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The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The

The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valuation is that those risks are being steadily reduced. EV competition is scarce, Tesla's cash reserves and consistent free cash flow hugely reduce the risk of bankruptcy, and the market is continuing to demonstrate that it wants electric cars (at least Tesla electric cars, that is), even during a pandemic. There is certainly an element of speculation and retail investor FOMO, but if Tesla's institutional investors didn't think this valuation could be justified at all they probably would have sold by now. Time will tell how reasonable the valuation really is, but betting against Tesla has not worked out very well so far.

JoeSmithson 6y ago
> "they could be worth trillions" Trillions? 50x the size of Ford? Bigger than, essentially, the current combined value of every car company in the world at the moment? How?
- zaroth 6y ago
  Ford has $150 billion in debt. 50x the size of Ford would be an enterprise value of $7.5 trillion, even if Ford's share price was $0.
yoavm 6y ago
But why would they become the Apple of electric cars? Why do you think they have better chances than anyone else? The market, to me, seems to show that most people still buy non-electric cars. Once that flips, any other much bigger car manufacturer could start producing more electric cars. There doesn't seem to be any rocket science to it. Back in the 90s I bought a Rio PMP300. Before anyone knew what MP3s were, it was the first mp3 player out there. That didn't help them when people did care about mp3 players - bigger players just came and ate the cake. I'm not sure what makes Tesla a different story. Seems like it was supposed to be "Autopilot", but we all know how good that's going.
- stingrae 6y ago
  I do think Tesla is way over valued at the moment. How could they be worth more than the market cap of all the vehicle companies combined? There isn’t going to be largely more numbers of vehicles bought each year. As to why Tesla could be the winner? One reason is that all the other automakers are failing to produce mass market EVs that anyone wants to buy.
  - ckdarby 6y ago
    My wife & I are considering our next vehicle our last non-electric one. We consider every vehicle brand a joke aside from Tesla.
    - jennyyang 6y ago
      There are many reasons why Tesla is not optimal. If you get into an accident, your car will be in the shop for months. Literally months. I have a Tesla with a minor trim at the bottom of the car got damaged. It took 3 months, and they had to take apart the entire car. Literally even the back seats were taken apart just to change the trim on the bottom. It cost over $10,000. Tesla's quality has dropped so much that JD Power's latest survey ranked it near the bottom in terms of quality. Everyone that has a Tesla says that they are fun to drive (they are) but they feel cheaply made. The European car manufacturers are coming out with electric cars and I think they're ability to create a luxurious feel will make a big dent to Tesla's sales. Case in point, the Porsche Taycan looks amazing and will be a competitor to the Model S.
      - skinnymuch 6y ago
        I thought the JD rankings are known to be fraud with issues, pay to play, favoritism (especially American brands) and so on.
      - ckdarby 6y ago
        Nobody in my circle of aged 25-35 North American friends talk about buying a Tesla because it is only an electric car. It is the whole package that gets people to buy it. Not only does it look good, it feels smooth while driving, it actually feels like it is a modern vehicle, the software updates and "autopilot". Every known vehicle manufacture outside of trucks & SUVs have no brand value to "millennials". I don't know anyone I communicate with who is excited to buy a ford, toyota, and or even a porsche car.

JoeSmithson 6y ago

> "they could be worth trillions" Trillions? 50x the size of Ford? Bigger than, essentially, the current combined value of every car company in the world at the moment? How?

zaroth 6y ago
Ford has $150 billion in debt. 50x the size of Ford would be an enterprise value of $7.5 trillion, even if Ford's share price was $0.

yoavm 6y ago

But why would they become the Apple of electric cars? Why do you think they have better chances than anyone else? The market, to me, seems to show that most people still buy non-electric cars. Once that flips, any other much bigger car manufacturer could start producing more electric cars. There doesn't seem to be any rocket science to it. Back in the 90s I bought a Rio PMP300. Before anyone knew what MP3s were, it was the first mp3 player out there. That didn't help them when people did care about mp3 players - bigger players just came and ate the cake. I'm not sure what makes Tesla a different story. Seems like it was supposed to be "Autopilot", but we all know how good that's going.

stingrae 6y ago
I do think Tesla is way over valued at the moment. How could they be worth more than the market cap of all the vehicle companies combined? There isn’t going to be largely more numbers of vehicles bought each year. As to why Tesla could be the winner? One reason is that all the other automakers are failing to produce mass market EVs that anyone wants to buy.
- ckdarby 6y ago
  My wife & I are considering our next vehicle our last non-electric one. We consider every vehicle brand a joke aside from Tesla.
  - jennyyang 6y ago
    There are many reasons why Tesla is not optimal. If you get into an accident, your car will be in the shop for months. Literally months. I have a Tesla with a minor trim at the bottom of the car got damaged. It took 3 months, and they had to take apart the entire car. Literally even the back seats were taken apart just to change the trim on the bottom. It cost over $10,000. Tesla's quality has dropped so much that JD Power's latest survey ranked it near the bottom in terms of quality. Everyone that has a Tesla says that they are fun to drive (they are) but they feel cheaply made. The European car manufacturers are coming out with electric cars and I think they're ability to create a luxurious feel will make a big dent to Tesla's sales. Case in point, the Porsche Taycan looks amazing and will be a competitor to the Model S.
    - skinnymuch 6y ago
      I thought the JD rankings are known to be fraud with issues, pay to play, favoritism (especially American brands) and so on.
    - ckdarby 6y ago
      Nobody in my circle of aged 25-35 North American friends talk about buying a Tesla because it is only an electric car. It is the whole package that gets people to buy it. Not only does it look good, it feels smooth while driving, it actually feels like it is a modern vehicle, the software updates and "autopilot". Every known vehicle manufacture outside of trucks & SUVs have no brand value to "millennials". I don't know anyone I communicate with who is excited to buy a ford, toyota, and or even a porsche car.