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I find this illogical and scary: 'Tesla stock is now worth more than the combined valuations of General Motors, Ford, Fiat Chrysler Automobiles and Toyota. Yet,

I find this illogical and scary: 'Tesla stock is now worth more than the combined valuations of General Motors, Ford, Fiat Chrysler Automobiles and Toyota. Yet, Tesla makes just a fraction of the cars of its more established rivals.'

marta_weber 6y ago
The best part is really that Tesla has only competitive disadvantages. There is really nothing in Tesla that sets them apart. Yeah, they made electric cars popular, but other car manufacturers started to catch up and they have immense advantages, like brand lock-in and a long history of adapting and evolving to customer needs. And they were right not to jump into EV too quickly. It's a pretty unpredictable, developing market. Tesla got a head start, but at the end, they really have nothing going for them. The stock is gonna crash so hard in a couple of years, I am sure someone will make a movie out of it. I might actually buy a good bunch of options against Tesla, if they reach far enough into the future.
- juancampa 6y ago
  The value doesn't come from the fact that they make electric cars, it comes from: The fact that they have a huge fleet of cars with cameras and sensors on the road feeding their ML models is a huge advantage. Battery factories. Supercharger network. Elon's Following. Edit: added following
  - new_realist 6y ago
    AOL. Walled garden. Captive audience. Original content.
- tashoecraft 6y ago
  While I think Tesla is over valued, I feel your statement is one many made about Apple. That they just used commodity parts to create the iPhone. That the margins will be driven too small to maintain and they’ll never live up to their valuation. Tesla has atleast a 3 year advantage, a very strong hold on battery production, extreme brand loyalty, and an iteration cycle that puts all other car companies to shame. They’ve caught an entire industry with their pants down.
- deleted 6y ago
  [deleted]
- pg_bot 6y ago
  Do I think Tesla is overvalued? Yes, but I find it laughable that you think Tesla has no competitive advantages. Off the top of my head I can think of their battery production + supply chain, direct sales to consumers, world class electrical engineering, best in class safety, and over the air software updates. All of those factors would be extremely hard or impossible to duplicate at an existing car manufacturer.
- sliken 6y ago
  Tesla IMO is just less greedy. They provide class leading safety, range, acceleration, and don't nickle and dime you. The battery packs have generous lifetimes and they have an Apple like good (rwd), better (AWD), and best (AWD performance) setup. Try to buy a Lexus, BMW, MB, etc and you get a huge laundry list of incompatible features that bundle in the options you want into expensive bundles. So much so that to get even the basic safety things like rear view cameras and decent headlights laws had to be passed and companies embarrassed with poor safety ratings because their headlights were unsafe at highway speeds and much worse than a Toyota Prius unless you bought the many $k package with the fancy headlights. Want a reliable car that's likely to last a few 100k miles, 353 mile range, is one of the safest cars on the planet to drive, has a great charging networks, great headlights, generous interior room, and low cost per mile? Get a model 3 AWD for $48k, it's a hell of a deal, and that's assuming your state, city, and country have no incentives. Sure it's one of the "slow" Tesla's at 0-60 in 4.2 seconds, but still one of the quicker accelerating cars around. I'd be hard pressed to name a #2. There's a nice Porsche, but it's like twice as much. The ford Mach e is somewhat similar, less range, less accel (at the same price), not as safe, and nowhere close on the charging network. Chevy bolt is embarrassing in comparison, doesn't handle, doesn't accelerate, not as safe, nowhere close on range, not AWD, etc.
slimsag 6y ago
Serious question: does the same aspect scare you with most tech startups, which have valuations well beyond the actual value they produce (often losses) at the time of their IPOs? Tesla is being valued based on its potential future, not present.
- veggieburglar 6y ago
  Software is much easier, faster and cheaper to scale than car manufacturers.
- xnx 6y ago
  Tech startups are valued that way because software has [approximately] zero marginal cost. If everyone in the world wants to install Tiktok tomorrow, they can. If everyone in the world wants to buy a Tesla tomorrow, it would be impossible to fulfill that demand.
  - virgilp 6y ago
    But if half of people in the world have Teslas with self driving, Tesla can also sell entertainment (they've already started, with video games!). They can also sell fancier version of self driving where you can "rent" your car (Uber-like). The hardware is a gateway to potentially more services. I still feel that Tesla is overvalued, but there exists a potential future where it still has room to grow (I'm not sure I'd like that future - so this, coupled with the stock volatility, kept me from investing in Tesla. Which, TBH, was a poor decision so far :D )
- Udik 6y ago
  > Tesla is being valued based on its potential future This is what I don't get. Tesla's potential (but unlikely) future is that of replacing some of its competitors. And yet it's valued more than all its current competitors combined. Something just doesn't add up.
  - olivermarks 6y ago
    Exactly!
elamje 6y ago
In fact, Michael Burry from the Big Short has been tweeting about this lately. It's actually more valuable the all WORLDWIDE auto makers combined, and sells <1% of global volume.
- newacct583 6y ago
  Because the bet is that in 30 years, Tesla will still be here and the legacy companies will not, having failed to pivot to the emerging markets. Yours is the same logic that has been deployed against tech industry P/E ratios for decades. No, it doesn't make "sense" per the balance sheet. But it's clear what the bet is.
  - est31 6y ago
    Some legacy companies will certainly fail the pivot, but I think it's wrong by the stock market to be so certain that they will collectively fail.
    - newacct583 6y ago
      Well, it doesn't bet that they'll "fail" exactly. It's simply betting that they aren't going to grow. The collective opinion of Wall Street is that the only value to owning Toyota or GM or Volkswagen stock is the immediate value: dividend payments, the value of liquidatable assets, etc... But with Tesla, the bet is that in 30 years that company is going to own most of the market all these existing firms do. That may be wrong, but like I said it's clear that this is the bet.
- changoplatanero 6y ago
  I’m pretty sure that Twitter account is not run by Michael burry
  - adnzzzzZ 6y ago
    There are articles from "real institutions" saying it is him, for example: https://www.bloomberg.com/news/articles/2020-04-07/michael-burry-slams-virus-lockdowns-in-controversial-tweetstorm https://www.bloomberg.com/news/articles/2020-04-07/michael-b.... It wouldn't surprise me that it is him, he seems like a contrarian in nature (if the movie did his personality any justice) and what he's been saying this year is pretty in line with that.
prof-dr-ir 6y ago
If that scares you then may I suggest you consult your cardiologist before you check what bitcoin has been going for recently? Excusez le mot, but I really do see these developments as two sides of the same coin.
- kylebenzle 6y ago
  Difference is that for anyone paying attention it has been clear for years that Bitcoin was hijacked by corporate interests (Adam Back's Blockstream) years ago and intentionally crippled in order to push their own "second layer" solutions to problems they themselves created. Tesla's controlling interest at least wants Tesla to succeed, the people that hijacked the Bitcoin GitHub repo specifically want it to fail as, "Digital Peer-to-Peer Cash". Just look into nonsense like "Replace by Fee", Greg Maxwell and the company Blockstream itself. All social engineering to get Bitcoin to fail.
- Udik 6y ago
  I agree, but then let's stop pretending that there's an underlying value which the price of Tesla shares reflect. If Tesla is like Bitcoin, then it's an asset with no intrinsic value except for its rarity. And the only reason people buy it is that they hope reselling it at a higher price. Nothing wrong with it, just let us be clear about that.
derefr 6y ago
Try measuring Tesla's output in Ampere-hours of EV batteries produced, vs. all those other manufacturers combined.

marta_weber 6y ago

The best part is really that Tesla has only competitive disadvantages. There is really nothing in Tesla that sets them apart. Yeah, they made electric cars popular, but other car manufacturers started to catch up and they have immense advantages, like brand lock-in and a long history of adapting and evolving to customer needs. And they were right not to jump into EV too quickly. It's a pretty unpredictable, developing market. Tesla got a head start, but at the end, they really have nothing going for them. The stock is gonna crash so hard in a couple of years, I am sure someone will make a movie out of it. I might actually buy a good bunch of options against Tesla, if they reach far enough into the future.

juancampa 6y ago
The value doesn't come from the fact that they make electric cars, it comes from: The fact that they have a huge fleet of cars with cameras and sensors on the road feeding their ML models is a huge advantage. Battery factories. Supercharger network. Elon's Following. Edit: added following
- new_realist 6y ago
  AOL. Walled garden. Captive audience. Original content.
tashoecraft 6y ago
While I think Tesla is over valued, I feel your statement is one many made about Apple. That they just used commodity parts to create the iPhone. That the margins will be driven too small to maintain and they’ll never live up to their valuation. Tesla has atleast a 3 year advantage, a very strong hold on battery production, extreme brand loyalty, and an iteration cycle that puts all other car companies to shame. They’ve caught an entire industry with their pants down.
deleted 6y ago
[deleted]
pg_bot 6y ago
Do I think Tesla is overvalued? Yes, but I find it laughable that you think Tesla has no competitive advantages. Off the top of my head I can think of their battery production + supply chain, direct sales to consumers, world class electrical engineering, best in class safety, and over the air software updates. All of those factors would be extremely hard or impossible to duplicate at an existing car manufacturer.
sliken 6y ago
Tesla IMO is just less greedy. They provide class leading safety, range, acceleration, and don't nickle and dime you. The battery packs have generous lifetimes and they have an Apple like good (rwd), better (AWD), and best (AWD performance) setup. Try to buy a Lexus, BMW, MB, etc and you get a huge laundry list of incompatible features that bundle in the options you want into expensive bundles. So much so that to get even the basic safety things like rear view cameras and decent headlights laws had to be passed and companies embarrassed with poor safety ratings because their headlights were unsafe at highway speeds and much worse than a Toyota Prius unless you bought the many $k package with the fancy headlights. Want a reliable car that's likely to last a few 100k miles, 353 mile range, is one of the safest cars on the planet to drive, has a great charging networks, great headlights, generous interior room, and low cost per mile? Get a model 3 AWD for $48k, it's a hell of a deal, and that's assuming your state, city, and country have no incentives. Sure it's one of the "slow" Tesla's at 0-60 in 4.2 seconds, but still one of the quicker accelerating cars around. I'd be hard pressed to name a #2. There's a nice Porsche, but it's like twice as much. The ford Mach e is somewhat similar, less range, less accel (at the same price), not as safe, and nowhere close on the charging network. Chevy bolt is embarrassing in comparison, doesn't handle, doesn't accelerate, not as safe, nowhere close on range, not AWD, etc.

slimsag 6y ago

Serious question: does the same aspect scare you with most tech startups, which have valuations well beyond the actual value they produce (often losses) at the time of their IPOs? Tesla is being valued based on its potential future, not present.

veggieburglar 6y ago
Software is much easier, faster and cheaper to scale than car manufacturers.
xnx 6y ago
Tech startups are valued that way because software has [approximately] zero marginal cost. If everyone in the world wants to install Tiktok tomorrow, they can. If everyone in the world wants to buy a Tesla tomorrow, it would be impossible to fulfill that demand.
- virgilp 6y ago
  But if half of people in the world have Teslas with self driving, Tesla can also sell entertainment (they've already started, with video games!). They can also sell fancier version of self driving where you can "rent" your car (Uber-like). The hardware is a gateway to potentially more services. I still feel that Tesla is overvalued, but there exists a potential future where it still has room to grow (I'm not sure I'd like that future - so this, coupled with the stock volatility, kept me from investing in Tesla. Which, TBH, was a poor decision so far :D )
Udik 6y ago
> Tesla is being valued based on its potential future This is what I don't get. Tesla's potential (but unlikely) future is that of replacing some of its competitors. And yet it's valued more than all its current competitors combined. Something just doesn't add up.
- olivermarks 6y ago
  Exactly!

elamje 6y ago

In fact, Michael Burry from the Big Short has been tweeting about this lately. It's actually more valuable the all WORLDWIDE auto makers combined, and sells <1% of global volume.

newacct583 6y ago
Because the bet is that in 30 years, Tesla will still be here and the legacy companies will not, having failed to pivot to the emerging markets. Yours is the same logic that has been deployed against tech industry P/E ratios for decades. No, it doesn't make "sense" per the balance sheet. But it's clear what the bet is.
- est31 6y ago
  Some legacy companies will certainly fail the pivot, but I think it's wrong by the stock market to be so certain that they will collectively fail.
  - newacct583 6y ago
    Well, it doesn't bet that they'll "fail" exactly. It's simply betting that they aren't going to grow. The collective opinion of Wall Street is that the only value to owning Toyota or GM or Volkswagen stock is the immediate value: dividend payments, the value of liquidatable assets, etc... But with Tesla, the bet is that in 30 years that company is going to own most of the market all these existing firms do. That may be wrong, but like I said it's clear that this is the bet.
changoplatanero 6y ago
I’m pretty sure that Twitter account is not run by Michael burry
- adnzzzzZ 6y ago
  There are articles from "real institutions" saying it is him, for example: https://www.bloomberg.com/news/articles/2020-04-07/michael-burry-slams-virus-lockdowns-in-controversial-tweetstorm https://www.bloomberg.com/news/articles/2020-04-07/michael-b.... It wouldn't surprise me that it is him, he seems like a contrarian in nature (if the movie did his personality any justice) and what he's been saying this year is pretty in line with that.

prof-dr-ir 6y ago

If that scares you then may I suggest you consult your cardiologist before you check what bitcoin has been going for recently? Excusez le mot, but I really do see these developments as two sides of the same coin.

kylebenzle 6y ago
Difference is that for anyone paying attention it has been clear for years that Bitcoin was hijacked by corporate interests (Adam Back's Blockstream) years ago and intentionally crippled in order to push their own "second layer" solutions to problems they themselves created. Tesla's controlling interest at least wants Tesla to succeed, the people that hijacked the Bitcoin GitHub repo specifically want it to fail as, "Digital Peer-to-Peer Cash". Just look into nonsense like "Replace by Fee", Greg Maxwell and the company Blockstream itself. All social engineering to get Bitcoin to fail.
Udik 6y ago
I agree, but then let's stop pretending that there's an underlying value which the price of Tesla shares reflect. If Tesla is like Bitcoin, then it's an asset with no intrinsic value except for its rarity. And the only reason people buy it is that they hope reselling it at a higher price. Nothing wrong with it, just let us be clear about that.

derefr 6y ago

Try measuring Tesla's output in Ampere-hours of EV batteries produced, vs. all those other manufacturers combined.