, stop lights / signs, smart summon, and navigate on autopilot). Last I checked, the closest was Mercedes's supercruise, which is very good and still doesn't have 1/2 of the functionality of Tesla. The OTA updates really are game changing. When I purchased my Model 3 in November 2018, it lacked an alarm system (Sentry Mode), dashcam (Tesla Cam), etc. I got this and a ton more functionality, for free via OTA updates. Unlike every other automotive company, I didn't have to wait for their next year's model. This is a radical rethink of the industry. Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are.
    - bhupy 6y ago
      > Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. I don't doubt that Tesla is a great car, I plan to buy one myself. The question is whether this justifies that kind of valuation. Cars are a commodity, and for as long as they've existed, there have always been great cars, shitty cars, and everything in between. Re: cybertruck. Ford already has already demonstrated its F-series all electric pickup prototype. I don't doubt that the semi truck market is huge, but again I ask: what specifically does Tesla have that would make it a monopoly here? Seems like another commodity market. > Plus a static energy provider (powerwall, powerpack, megapack). > Plus a solar provider (solar panels + solar tiles) In theory, yes, but in practice they haven't sold much of this at all. Remember, the current revenue growth is on the back of their car revenues. Vast majority of their opex is in car manufacturing and sales. > Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. This is a strong point, but I'm not sure that it's really that much of a competitive advantage. While you're right that Tesla has a huge lead on everyone, that's just because the vast majority of consumers still drive ICE cars, and get the energy for that from Chevron/Arco/Shell/BP pumps sprinkled all over the world. The world will gradually shift away from ICE -> electric, but installing electric chargers at gas pumps isn't a huge lift for your Chevrons of the world — they already have the humans, capital, and real estate. > Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are. I don't doubt that Tesla will continue to exist and be hugely successful — I'm even rooting for Elon because he is IMO the most interesting industrialist of all time. It still doesn't necessarily mean that they are worth $200B+. [1] https://www.youtube.com/watch?v=jAlIfWcCJdI https://www.youtube.com/watch?v=jAlIfWcCJdI
- alextheparrot 6y ago
  A more productive comment would’ve taken the statement at face value and tried to learn where the disconnect is. I assume that the first sentence, including declining revenues, is in reference to the current state vs expectations. The disconnect may be in what “Declining revenues” was intended to mean, in this case it makes sense if it is against expected revenue instead of the global value.
  - CrazyStat 6y ago
    You're very generous with your assumption.
- xkjkls 6y ago
  In the US they’ve been posting revenue YoY declines

samfisher83 6y ago

The valuation on this stock is insane. However shorting it is also insane.

StavrosK 6y ago
What word would you use to describe thinking that those sentences can both be true at the same time?
- deleted 6y ago
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- kod 6y ago
  Sane. "There's too much risk either direction, stay away from it" sounds pretty sane to me.
- OldHand2018 6y ago
  How about the famous quote: "The markets can stay irrational longer than you can stay solvent"
- ABeeSea 6y ago
  The one where shorting requires debt and a massive risk premium on the time value of money. Not to mention the unlimited risk piece. The two bets aren’t symmetric
- deleted 6y ago
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- CrazyStat 6y ago
  A recognition that the market may continue to be irrational for a long time, so even if you believe a company to be extremely overvalued it may be unwise to short it unless you have infinitely deep pockets. If you insist on a single word, may I suggest "experience."
  - gpm 6y ago
    And even if you have infinite money, a short squeeze in the meantime can mean that you permanently lose money on shorting the stock before it goes down.

partiallypro 6y ago

If you think this is insane, look at Nikola, an electric car company that has never produced a single vehicle...is now worth more than Ford (as of yesterday.)

zaroth 6y ago
I would guess that the paper value market cap of Nikola is an artifact of extremely tight supply of their new stock.
tenpies 6y ago
And if you want to see even more insanity, look at market cap versus profit. Tesla - who has not even made $1 BB of profit in its 15 years despite billions of government money, tax credits, regulatory credits, and untold favours - is now valued at $185 BB. Musk's bonus this year is bigger than all the profit Tesla has ever made. It is absolute insanity.
- deleted 6y ago
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- xkjkls 6y ago
  You can add up every quarter they had a profit, and ignore the fact that they had losses every other quarter and it’s still not equal to his $750 million pay package
- Cthulhu_ 6y ago
  Modern capitalism doesn't work with basic maths apparently; companies run off investor money for years, if not decades (AMD is one of those companies that has been running a net negative for a long time - not sure how they're doing of late though). Personally, based on a very superficial understanding of economy, I... don't actually mind - as long as their personnel, suppliers, and taxes are paid timely and adequately, they are doing their 'contribution' to the economy.
dhosek 6y ago
I'd never heard of them before. Here's wikipedia on them: https://en.wikipedia.org/wiki/Nikola_Motor_Company https://en.wikipedia.org/wiki/Nikola_Motor_Company It appears that technically, your statement is incorrect in that they've produced some prototypes. And they have orders (not sure if that counts as sales), but they've not actually delivered a production vehicle yet. Which makes their market cap seem insane, but it seems like most publicly traded companies have had insane market caps since the 90s.

pbreit 6y ago

Elon is the greatest entrepreneur of the era and possibly ever. Stockholders are paying for a large piece of his attention and interest.

sixQuarks 6y ago

Do the fundamentals justify Tesla's market cap? No. Is Tesla just a car company? No. Does Tesla still have an exponential growth outlook? Yes. Has Tesla been able to meet their stated goals in the 1st 10 years? Yes. Do you think Tesla will meet their stated goals for the next 10 years? Probably This is why Tesla market cap is nearly 200 billion.

sschueller 6y ago
"Has Tesla been able to meet their stated goals in the 1st 10 years? Yes" Where is the full self driving car? They are selling a feature that most likely will never exist.
- nickik 6y ago
  That there is so much tech conservatism on Hacker News is quite baffling. The idea that self driving cars will not exist is just nonsense, and Tesla is best place to exploit it.
  - bhupy 6y ago
    Honest question: why is Tesla in a better place to "exploit" self driving than Waymo?
    - mucle6 6y ago
      I've heard that whenever someone uses autopilot on a Telsa, if they override the autopilot, it sends the car's video and commands from before, and uses the override as the "correct" decision. If Tesla has every one of their cars feeding their models more data, it does feel like a natural conclusion that they will be able to overtake waymo. *Disclaimer: I'm not an expert in ML
    - sixQuarks 6y ago
      billions of miles of real-world driving data from a million and growing fleet of vehicles. Tesla has built their own chip optimized fully for self-driving. all-in on vision based full self-driving, which seems to be the only way to solve all the edge cases. Even if google accomplishes self driving with lidar, lidar will never be able to compensate for all edge cases. Human vision already compensates for all edge cases, thus the case for vision based self driving.

davedx 6y ago

Despite the production chaos, missed deadlines, over promises and general CEO fuckwittery, Tesla is a massive success story that was in the right place at the right time and completely changed an industry. I have huge respect for everyone who worked there and helped build it. I was a (small time) shareholder from around 2013 until last year when I happily liquidated my position and put in an order for a Model 3. I don't think anyone can really say whether this share price is justified even with all the future growth priced in. This is a company that has been at least partly responsible for some quite fundamental changes in mobility, and they're nowhere done yet. (I'm more excited about the Semi than Cybertruck). They've also helped drive the price/watt of batteries right down which is having a multitude of knock-on effects across many industries. Without Tesla, would we have seen battery powered airplanes starting to be built? Maybe we would, but they would probably be at the least more expensive. I can't wait to see what the future holds for Tesla, and despite all his shortcomings, I'm happy Musk is still in charge. This all simply would not have happened without his insane drive and determination. (Strangely, HN, that loved Apple in Steve Jobs' glory days, seems to have a lot of irrational hatred for Tesla).

Traster 6y ago
Steve Jobs went on stage and announced the iPod on October 3rd 2001, they were on sale Nov 10th. He announced the iPhone Jan 2007, it was in people's hands by June. Elon Musk announced fully autonomous cars about 17 times in the last decade and sold software packages to people for it and has still hasn't delivered. I'm not sure Jobs could be any further from Musk in terms of how they manage(d)their companies.
fsloth 6y ago
"(Strangely, HN, that loved Apple in Steve Jobs' glory days, seems to have a lot of irrational hatred for Tesla)." Jobs was vocal in public about products they have already launched. They delivered products that were obviously best at what they were intended for. Musk is vocal about - well, apparently everything - and ICE:s are still a superior option for a large category of car owners. I think the biggest gripe is probably about overpromising autopilot capability years before it's actually production ready. Still, Musk is up there with Ford on a list of industrialists who made a dent in the universe in my books.

tibbydudeza 6y ago

Talk to me again when they make something for the common folk like the Toyota Corolla or VW Golf ... sure they will become an important player but it will be like Volvo.

AlanSE 6y ago
The valuation basically assumes that the Corolla of Tesla will come around sometime in the next 10 years, otherwise volume won't be enough. But not before they run out of all the most profitable markets. Thus the consumer-level truck.
megaman821 6y ago
I think it is pretty likely in the next 10 years they will be selling the Model 3 for around $25. That is definitely mass-market pricing.
fomine3 6y ago
As an outside of US person, I won't expect US car manufacturer going to record top sales on all over the world. In EV era, I expect Tesla would get BMW position but not Volkswagen/Toyota.

syllable_studio 6y ago

People will never understand Tesla's value if they don't understand that Tesla is more than just a car company. (But no comment on the current stock value.)

u10 6y ago
What kind of company are they?
- mschuster91 6y ago
  A software company (where they are lightyears ahead of everyone else), an AI company (they've got far more real world training data than everyone else) and a battery management tech company (again, they have the most experience). The fusion of these three strong parts and their car knowledge (where their advantage over the competition is not the experience but the agility) is what drives the valuation. Tesla only has to solve scale (which they're beginning to do) and spare parts availability (which is going to solve itself but it needs time to build out a network) to utterly dominate the car market of the future.
  - u10 6y ago
    They don't sell software though... they sell cars augmented with software. If they don't have cars to sell they don't have any software to sell. Sure, one could argue the valuation is pricing in the value of the patents but that doesn't mean that Tesla is not overvalued. Not to mention most of their RnD and their capex goes towards manufacturing cars.
  - Traster 6y ago
    Huh? Tesla has to actually solve self-driving to justify their valuation. All the things you've listed might put them at an advantage solving that problem, but what their software does today doesn't justify the valuation. If it turns out that Tesla are probably 1 or 2 steps ahead of most fo the competition towards self-driving. It may turn out that we're a thousand steps away from self-driving, in which case their AI and software advantages simply aren't going to map to massive profits.

u10 6y ago

The world has gone insane... treating a manufacturing company like it's a tech company and applying the "appropriate" multiples. People are going to lose their shirts on this one.

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the-dude 6y ago
Tesla is by no means just a manufacturing company.
- u10 6y ago
  Their core business is manufacturing. The vast majority of their RnD and capex goes into manufacturing. They don't sell software, they sell cars.
alextheparrot 6y ago
Couldn’t you apply this same principle to Apple from ~2000 until current? It seems, at least in some pocket markets, there exists an intersection where manufacturing and technology combine to be highly profitable. Maybe car manufacturing isn’t one of those places, but I feel like that’s more difficult to dismiss as flippantly.
- u10 6y ago
  Not really, for one Apple outsources their manufacturing to various companies (TSMC, Foxconn, AMD, Intel, etc). This allows Apple to focus on design and software (ie, the hardware design follows the software, unlike Tesla where the software follows the hardware, so to speak), and not get bogged down in the manufacturing process. Apple handles the design and software, not the manufacturing.
jeffreyrogers 6y ago
The more things I've seen like this, the more I realize the wisdom of Keyne's quote, "the market can stay irrational longer than you can stay solvent", or something to that effect. There have been a number of publicly traded companies I've seen with outrageous valuations, that've shocked me by how long they've maintained them. I've probably been right about the eventual outcome about 70% of the time, but I would have lost a ton of money trying to bet against them.

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A4ET8a8uTh0 6y ago

I want to love Tesla, but between messing with car setup OTA, issues with getting parts and basically treating car like a software release, it is difficult for me to consider it for purchase ( and I do want an EV ). Eh, I really hope other manufacturers deliver.

zaroth 6y ago

Most of all it’s important to understand the headline is totally false. The “value” of a company is not represented in its equity market cap. Other car companies finance their operations through debt instead of equity. It directly effects their market cap. It doesn’t directly effect their “value”.

bryanlarsen 6y ago
Correct. Toyota enterprise value: $325B Tesla enterprise value: $200B https://ycharts.com/companies/TM/enterprise_value https://ycharts.com/companies/TM/enterprise_value https://ycharts.com/companies/TSLA/enterprise_value https://ycharts.com/companies/TSLA/enterprise_value

martythemaniak 6y ago

Tesla is an industrial conglomerate that will power the 21st century. At the moment they are a small, luxury car maker, but much like Apple was a small, luxury computer maker, Tesla's ambitions are great and their stock price is a function of how much the market believes that they will be able to achieve that. The parts of this conglomerate are: * The vehicle manufacturing. This one is obvious - they have a big lead on other automakers in producing EVs and this lead is not closing. They will keep expanding their portfolio of models and markets until they're near the top. * The mobility service. This will grow out of their Autopilot efforts and take on Uber et all. This will be much wider though, as it will include public transit services with the Boring Co, private cars, and even taking on rail with fleets of Semis. * The electricity utility business. This one is simple as well - there's a ton of cheap solar and wind power. Pairing it with batteries and Tesla's management software means they'll be providing the infrastructure utilities use. They likely won't become a utility themselves, as that requires local certifications etc. * The homes business. Your home needs a battery, a roof that makes power and a geothermal HVAC system. Tesla wants to sell them to you all tied up with great software. * Planes. Electric flight needs the best batteries and electric motors, Tesla would be pretty crazy not to pursue this. No, they're not going to take on Boeing or Airbus, but small, regional commuter planes (range of several hundred km) are within reach in 10 years. Anyway, it's pretty simple. If you believe the above, go long. If you think it's BS, go short. If you think this is a bit too out-there/WTF, then just sit back and enjoy the show.

stunt 6y ago

Stock market is just a money game now. Don't try to make sense of it.