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Because a car company that manufactured 500k cars is worth _more_ than the entire car industry combined... which manufactured 70 million cars? This is irration

by u10 6y ago

Because a car company that manufactured 500k cars is worth _more_ than the entire car industry combined... which manufactured 70 million cars? This is irrational exuberance.

natch 6y ago
I agree the valuation is too high. But we should note that most of those 70 million cars are soon to be obsolete, and their resale value is going to crash very hard. Anyone buying a car these days should think twice about their purchase.
- kazen44 6y ago
  I think you are highly optimistic about this timescale. This perspecitive is highly US centric. For instance, a lot less people buy new cars in europe, not to mention the developing world.
  - natch 6y ago
    Not sure if you're talking about the timescale of obsolescence or the timescale of the value crashing. One could make the argument that ICE cars becoming obsolete is an event that has already happened, so let's set that aside. You're right that my view of this is US-centric, my bad for that. Value crashing is interesting. Cars have a fairly long lifespan so the transition to ownership of EVs is slow, I would agree with that if that's what you're saying. But the transition to crashing value does not have to be as slow. If the perceived value of an option is 2% better than another option, that does not equate to a 2% price difference. It equates to a much bigger price difference. Of course a lot of EVs are still crappy and the perceived value of ICE cars is still high due to rampant ignorance about charging options (in the US and Europe) or simple lack of charging options (in the developing world). But that can change very quickly as EVs and the infrastructure get better, and then even though the ownership transition is slow, people will be stuck owning ICE cars when they would prefer to own something 2% better, or 10% better, or 90% better.
whatshisface 6y ago
Since profit tends to zero, the entire car industry converges on paying its own bills and nothing else. Any new company that shows signs of growth potential is way more significant to investors - although, I admit, this might be a little overboard.
sdfsadfsdfds 6y ago
When you find out that Tesla has their finger not only in car manufacturing, you realize that they should never be evaluated as a car manufacturer alone. They compete in Solar power (solar roof), in battery storage (commercial and private), autonomous driving (Waymo is valued at more than 100 billion, why shouldn't Teslas autopilot division alone too), energy autobidder, own battery tech and so much more. Maybe they are a bit high right now, but just simply comparing Tesla to VW or whatever doesn't cut it.

by u10 6y ago

Because a car company that manufactured 500k cars is worth _more_ than the entire car industry combined... which manufactured 70 million cars? This is irrational exuberance.

natch 6y ago

I agree the valuation is too high. But we should note that most of those 70 million cars are soon to be obsolete, and their resale value is going to crash very hard. Anyone buying a car these days should think twice about their purchase.

kazen44 6y ago
I think you are highly optimistic about this timescale. This perspecitive is highly US centric. For instance, a lot less people buy new cars in europe, not to mention the developing world.
- natch 6y ago
  Not sure if you're talking about the timescale of obsolescence or the timescale of the value crashing. One could make the argument that ICE cars becoming obsolete is an event that has already happened, so let's set that aside. You're right that my view of this is US-centric, my bad for that. Value crashing is interesting. Cars have a fairly long lifespan so the transition to ownership of EVs is slow, I would agree with that if that's what you're saying. But the transition to crashing value does not have to be as slow. If the perceived value of an option is 2% better than another option, that does not equate to a 2% price difference. It equates to a much bigger price difference. Of course a lot of EVs are still crappy and the perceived value of ICE cars is still high due to rampant ignorance about charging options (in the US and Europe) or simple lack of charging options (in the developing world). But that can change very quickly as EVs and the infrastructure get better, and then even though the ownership transition is slow, people will be stuck owning ICE cars when they would prefer to own something 2% better, or 10% better, or 90% better.

whatshisface 6y ago

Since profit tends to zero, the entire car industry converges on paying its own bills and nothing else. Any new company that shows signs of growth potential is way more significant to investors - although, I admit, this might be a little overboard.

sdfsadfsdfds 6y ago

When you find out that Tesla has their finger not only in car manufacturing, you realize that they should never be evaluated as a car manufacturer alone. They compete in Solar power (solar roof), in battery storage (commercial and private), autonomous driving (Waymo is valued at more than 100 billion, why shouldn't Teslas autopilot division alone too), energy autobidder, own battery tech and so much more. Maybe they are a bit high right now, but just simply comparing Tesla to VW or whatever doesn't cut it.