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And Toyota can sell higher "trim" version of their vehicles, which also has extremely good margins (as higher trim are not significantly more expensive to manuf

by xyzzyz 6y ago

And Toyota can sell higher "trim" version of their vehicles, which also has extremely good margins (as higher trim are not significantly more expensive to manufacture than base, just like software upgrades). But the issue is not about margin on some specific upsell, rather the question is about the entire margin on the whole business. Can Tesla make as good or better cars as competition for lower prices, and keep this advantage for a while? Very much possible. Will their advantage be 10x, like the current market cap suggests? In my opinion, highly unlikely.

useful 6y ago
I have no idea. But you can also sell an aftermarket 10k upgrade of "trim". I don't think toyota can offer that. I don't think the bull case is very strong. But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. I would describe myself as bearish on their self-driving future as something I could trust to sleep or do work in. The recent videos are impressive and exciting. I hope they succeed.
- xyzzyz 6y ago
  Of course Toyota could offer that. There are plenty of independent car shops that will do all kinds of stuff to your ride, from visual trim replacement, repainting, mechanical tuning, engine swaps, aftermarket parts etc etc. Toyota doesn't bother, because there isn't much money in it. An independent tuning shop can make $1M/year in revenue, and a thousand of such shops can make a total of a $1B. But $1B/year of extra revenue is paltry change for Toyota. Anyone can offer 10k aftermarket upgrade, but the real question is how many will buy it. > But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. Yes, I'm very bullish on Tesla, mostly because I have great trust in Musk's ability to run business. However, my bullishness doesn't extend to valuing Tesla today more than next five of biggest auto makers combined.

by xyzzyz 6y ago

useful 6y ago

I have no idea. But you can also sell an aftermarket 10k upgrade of "trim". I don't think toyota can offer that. I don't think the bull case is very strong. But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. I would describe myself as bearish on their self-driving future as something I could trust to sleep or do work in. The recent videos are impressive and exciting. I hope they succeed.

xyzzyz 6y ago
Of course Toyota could offer that. There are plenty of independent car shops that will do all kinds of stuff to your ride, from visual trim replacement, repainting, mechanical tuning, engine swaps, aftermarket parts etc etc. Toyota doesn't bother, because there isn't much money in it. An independent tuning shop can make $1M/year in revenue, and a thousand of such shops can make a total of a $1B. But $1B/year of extra revenue is paltry change for Toyota. Anyone can offer 10k aftermarket upgrade, but the real question is how many will buy it. > But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. Yes, I'm very bullish on Tesla, mostly because I have great trust in Musk's ability to run business. However, my bullishness doesn't extend to valuing Tesla today more than next five of biggest auto makers combined.