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> It is beyond me why anyone would by this stock over VW, let alone pay 4x the price for it. The better answer is that nobody should buy VW either. Their busin

> It is beyond me why anyone would by this stock over VW, let alone pay 4x the price for it. The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs; along with the inevitable rise of China's domestic automakers, which will eat a very large amount of market and sales away from the old giants. VW's position is its weakness, it has everything to lose and nothing to gain from the peak they've reached. Which also isn't the same as saying that Tesla should be bought at its present absurd valuation.

philwelch 6y ago
> The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs VW is an EV manufacturer and is investing heavily in the transition to EVs themselves. And they’re already at a much larger scale than Tesla in terms of distribution and manufacturing the rest of the car.
- brianwawok 6y ago
  To some extent, the 1900s distribution model of dealerships is a burden. When you buy a tesla, tesla gets 100% of the revenue. When you buy a VW or a ford, what % cut does the dealership take? How much does it cost to have 800 cars sitting on a lot, vs order on demand? Auto industry is ripe for innovation, glad we have someone innovating. I will hopefully never need to talk to a car salesmen or do the dealership thing again.
  - philwelch 6y ago
    Tesla also has to operate local showrooms and sales outlets throughout the world. In order to match a full scale manufacturer, they would need outlets in every medium-sized rural town in the US. It’s not an issue for Tesla now because they have outlets in big city tech hubs, but that won’t be sufficient unless they’re content staying a high end luxury brand. Dealerships run on lower and lower margins these days so there isn’t really that much to gain. It’s effectively the same reason that restaurant and fast food chains almost universally adopt a franchise model.
- protastus 6y ago
  Too many automakers have claimed to be investing in EVs yet delivered nothing of merit or long-term value. Tesla's market cap is crazy, but is a reflection of having actual products.
  - philwelch 6y ago
    VW is going all-in and is converting over their existing factories for EV’s, and since electric drivetrains are simpler than diesel or gasoline, having existing manufacturing that can be converted might give them a leg up compared to a company that needs to build out that capacity from scratch. And they’re well on their way in Europe.
ckastner 6y ago
> VW's position is its weakness, it has everything to lose and nothing to gain from the peak they've reached. I think that’s a very reasonable argument to make. However, Tesla is not even close to this peak VW might have reached, and is valued (roughly speaking) at 4x that. VW might lose its peak, Tesla never had it in the first place.

philwelch 6y ago

> The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs VW is an EV manufacturer and is investing heavily in the transition to EVs themselves. And they’re already at a much larger scale than Tesla in terms of distribution and manufacturing the rest of the car.

brianwawok 6y ago
To some extent, the 1900s distribution model of dealerships is a burden. When you buy a tesla, tesla gets 100% of the revenue. When you buy a VW or a ford, what % cut does the dealership take? How much does it cost to have 800 cars sitting on a lot, vs order on demand? Auto industry is ripe for innovation, glad we have someone innovating. I will hopefully never need to talk to a car salesmen or do the dealership thing again.
- philwelch 6y ago
  Tesla also has to operate local showrooms and sales outlets throughout the world. In order to match a full scale manufacturer, they would need outlets in every medium-sized rural town in the US. It’s not an issue for Tesla now because they have outlets in big city tech hubs, but that won’t be sufficient unless they’re content staying a high end luxury brand. Dealerships run on lower and lower margins these days so there isn’t really that much to gain. It’s effectively the same reason that restaurant and fast food chains almost universally adopt a franchise model.
protastus 6y ago
Too many automakers have claimed to be investing in EVs yet delivered nothing of merit or long-term value. Tesla's market cap is crazy, but is a reflection of having actual products.
- philwelch 6y ago
  VW is going all-in and is converting over their existing factories for EV’s, and since electric drivetrains are simpler than diesel or gasoline, having existing manufacturing that can be converted might give them a leg up compared to a company that needs to build out that capacity from scratch. And they’re well on their way in Europe.

ckastner 6y ago

> VW's position is its weakness, it has everything to lose and nothing to gain from the peak they've reached. I think that’s a very reasonable argument to make. However, Tesla is not even close to this peak VW might have reached, and is valued (roughly speaking) at 4x that. VW might lose its peak, Tesla never had it in the first place.