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meanwhile, morons keep claiming Tesla lives off government subsidies.

by sixQuarks 6y ago

mhh__ 6y ago
They can both be true, no? Tesla's P/E is roughly 1100, they aren't exactly printing money.
- Retric 6y ago
  That really doesn’t say much. Amazon’s P/E looked insane for years, while still being a good investment. The real question is what do future profits look like, and past performance is often a poor indicator of future performance.
  - mhh__ 6y ago
    Perhaps, but for Tesla to go to being what Amazon is now would take so much luck/decision-making I just can't see it happening. They make nice cars, but they would have to dominate the market in a way they can't even dream of today. For example, Tesla sold 300k cars last year - ford alone sold something like 6 million. Tesla have to compete with the entire world's car industry including companies that have much more experience selling cars at that scale. Is it impossible, no, is it unlikely yes - Tesla will grow from now but I just can't see that P/E turning into cold hard cash. Also, Amazon's P/E peaked at 3.6k but only for 2012. It's been around a tenth of Tesla's current P/E for almost all of their time on the exchange. https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-ratio https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-rat...
    - Retric 6y ago
      I haven’t dug deeply into their financials, but directly comparing them to other car companies is misleading as they are far more vertically integrated. An EV charging network, direct sales, and building significantly more parts in house means they can extract more money even if they sold an identical product to the rest of the market. I doubt the solar business or grid batteries are particularly profitable, but it’s the same Apple vs Samsung song and dance. Outsourcing everything means you’re sharing profits with your suppliers and have little leverage over your competitors. That’s not to say they can or will do all of that profitability. Tesla’s self driving tech could fall behind rendering a massive investment worthless. But, the numbers aren’t so high it’s impossible for them to be a great investment just IMO unlikely.
    - dd36 6y ago
      Tesla is much more than a car company. It’s an energy company that also sells cars.
    - CyberDildonics 6y ago
      What does that have to do with subsidies?
    - cure 6y ago
      > For example, Tesla sold 300k cars last year - ford alone sold something like 6 million. Tesla have to compete with the entire world's car industry including companies that have much more experience selling cars at that scale. Is it impossible, no, is it unlikely yes - Tesla will grow from now but I just can't see that P/E turning into cold hard cash. Tesla sold 367,500 vehicles last year, Ford sold about 5,387,000. In other words, Ford sold almost 15 times as many cars as Tesla in 2019, which is a significant difference in scale. Fast forward to Q3 this year. Ford sold 551,796 vehicles (sales down significantly due to the pandemic). Tesla sold 139,300 (sales up significantly despite the pandemic). They are now just a factor of four apart. And that's just vehicles; Tesla is really an energy company, don't forget. The battery and solar parts of their business are just getting started. The P/E is extreme, but given how well Tesla is executing, and how steep their growth trajectory is, perhaps it's not so crazy after all...
- nickik 6y ago
  They 'can' both be true, but they are not. Their P/E has nothing to do with government subsidies. The made more profit in the last 3 quarters then most other automakers, as most lost billions.
  - arcticbull 6y ago
    Generally everything here can be true at once. (1) Tesla can be living off government subsidies. (2) Taxpayers can be on the hook for billions in clean-up costs. (3) A P/E of 1100 represents a combination of the market's enthusiasm for TSLA shares, their subsidies driving earnings on the one side, and their desire to re-invest proceeds on the other. They are making good money [in part thanks to subsidies], but they're pouring it back into R&D rather than returning it to the shareholders. This is the mark of a growth company.
    - nickik 6y ago
      As I said, yes it 'can' be true, but it isn't. But Tesla isn't living of subsidies, that is just a nonsense claim that gets repeated by uninformed people. In fact, of US automakers they have had the least amount of help in the last 10 years. Tesla has been operating without the EV tax intensive for a while now, while all their competition (outside of GM) still have it. So if anything the US government is helping VW, BMW, Daimler, Nissan and so on MORE then they are helping Tesla (or GM) at the moment. A pretty insane policy if you ask me but I guess the US government didn't really think it threw. Ford hasn't even payed back the credit from the 2008 crash to the government. And GM clearly got the most help this century.
  - mhh__ 6y ago
    I wasn't saying they are both true just that the subsidies can go to both. Also [Citation needed]? Some manufacturers did make losses but "most others" would seem to be a miss-classification at least by net income. https://www.investopedia.com/articles/company-insights/091516/most-profitable-auto-companies-2016-tm-gm.asp https://www.investopedia.com/articles/company-insights/09151... (Updated 2020)
- deleted 6y ago
  [deleted]
arcticbull 6y ago
They are, and intentionally so. The point of government subsidies is often to bootstrap business models that aren't economical now, but will become economical in time. Electric cars are a great example of this, IMO. I argue that's the system working very well.
- socialdemocrat 6y ago
  I think he meant "in context." The implication is that Tesla lives of subsidies while the oil industry doesn't. This story shows yet again that the oil industry is getting major subsidies, and the complain about subsidies for Tesla rings hollow.
  - sixQuarks 6y ago
    exactly! And you're right, I should have used the word "complaining" rather than "claiming"

meanwhile, morons keep claiming Tesla lives off government subsidies.

mhh__ 6y ago

They can both be true, no? Tesla's P/E is roughly 1100, they aren't exactly printing money.

Retric 6y ago
That really doesn’t say much. Amazon’s P/E looked insane for years, while still being a good investment. The real question is what do future profits look like, and past performance is often a poor indicator of future performance.
- mhh__ 6y ago
  Perhaps, but for Tesla to go to being what Amazon is now would take so much luck/decision-making I just can't see it happening. They make nice cars, but they would have to dominate the market in a way they can't even dream of today. For example, Tesla sold 300k cars last year - ford alone sold something like 6 million. Tesla have to compete with the entire world's car industry including companies that have much more experience selling cars at that scale. Is it impossible, no, is it unlikely yes - Tesla will grow from now but I just can't see that P/E turning into cold hard cash. Also, Amazon's P/E peaked at 3.6k but only for 2012. It's been around a tenth of Tesla's current P/E for almost all of their time on the exchange. https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-ratio https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-rat...
  - Retric 6y ago
    I haven’t dug deeply into their financials, but directly comparing them to other car companies is misleading as they are far more vertically integrated. An EV charging network, direct sales, and building significantly more parts in house means they can extract more money even if they sold an identical product to the rest of the market. I doubt the solar business or grid batteries are particularly profitable, but it’s the same Apple vs Samsung song and dance. Outsourcing everything means you’re sharing profits with your suppliers and have little leverage over your competitors. That’s not to say they can or will do all of that profitability. Tesla’s self driving tech could fall behind rendering a massive investment worthless. But, the numbers aren’t so high it’s impossible for them to be a great investment just IMO unlikely.
  - dd36 6y ago
    Tesla is much more than a car company. It’s an energy company that also sells cars.
  - CyberDildonics 6y ago
    What does that have to do with subsidies?
  - cure 6y ago
    > For example, Tesla sold 300k cars last year - ford alone sold something like 6 million. Tesla have to compete with the entire world's car industry including companies that have much more experience selling cars at that scale. Is it impossible, no, is it unlikely yes - Tesla will grow from now but I just can't see that P/E turning into cold hard cash. Tesla sold 367,500 vehicles last year, Ford sold about 5,387,000. In other words, Ford sold almost 15 times as many cars as Tesla in 2019, which is a significant difference in scale. Fast forward to Q3 this year. Ford sold 551,796 vehicles (sales down significantly due to the pandemic). Tesla sold 139,300 (sales up significantly despite the pandemic). They are now just a factor of four apart. And that's just vehicles; Tesla is really an energy company, don't forget. The battery and solar parts of their business are just getting started. The P/E is extreme, but given how well Tesla is executing, and how steep their growth trajectory is, perhaps it's not so crazy after all...
nickik 6y ago
They 'can' both be true, but they are not. Their P/E has nothing to do with government subsidies. The made more profit in the last 3 quarters then most other automakers, as most lost billions.
- arcticbull 6y ago
  Generally everything here can be true at once. (1) Tesla can be living off government subsidies. (2) Taxpayers can be on the hook for billions in clean-up costs. (3) A P/E of 1100 represents a combination of the market's enthusiasm for TSLA shares, their subsidies driving earnings on the one side, and their desire to re-invest proceeds on the other. They are making good money [in part thanks to subsidies], but they're pouring it back into R&D rather than returning it to the shareholders. This is the mark of a growth company.
  - nickik 6y ago
    As I said, yes it 'can' be true, but it isn't. But Tesla isn't living of subsidies, that is just a nonsense claim that gets repeated by uninformed people. In fact, of US automakers they have had the least amount of help in the last 10 years. Tesla has been operating without the EV tax intensive for a while now, while all their competition (outside of GM) still have it. So if anything the US government is helping VW, BMW, Daimler, Nissan and so on MORE then they are helping Tesla (or GM) at the moment. A pretty insane policy if you ask me but I guess the US government didn't really think it threw. Ford hasn't even payed back the credit from the 2008 crash to the government. And GM clearly got the most help this century.
- mhh__ 6y ago
  I wasn't saying they are both true just that the subsidies can go to both. Also [Citation needed]? Some manufacturers did make losses but "most others" would seem to be a miss-classification at least by net income. https://www.investopedia.com/articles/company-insights/091516/most-profitable-auto-companies-2016-tm-gm.asp https://www.investopedia.com/articles/company-insights/09151... (Updated 2020)
deleted 6y ago
[deleted]

arcticbull 6y ago

They are, and intentionally so. The point of government subsidies is often to bootstrap business models that aren't economical now, but will become economical in time. Electric cars are a great example of this, IMO. I argue that's the system working very well.

socialdemocrat 6y ago
I think he meant "in context." The implication is that Tesla lives of subsidies while the oil industry doesn't. This story shows yet again that the oil industry is getting major subsidies, and the complain about subsidies for Tesla rings hollow.
- sixQuarks 6y ago
  exactly! And you're right, I should have used the word "complaining" rather than "claiming"