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> 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

by 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

nickik 6y ago
Its a question of margins. Take a look at the new Ford EV (Mustang) that competes Model Y. That care has the same amount of miles and yet has 2x the battery. That means that car is flat not making money. Tesla has demonstrated 25% margin, and their Model 3 is still a nightmare to manufacture. The Cybertruck promised to get there too. The Model Y based on breakdowns is pretty well designed to make good margin. One argument one has to make is not why is Tesla so high, but why are the others so low. They have gigantic capital stock that is dropping in value like a stone, the used car market will be fludded with insane amounts of old ICEs. These companies have thin margins already, and they will need to make huge investments in batteries and new product lines to compete. All of that with a stock market that doesn't make it easy for them to raise money. We saw this during Covid, companies like Ford and GM start dropping 10s of billions as soon as their margins slide. Even given all of those good things, Tesla is still high. For me, the only thing that can make it worth it, is the taxi fleet idea. If you don't believe in that, then the evaluation is way to high. I bought my stock at basically the lowest point in Covid, but I think I'm gone hold it longer. Just because even if you don't believe in the fundamentals, I think the hype cycle is at a peak yet. And I think I believe in the taxi idea, simply because whatever people think Elon knows about the potential profit and is doing everything he can to get there. Others simply don't have that conviction and drive.
- bhupy 6y ago
  > They have gigantic capital stock that is dropping in value like a stone, the used car market will be fludded with insane amounts of old ICEs. These companies have thin margins already, and they will need to make huge investments in batteries and new product lines to compete. All of that with a stock market that doesn't make it easy for them to raise money. Just want to point out that Toyota Motor Company's gross profit has been at about $50 billion per year. That's their profit. Honda's gross profit has been about $30 billion per year. Ford's annual gross profit has been teetering $20-25B per year. Tesla's gross profit is $4B (and increasing). This isn't to knock Tesla, I just want to make sure you're not under-estimating the competition. I think it's too early to say for sure who is going to win the electric automobile market.
  - bryanlarsen 6y ago
    Yes, I really think this headline is less about Tesla and more about the other car companies. Ford's stock price is teetering close to 10% of it's peak value. The fed is injecting huge liquidity into the stock market and it's going into TSLA and not into Ford etc. I'm fairly confident that some car companies will make it through the transition to electric, and that some won't, but I have no idea which. Tesla is going to be one of them, but that upside is already priced in. VW is investing tens of billions, maybe they'll be OK? OTOH Toyota's conservative strategy may be best -- I'm sure they'll introduce electric cars when there is a solid market for them. Perhaps being last to the party just means that it'll be cheaper for them to transition.
  - nickik 6y ago
    I think Toyota should be higher then Tesla. The only reason for me why I'm a bit iffy on them is that they still going after hydrogen and there electrification strategy is pretty wrong. They seem to have partly realized that but still not totally convinced by their new strategy. They will defently survive and thrive, but I don't think they can dominate more then they do now. Ford has been problematic and their balance sheet is not that great, their margin are very thin and they totally relay on high margin trucks and SUV. Their electrification plans seem pretty terrible, so I would not bet on them at all. Betting on Tesla is betting on the other car makers having trouble doing the transition and making profits at the same time. Tesla ability to continuation to execute year after year. And to justify the super high evaluations, bringing self driving to market.

by bhupy 6y ago

nickik 6y ago

Its a question of margins. Take a look at the new Ford EV (Mustang) that competes Model Y. That care has the same amount of miles and yet has 2x the battery. That means that car is flat not making money. Tesla has demonstrated 25% margin, and their Model 3 is still a nightmare to manufacture. The Cybertruck promised to get there too. The Model Y based on breakdowns is pretty well designed to make good margin. One argument one has to make is not why is Tesla so high, but why are the others so low. They have gigantic capital stock that is dropping in value like a stone, the used car market will be fludded with insane amounts of old ICEs. These companies have thin margins already, and they will need to make huge investments in batteries and new product lines to compete. All of that with a stock market that doesn't make it easy for them to raise money. We saw this during Covid, companies like Ford and GM start dropping 10s of billions as soon as their margins slide. Even given all of those good things, Tesla is still high. For me, the only thing that can make it worth it, is the taxi fleet idea. If you don't believe in that, then the evaluation is way to high. I bought my stock at basically the lowest point in Covid, but I think I'm gone hold it longer. Just because even if you don't believe in the fundamentals, I think the hype cycle is at a peak yet. And I think I believe in the taxi idea, simply because whatever people think Elon knows about the potential profit and is doing everything he can to get there. Others simply don't have that conviction and drive.

bhupy 6y ago
> They have gigantic capital stock that is dropping in value like a stone, the used car market will be fludded with insane amounts of old ICEs. These companies have thin margins already, and they will need to make huge investments in batteries and new product lines to compete. All of that with a stock market that doesn't make it easy for them to raise money. Just want to point out that Toyota Motor Company's gross profit has been at about $50 billion per year. That's their profit. Honda's gross profit has been about $30 billion per year. Ford's annual gross profit has been teetering $20-25B per year. Tesla's gross profit is $4B (and increasing). This isn't to knock Tesla, I just want to make sure you're not under-estimating the competition. I think it's too early to say for sure who is going to win the electric automobile market.
- bryanlarsen 6y ago
  Yes, I really think this headline is less about Tesla and more about the other car companies. Ford's stock price is teetering close to 10% of it's peak value. The fed is injecting huge liquidity into the stock market and it's going into TSLA and not into Ford etc. I'm fairly confident that some car companies will make it through the transition to electric, and that some won't, but I have no idea which. Tesla is going to be one of them, but that upside is already priced in. VW is investing tens of billions, maybe they'll be OK? OTOH Toyota's conservative strategy may be best -- I'm sure they'll introduce electric cars when there is a solid market for them. Perhaps being last to the party just means that it'll be cheaper for them to transition.
- nickik 6y ago
  I think Toyota should be higher then Tesla. The only reason for me why I'm a bit iffy on them is that they still going after hydrogen and there electrification strategy is pretty wrong. They seem to have partly realized that but still not totally convinced by their new strategy. They will defently survive and thrive, but I don't think they can dominate more then they do now. Ford has been problematic and their balance sheet is not that great, their margin are very thin and they totally relay on high margin trucks and SUV. Their electrification plans seem pretty terrible, so I would not bet on them at all. Betting on Tesla is betting on the other car makers having trouble doing the transition and making profits at the same time. Tesla ability to continuation to execute year after year. And to justify the super high evaluations, bringing self driving to market.