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Everyone is looking at these sort of headlines and being surprised at how high Tesla's valuation is, but I find it equally interesting as a sign of how low all
by HALtheWise 6y ago
Everyone is looking at these sort of headlines and being surprised at how high Tesla's valuation is, but I find it equally interesting as a sign of how low all the other automakers' valuations are. In that light, one hypothesis is that other automakers have pretty convincingly demonstrated that they are not able to sell significant numbers of cars at large profit margins, dooming them to perpetually hover slightly above or below breakeven depending on whether the economy is growing or in recession. Tesla hasn't proven they can do this, but they are unique among automakers in at least _not_ proving they _can't_, leaving open the potential of growing into an Apple-like position of commanding the majority of the profit in their industry, even if only a minority of sales.
Ford's success with the F-150 line might be an exception here, but the pickup truck market will always be much smaller than the rest of the automobile market.
- neogodless 6y agoI assume you may be talking globally. In the U.S.[0] trucks are about a fifth of sales, crossovers are two fifths, and SUVs are just under a fifth. Cars like the Model 3 and Nissan Leaf fall into the "midsized car" category which is about a tenth of sales. So watching the Model Y is probably a better indicator for the long-term growth of Tesla, and there's plenty of competition. Just as a data point... GM's 15% profit margin[1]. [0] https://www.statista.com/statistics/276506/change-in-us-car-demand-by-vehicle-type/ https://www.statista.com/statistics/276506/change-in-us-car-... [1] https://www.cfo.com/financial-performance/2020/11/gm-posts-4b-profit-on-strong-truck-suv-sales/ https://www.cfo.com/financial-performance/2020/11/gm-posts-4...
- babesh 6y agoFord and GM have massive amounts of debt. https://finance.yahoo.com/news/ford-motors-debt-overview-120757629.html https://finance.yahoo.com/news/ford-motors-debt-overview-120... Ford is at 142B net debt. So if you add the debt to the market cap, you get about 177B. https://m.benzinga.com/article/16826282 https://m.benzinga.com/article/16826282 GM is around 88B net debt. Add to market cap to get 148B. Tesla is probably close to 0 net with the latest raise. https://finance.yahoo.com/news/teslas-debt-overview-120614517.html https://finance.yahoo.com/news/teslas-debt-overview-12061451...