5 ms·

Tesla's market cap per car sold is 112x higher than Volkswagen (sales data for last year). They never had a profitable year.

chrisseaton 6y ago
Tesla completely turned the industry on its head with their electric cars - something dinosaur incumbents like Volkswagen were either unwilling or unable to do. Maybe people see a future in Tesla and not as much in Volkswagen, and the price reflects the future not the past?
- fzeroracer 6y ago
  This seems like a similar argument to what I saw for Bitcoin before the crash came. Bitcoin prices were high because the bitcoin price reflected the future of currency and that bitcoin turned the finance industry upside down.
  - jmastrangelo 6y ago
    Not sure why you got downvoted. I think Tesla is a great company, but these valuations suggest they're going dominate transportation in a way no car manufacturer ever has. Even if that is possible, which I'm not sure it is, the future is uncertain and the stock should have significant discount to reflect that.
- Barrin92 6y ago
  >Maybe people see a future in Tesla and not as much in Volkswagen, and the price reflects the future not the past? Tesla's valuation is now three times higher than in April, what exactly is supposed to have happened in the last few months that changed investors minds about the long term future? Had they not turned the car industry on its head in April yet?
  - nickik 6y ago
    Tesla lost far less during COVID and has shown to be resistant to even a crazy recession. They showed demand in the worst economic climate in 10+ years. They continue to show very good margin that nobody else can match with EVs, not even close.
    - RivieraKid 6y ago
      They were break even in Q1, thanks to $400m of tax credits thanks to tax credits. They had to drop prices in Q2. Deliveries would be down YoY if it wasn't for China.
      - nickik 6y ago
        So what? All producers dropped prices and offered intensive. All companies try to sell/produce cars in China. Getting extra money for doing nothing is a negative now? Automotive only margins are still good and improving making their outlook for the second half of the year very good.
- Certhas 6y ago
  VW is the company with the third largest R&D budget, after Amazon and almost tied with Alphabet. More than ten times larger than Tesla. Over recent years they built a substantial tech base for EVs that they are on the brink of introducing at scale. The Zwickau plant alone is planned to scale to 330000 EVs/y next year. ICE production at Zwickau is shut down. This is diametrically opposed to, for example, BMW who seem to be more doubling down on ICE with token efforts towards EVs for now. It's not insane to say that Tesla will eat BMWs share of the future, but that is valued ten times lower.
  - nickik 6y ago
    I hate these 'R&D' budget argument. The can spend money but actually Tesla was first on all the important stuff. So have no idea why this all of a sudden is supposed to matter. VW can barley get the basic software for their EV right at the moment. The CEO has admitted the lead Tesla has. > planned to scale to 330000 EVs/y next year. They have been missing their claimed targets many times before. Even if they manage that, only a tiny % of current cars sold are electric. Nobody believes Tesla will own 100% of the market. If VW can actually make good on all those promesses, their stock will also go up. But having the legacy and investment of massively depreciating ICE assets and not shown the ability to produce profits with EVs, they will need to execute to convince investors again.
    - Certhas 6y ago
      It's a question of ressources. Just like it's hard to see Microsoft becoming irrelevant simply because they have so much cash that they can just keep trying. What exactly was Tesla first on? They managed decent range but there EVs are simply not that difficult to build compared to ICEs. Software is big but they know they are behind they have the ressources, and the institutional commitment. It's not that I think Tesla should have the same cats/validation ratio as VW. They are ahead after all. But it's very hard to see the extend of the discrepancy in validation as justified over the long run for me. And it's not like VW is ignoring adjacent markets, Moia is a reasonably successful pilot, etc...
      - 6y ago
- RivieraKid 6y ago
  Of course, I don't doubt that Tesla is innovative and doing many things right. I was talking about the valuation.
adventured 6y ago
> They never had a profitable year. I think you're trying too hard. Is Tesla overvalued? Very overvalued? Reasonable debate to have given where the market cap is at now. However Tesla very obviously isn't being valued today based on whether they turned a profit in the past. Companies aren't valued by their profit from five years ago. That they have never had a profitable year, doesn't dictate whether they will in the future. Tesla has grown by nearly 300% in 3.x years. The market is primarily concerned about growth and cash burn rate, limiting excess red ink, not that they must immediately generate immense profit. Tesla has also shown a drastic improvement in their operating picture. From negative $1.6 billion in operating income in 2017, to negative $252m in 2018, to positive $80m in 2019, to positive $841 million in the last four quarters. Investors tend to pay attention to direction in particular, betting on where the company is going.
deleted 6y ago
[deleted]
slg 6y ago
I think Tesla is extremely overvalued. I was long on them for years and cashed out at around $800 because I couldn't understand the valuation anymore. However, it is a mistake to compare Tesla best case scenario against current car companies. They are also a energy company, a battery company, a logistics company, and a transportation company. For example, Uber isn't that far behind Volkswagen in terms of total valuation. If Tesla ever nails Autopilot, Tesla can immediately become Uber. Volkswagen doesn't have nearly as clear of a path to those extra revenue streams.
- bmitc 6y ago
  How are they an energy or logistics company? What products or services do they sell that fit those categories?
  - orcasauce 6y ago
    https://www.tesla.com/powerwall https://www.tesla.com/powerwall https://www.tesla.com/solarroof https://www.tesla.com/solarroof
    - slg 6y ago
      You forgot https://www.tesla.com/semi https://www.tesla.com/semi for logistics. Lots of these products and services are nowhere near maturity, but the stock market is the sum of all future revenue streams weighted for probability. There is a potential future in which many of us get our energy from Tesla solar panels, that energy is stored in Tesla battery, we use that to power our autonomous Tesla cars that we either own or call to us with a ridesharing app, all while Tesla owned and operated trucks cross the nation autonomously. I don't think that is a particularly likely outcome, but there is a way for Tesla to get there while there is a near zero chance Volkswagen has a similar future.
      - bmitc 6y ago
        That's still a vehicle isn't it? Are semi-truck makers considered logistics companies?
deleted 6y ago
[deleted]

chrisseaton 6y ago

Tesla completely turned the industry on its head with their electric cars - something dinosaur incumbents like Volkswagen were either unwilling or unable to do. Maybe people see a future in Tesla and not as much in Volkswagen, and the price reflects the future not the past?

fzeroracer 6y ago
This seems like a similar argument to what I saw for Bitcoin before the crash came. Bitcoin prices were high because the bitcoin price reflected the future of currency and that bitcoin turned the finance industry upside down.
- jmastrangelo 6y ago
  Not sure why you got downvoted. I think Tesla is a great company, but these valuations suggest they're going dominate transportation in a way no car manufacturer ever has. Even if that is possible, which I'm not sure it is, the future is uncertain and the stock should have significant discount to reflect that.
Barrin92 6y ago
>Maybe people see a future in Tesla and not as much in Volkswagen, and the price reflects the future not the past? Tesla's valuation is now three times higher than in April, what exactly is supposed to have happened in the last few months that changed investors minds about the long term future? Had they not turned the car industry on its head in April yet?
- nickik 6y ago
  Tesla lost far less during COVID and has shown to be resistant to even a crazy recession. They showed demand in the worst economic climate in 10+ years. They continue to show very good margin that nobody else can match with EVs, not even close.
  - RivieraKid 6y ago
    They were break even in Q1, thanks to $400m of tax credits thanks to tax credits. They had to drop prices in Q2. Deliveries would be down YoY if it wasn't for China.
    - nickik 6y ago
      So what? All producers dropped prices and offered intensive. All companies try to sell/produce cars in China. Getting extra money for doing nothing is a negative now? Automotive only margins are still good and improving making their outlook for the second half of the year very good.
Certhas 6y ago
VW is the company with the third largest R&D budget, after Amazon and almost tied with Alphabet. More than ten times larger than Tesla. Over recent years they built a substantial tech base for EVs that they are on the brink of introducing at scale. The Zwickau plant alone is planned to scale to 330000 EVs/y next year. ICE production at Zwickau is shut down. This is diametrically opposed to, for example, BMW who seem to be more doubling down on ICE with token efforts towards EVs for now. It's not insane to say that Tesla will eat BMWs share of the future, but that is valued ten times lower.
- nickik 6y ago
  I hate these 'R&D' budget argument. The can spend money but actually Tesla was first on all the important stuff. So have no idea why this all of a sudden is supposed to matter. VW can barley get the basic software for their EV right at the moment. The CEO has admitted the lead Tesla has. > planned to scale to 330000 EVs/y next year. They have been missing their claimed targets many times before. Even if they manage that, only a tiny % of current cars sold are electric. Nobody believes Tesla will own 100% of the market. If VW can actually make good on all those promesses, their stock will also go up. But having the legacy and investment of massively depreciating ICE assets and not shown the ability to produce profits with EVs, they will need to execute to convince investors again.
  - Certhas 6y ago
    It's a question of ressources. Just like it's hard to see Microsoft becoming irrelevant simply because they have so much cash that they can just keep trying. What exactly was Tesla first on? They managed decent range but there EVs are simply not that difficult to build compared to ICEs. Software is big but they know they are behind they have the ressources, and the institutional commitment. It's not that I think Tesla should have the same cats/validation ratio as VW. They are ahead after all. But it's very hard to see the extend of the discrepancy in validation as justified over the long run for me. And it's not like VW is ignoring adjacent markets, Moia is a reasonably successful pilot, etc...
    - 6y ago
RivieraKid 6y ago
Of course, I don't doubt that Tesla is innovative and doing many things right. I was talking about the valuation.

adventured 6y ago

> They never had a profitable year. I think you're trying too hard. Is Tesla overvalued? Very overvalued? Reasonable debate to have given where the market cap is at now. However Tesla very obviously isn't being valued today based on whether they turned a profit in the past. Companies aren't valued by their profit from five years ago. That they have never had a profitable year, doesn't dictate whether they will in the future. Tesla has grown by nearly 300% in 3.x years. The market is primarily concerned about growth and cash burn rate, limiting excess red ink, not that they must immediately generate immense profit. Tesla has also shown a drastic improvement in their operating picture. From negative $1.6 billion in operating income in 2017, to negative $252m in 2018, to positive $80m in 2019, to positive $841 million in the last four quarters. Investors tend to pay attention to direction in particular, betting on where the company is going.

deleted 6y ago

[deleted]

slg 6y ago

I think Tesla is extremely overvalued. I was long on them for years and cashed out at around $800 because I couldn't understand the valuation anymore. However, it is a mistake to compare Tesla best case scenario against current car companies. They are also a energy company, a battery company, a logistics company, and a transportation company. For example, Uber isn't that far behind Volkswagen in terms of total valuation. If Tesla ever nails Autopilot, Tesla can immediately become Uber. Volkswagen doesn't have nearly as clear of a path to those extra revenue streams.

bmitc 6y ago
How are they an energy or logistics company? What products or services do they sell that fit those categories?
- orcasauce 6y ago
  https://www.tesla.com/powerwall https://www.tesla.com/powerwall https://www.tesla.com/solarroof https://www.tesla.com/solarroof
  - slg 6y ago
    You forgot https://www.tesla.com/semi https://www.tesla.com/semi for logistics. Lots of these products and services are nowhere near maturity, but the stock market is the sum of all future revenue streams weighted for probability. There is a potential future in which many of us get our energy from Tesla solar panels, that energy is stored in Tesla battery, we use that to power our autonomous Tesla cars that we either own or call to us with a ridesharing app, all while Tesla owned and operated trucks cross the nation autonomously. I don't think that is a particularly likely outcome, but there is a way for Tesla to get there while there is a near zero chance Volkswagen has a similar future.
    - bmitc 6y ago
      That's still a vehicle isn't it? Are semi-truck makers considered logistics companies?

deleted 6y ago

[deleted]