6 ms·

I think enterprise value is a better metric of a company's value than market capitalization. Tesla's market capitalization is certainly speculative, but at it's

I think enterprise value is a better metric of a company's value than market capitalization. Tesla's market capitalization is certainly speculative, but at it's current price it's enterprise value is roughly the same as Toyota's. 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

itsoktocry 6y ago
>but at it's current price it's enterprise value is roughly the same as Toyota's. Even this is absurd, though. Tesla has a couple US factories, one in China (practically owned by the CCP) and another under construction in Germany. They sell a few hundred thousand cars a year, and sales are relatively flat/slightly up y-o-y. They've never made a profit outside of selling credits, some of which have come from controversial schemes like their battery swap. Meanwhile, Toyota has factories all around the world (20+ countries) and produces 10 million cars per year at a profit. It doesn't add up.
- omgwtfbyobbq 6y ago
  It's certainly speculative, but I don't think it's absurd. Toyota's revenue is around $280 billion, while Tesla's is around $25 billion, so Tesla will need to grow by a factor of 11 to hit Toyota's revenue. Other manufacturers also generate/sell credits, so it's not like Tesla is alone there. Tesla being able to expand in a segment where most manufacturers only build compliance cars to avoid fines speaks to how effective they are at building EVs compared to everyone else, which is expected because they're the only manufacturer designing EVs from the ground up. The scale of Tesla's production could be another reason for their valuation. If they're hitting roughly a tenth of Toyota's revenue with 3 factories, all of which are incomplete, that could speak to how efficiently they're using capital. For comparison, Toyota has 50+ factories they own and another ~20 contract/licensed/joint factories. https://en.wikipedia.org/wiki/List_of_Toyota_factories https://en.wikipedia.org/wiki/List_of_Toyota_factories The Q2 sales figures aren't great if we examine them superficially, but their largest factory, Fremont, was closed for half the quarter too. https://www.usatoday.com/story/tech/2020/07/22/tesla-makes-104-m-profit-q-2-despite-plant-shutdown-coronavirus/5490228002/ https://www.usatoday.com/story/tech/2020/07/22/tesla-makes-1... Even approaching Q2 2019's production figures means Shanghai was able to take up most of the slack from Fremont sitting idle for ~1.5 months, and Shanghai only broke ground at the beginning of 2019. Their production capacity by 2021 should be about double what it was when they sold a few hundred thousand cars in 2019. Production of the semi, cybertruck, expansion of the Shanghai factory, and completion of their factory in Germany should all increase production and revenue significantly. The biggest question mark IMO is whether they can manufacturer their own battery cells. If they can pull that off, I don't see any technical hurdles to them approaching Toyota's $280 billion in revenue in the next 5-10 years. Don't get me wrong, they're valuation is still very speculative, because they need to execute on these new factories/products/production lines, but like I said, I don't think their valuation is absurd.

itsoktocry 6y ago

>but at it's current price it's enterprise value is roughly the same as Toyota's. Even this is absurd, though. Tesla has a couple US factories, one in China (practically owned by the CCP) and another under construction in Germany. They sell a few hundred thousand cars a year, and sales are relatively flat/slightly up y-o-y. They've never made a profit outside of selling credits, some of which have come from controversial schemes like their battery swap. Meanwhile, Toyota has factories all around the world (20+ countries) and produces 10 million cars per year at a profit. It doesn't add up.

omgwtfbyobbq 6y ago
It's certainly speculative, but I don't think it's absurd. Toyota's revenue is around $280 billion, while Tesla's is around $25 billion, so Tesla will need to grow by a factor of 11 to hit Toyota's revenue. Other manufacturers also generate/sell credits, so it's not like Tesla is alone there. Tesla being able to expand in a segment where most manufacturers only build compliance cars to avoid fines speaks to how effective they are at building EVs compared to everyone else, which is expected because they're the only manufacturer designing EVs from the ground up. The scale of Tesla's production could be another reason for their valuation. If they're hitting roughly a tenth of Toyota's revenue with 3 factories, all of which are incomplete, that could speak to how efficiently they're using capital. For comparison, Toyota has 50+ factories they own and another ~20 contract/licensed/joint factories. https://en.wikipedia.org/wiki/List_of_Toyota_factories https://en.wikipedia.org/wiki/List_of_Toyota_factories The Q2 sales figures aren't great if we examine them superficially, but their largest factory, Fremont, was closed for half the quarter too. https://www.usatoday.com/story/tech/2020/07/22/tesla-makes-104-m-profit-q-2-despite-plant-shutdown-coronavirus/5490228002/ https://www.usatoday.com/story/tech/2020/07/22/tesla-makes-1... Even approaching Q2 2019's production figures means Shanghai was able to take up most of the slack from Fremont sitting idle for ~1.5 months, and Shanghai only broke ground at the beginning of 2019. Their production capacity by 2021 should be about double what it was when they sold a few hundred thousand cars in 2019. Production of the semi, cybertruck, expansion of the Shanghai factory, and completion of their factory in Germany should all increase production and revenue significantly. The biggest question mark IMO is whether they can manufacturer their own battery cells. If they can pull that off, I don't see any technical hurdles to them approaching Toyota's $280 billion in revenue in the next 5-10 years. Don't get me wrong, they're valuation is still very speculative, because they need to execute on these new factories/products/production lines, but like I said, I don't think their valuation is absurd.