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The same people shitting on Tesla now were shitting on Amazon 10 years ago (and we know how that turned out). It's the exact same situation, only Elon Musk is m

The same people shitting on Tesla now were shitting on Amazon 10 years ago (and we know how that turned out). It's the exact same situation, only Elon Musk is more active/controversial on Twitter than Bezos ever was.

adventured 5y ago
It's not the same situation at all. The car industry is a known quantity in terms of sales potential, margins, costs and possible overall scale. Tesla will never exceed today's version of Toyota or VW in terms of size. There's your cap. And that's all before the market is entirely flooded with EV competition. AWS is a better profit machine than anything Tesla will ever produce. Tesla will never own half the automobile market, nor will they ever have AWS operating income margins (Tesla's operating income margins are typically 5-10% in a good quarter, and that's normal for the auto industry; which is half to 1/4 that of AWS). That's the reason Tesla will never have an Amazon-like result. It wasn't retail that made Amazon worth so much. There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs; there's no super margin jump that makes electric cars two or three times as profitable compared to selling a $45,000 BMW or Mercedes. AWS can generate $20 to $30 billion in operating income on $100b-$120b in sales. It's very likely to get there at this point. There is almost no scenario where Tesla makes that much money selling expensive electric vehicles (and solar panels are a horrific business for generating profit, as is the battery industry). Tesla needs tens of billions of dollars in annual profit to float its market cap (and that's just to support where it's already at). I was defending Tesla when a zillion people on HN were saying they could never mass produce the Model 3. I was right. I was defending Tesla when a zillion people on HN were claiming it was going to go bankrupt. I was right. Before that I was defending the Model S in its early days. I was right. And I'm right about this too, and it's very obvious Tesla's just going to end up as another automobile company (best case scenario). There's nothing special about being the next Mercedes, it isn't worth $500-$900 billion to be that.
- sneak 5y ago
  > There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs; If Tesla achieves FSD (big if) first, that is indeed some magic that will expand the car market by (not tenfold, but significantly) just because they're Teslas. FSD semis is precisely some magic that will increase that market several times. (The fact that they have not actually shipped their human-driven semi yet notwithstanding.)
  - Grustaf 5y ago
    How would self driving make the car market 10 times larger? The only real point of self driving for local trips is to radically DEcrease the number of cars by efficient and convenient pooling.
- golergka 5y ago
  > It's not the same situation at all. The car industry is a known quantity in terms of sales potential, margins, costs and possible overall scale. It's only true if probability of autonomous taxi fleet is zero. I'm not saying it's 100%, or even high. But even if it's 1%, then your statement is already incorrect.
- Jyaif 5y ago
  > Tesla will never exceed today's version of Toyota or VW in terms of size. There's your cap. Just like Amazon will never exceed the cap of Barnes & Noble?
- bryanlarsen 5y ago
  Current non-Tesla car makers are massively undervalued because: - they have a massive amount of debt - (many of them but not all) have a poor gross margin - EVs are an existential threat that will likely destroy a couple of them, we just don't know which ones yet. Any car maker that gets past all three points above AND has a VW or Toyota like market share AND has a substantial growth rate in its profit margin will likely have a trillion dollar market cap as long as we are still in a cheap capital market. That's a lot of if's for anybody, including Tesla. And Tesla with a market cap of $1T in a decade is basically just keeping up with inflation, so not a great investment even if there weren't any risks. Transportation and energy are both trillion dollar markets. They can support trillion dollar market caps. But trillion dollar caps require Apple levels of profit risk, not car manufacturer levels of risk.
  - misiti3780 5y ago
    you mean over-valued? why would them having poor-margins and huge amounts of debt make them an attractive investment ?
    - bryanlarsen 5y ago
      Under valued relative to what you'd think they'd be worth given their revenues.
      - Grustaf 5y ago
        Surely you want to say that people think they are worth X given their large revenues, but in reality they are worth less than X because they also have huge debt and poor margins? If so, that means they are OVERvalued.
- Grustaf 5y ago
  I agree with your sentiment (and your logic for that matter), but I want to just point out that there is a (distant, admittedly) possibility that they come up with something very new and clever, like self-driving micro cars as a service or something, that can create an entirely new industry. I mean look at Apple in 2006, or 2008 for that matter. Nobody could have foreseen that they would create a completely new category that would have basically half of the rich world spending 1000 bucks every 2 years on a pocket computer. Clearly Elon Musk is no Steve Jobs or Tim Cook, and Tesla is no Apple, but it's not impossible.
  - zamfi 5y ago
    Yes, but Tesla’s market cap already assumes all those things happened...it’s worth 1/4 of Apple already, but hasn’t actually done those Apple-type things!
    - Grustaf 5y ago
      Sure, my point is more that Tesla could in theory live up to their astronomical valuation. They merely have to pull off an iPhone and create a new industry…
      - zamfi 5y ago
        Sure, and my point is that...there's not a lot of room for valuation growth, since their current valuation already prices in extreme success.
- nickik 5y ago
  That Tesla cap is VW is simply not true. VW simply doesn't include a lot of the things Tesla would be doing themselves. Like service, power production, higher vertical integration, sales and so on. And that is excluding the possibility that Tesla could have a continues improvement on margin. Not to mention Tesla is established in multiple ohter fast growing industry, solar, stationary home storage and grid storage. Not to mention Tesla is making itself into a first rate battery companies that have lot of opportunity for other uses. Not to mention the ongoing race for slef-driving (whatever many on HN think of their strategy) Not to mention that all Musk companies have been growing pretty consistently and Elon always has a 'next big thing'. Look at SpaceX with Starlink and Starship. He has been talking about an electric plane for 10+ years and eventually that will be a natural extension of what Tesla does, batteries, electric engines (not to mention the connection to SpaceX).

adventured 5y ago

It's not the same situation at all. The car industry is a known quantity in terms of sales potential, margins, costs and possible overall scale. Tesla will never exceed today's version of Toyota or VW in terms of size. There's your cap. And that's all before the market is entirely flooded with EV competition. AWS is a better profit machine than anything Tesla will ever produce. Tesla will never own half the automobile market, nor will they ever have AWS operating income margins (Tesla's operating income margins are typically 5-10% in a good quarter, and that's normal for the auto industry; which is half to 1/4 that of AWS). That's the reason Tesla will never have an Amazon-like result. It wasn't retail that made Amazon worth so much. There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs; there's no super margin jump that makes electric cars two or three times as profitable compared to selling a $45,000 BMW or Mercedes. AWS can generate $20 to $30 billion in operating income on $100b-$120b in sales. It's very likely to get there at this point. There is almost no scenario where Tesla makes that much money selling expensive electric vehicles (and solar panels are a horrific business for generating profit, as is the battery industry). Tesla needs tens of billions of dollars in annual profit to float its market cap (and that's just to support where it's already at). I was defending Tesla when a zillion people on HN were saying they could never mass produce the Model 3. I was right. I was defending Tesla when a zillion people on HN were claiming it was going to go bankrupt. I was right. Before that I was defending the Model S in its early days. I was right. And I'm right about this too, and it's very obvious Tesla's just going to end up as another automobile company (best case scenario). There's nothing special about being the next Mercedes, it isn't worth $500-$900 billion to be that.

sneak 5y ago
> There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs; If Tesla achieves FSD (big if) first, that is indeed some magic that will expand the car market by (not tenfold, but significantly) just because they're Teslas. FSD semis is precisely some magic that will increase that market several times. (The fact that they have not actually shipped their human-driven semi yet notwithstanding.)
- Grustaf 5y ago
  How would self driving make the car market 10 times larger? The only real point of self driving for local trips is to radically DEcrease the number of cars by efficient and convenient pooling.
golergka 5y ago
> It's not the same situation at all. The car industry is a known quantity in terms of sales potential, margins, costs and possible overall scale. It's only true if probability of autonomous taxi fleet is zero. I'm not saying it's 100%, or even high. But even if it's 1%, then your statement is already incorrect.
Jyaif 5y ago
> Tesla will never exceed today's version of Toyota or VW in terms of size. There's your cap. Just like Amazon will never exceed the cap of Barnes & Noble?
bryanlarsen 5y ago
Current non-Tesla car makers are massively undervalued because: - they have a massive amount of debt - (many of them but not all) have a poor gross margin - EVs are an existential threat that will likely destroy a couple of them, we just don't know which ones yet. Any car maker that gets past all three points above AND has a VW or Toyota like market share AND has a substantial growth rate in its profit margin will likely have a trillion dollar market cap as long as we are still in a cheap capital market. That's a lot of if's for anybody, including Tesla. And Tesla with a market cap of $1T in a decade is basically just keeping up with inflation, so not a great investment even if there weren't any risks. Transportation and energy are both trillion dollar markets. They can support trillion dollar market caps. But trillion dollar caps require Apple levels of profit risk, not car manufacturer levels of risk.
- misiti3780 5y ago
  you mean over-valued? why would them having poor-margins and huge amounts of debt make them an attractive investment ?
  - bryanlarsen 5y ago
    Under valued relative to what you'd think they'd be worth given their revenues.
    - Grustaf 5y ago
      Surely you want to say that people think they are worth X given their large revenues, but in reality they are worth less than X because they also have huge debt and poor margins? If so, that means they are OVERvalued.
Grustaf 5y ago
I agree with your sentiment (and your logic for that matter), but I want to just point out that there is a (distant, admittedly) possibility that they come up with something very new and clever, like self-driving micro cars as a service or something, that can create an entirely new industry. I mean look at Apple in 2006, or 2008 for that matter. Nobody could have foreseen that they would create a completely new category that would have basically half of the rich world spending 1000 bucks every 2 years on a pocket computer. Clearly Elon Musk is no Steve Jobs or Tim Cook, and Tesla is no Apple, but it's not impossible.
- zamfi 5y ago
  Yes, but Tesla’s market cap already assumes all those things happened...it’s worth 1/4 of Apple already, but hasn’t actually done those Apple-type things!
  - Grustaf 5y ago
    Sure, my point is more that Tesla could in theory live up to their astronomical valuation. They merely have to pull off an iPhone and create a new industry…
    - zamfi 5y ago
      Sure, and my point is that...there's not a lot of room for valuation growth, since their current valuation already prices in extreme success.
nickik 5y ago
That Tesla cap is VW is simply not true. VW simply doesn't include a lot of the things Tesla would be doing themselves. Like service, power production, higher vertical integration, sales and so on. And that is excluding the possibility that Tesla could have a continues improvement on margin. Not to mention Tesla is established in multiple ohter fast growing industry, solar, stationary home storage and grid storage. Not to mention Tesla is making itself into a first rate battery companies that have lot of opportunity for other uses. Not to mention the ongoing race for slef-driving (whatever many on HN think of their strategy) Not to mention that all Musk companies have been growing pretty consistently and Elon always has a 'next big thing'. Look at SpaceX with Starlink and Starship. He has been talking about an electric plane for 10+ years and eventually that will be a natural extension of what Tesla does, batteries, electric engines (not to mention the connection to SpaceX).