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Teslas price is just too high. I think they will be very successful and become a big, dominant car maker. But their price only makes sense if they end up being

Teslas price is just too high. I think they will be very successful and become a big, dominant car maker. But their price only makes sense if they end up being the only car maker left. That's not realistic. Building an electric car is not that hard, especially if Tesla already did all the hard lifting for you. For a while I was thinking that the battery play - becoming the number 1 battery supplier - will justify the price, but what I see right now looks like there is many players, old and new, moving in. I won't short them tough, in the end I'm just a dog on the internet and have no clue how stonks work.

jdmoreira 5y ago
On the internet no one knows you are a dog :)
- verelo 5y ago
  This comment reminds me of a car auction i went to years ago: This 2 yr old car with around 250,000kms on it came up, likely used for long distance travel as this was in rural Australia. The car looked like a 2 year old car inside and out, it was completely normal except for the odometer reading. The auctioneer used the line "No one can read the odometer when you're driving on by". I wouldn't have bought it, but i liked the line.
toomuchtodo 5y ago
The world needs enormous amounts of stationary storage to transition to zero carbon electrical generation, and nuclear ain’t happening. Tesla sells batteries in lots of products, some with better margins than others.
cryptoz 5y ago
Tesla isn't a car company, though. They even removed "Motors" from their name years ago - showing wider interest, and not just batteries. Solar roofing as well, and others. I don't hold TSLA right now, regretfully, I entered pre-split at $27 and sold at $200. I also think the current price is way too high, for what it's worth. WAY too high. But it's not at all about cars, at least not for me, when trying to justify the valuation. It's about energy at large scale, and transportation at large scale. Not just car sales. Or battery sales. Edit: Currently P/E is ~570! I remember it being 1,300 recently. Yikes.
- kikokikokiko 5y ago
  Take a look at the "Common Sense Skeptic" youtube channel. Tesla's purchase of Solar City is a scandal on itself, it was never a play on entering the solar roof business. It was just a bail out using Tesla's shareholders money to save Musks and his business partners (which were Musks cousins btw) investments. This channel also destroys all the hype surrounding Starship, it's a joy to watch.
  - epistasis 5y ago
    It's quite possible for the Solar City purchase to have been executed at a terrible price that is basically crony capitalism and deserves jail time, while it simultaneously being a great value add for Tesla. Controlling solar generation, backup batteries, and car charging all at once is difficult when cobbling together pieces from vendors that don't interoperate, when there's nobody else willing to write the middle ware to connect it all. With Tesla's ridiculous valuation, they can make all sorts of terrible purchases like that and still succeed just fine.
  - karolist 5y ago
    Everyone should watch this video, more so people who refer to other car companies as "legacy automakers". Another good channel to remove the veil is Thunderf00t.
    - Robotbeat 5y ago
      Thunderf00t’s criticisms ring pretty hollow, TBH. Criticism of Musk is one thing. The whole “remove the veil” sorta “red-pill” type language, criticism that Musk has never done anything useful or noteworthy other than scamming falls apart for anyone who has been paying attention for more than a couple years. Electric cars pre-Tesla were a joke. Tesla had enormous influence. And SpaceX (which was founded by Musk, who runs it as chief engineer) launched more mass to orbit last year than the rest of the world combined, a remarkable turnaround from the failure of US companies to be commercially competitive. There are things worth being skeptical of. “Full self-driving,” for instance or even, sure, the Solar City deal (although arguable). Perma-skeptics like Thunderf00t, though, never acknowledge this kind of stuff.
epistasis 5y ago
There's also solar, in addition to storage. All three technologies are really key parts of the future, and controlling that aspect of the suburban home energy profile have absolutely huge synergies. As we get to higher penetration of renewables, our grid will change from the current model of supplying whatever power is demanded, to a far more two way mode where excess supply will drive time-shifted demand. Right now the only monetization strategy on the grid for solar/storage providers are 1) net-metered solar, and 2) backup electricity for outages. This will change. The most expensive component of an EV is the battery, and it's likely we will have as much grid-attached non-EV storage as we have EV storage. IMHO the current price is unhinged from any analysis, and fully in the tulip bulb stage of share pricing. But I think that Tesla is better positioned to take advantage of three core technologies of our energy future, three techs that must be tightly coupled, and no other player is even really thinking of that.
- batmenace 5y ago
  That may be true for car makers, but in the energy world, other than some battery storage projects, Tesla is really not a major player at all, and there is an endlessly long list of companies that are more meaningful for this market and better able to take advantage of the increased renewables rollout around the world.
  - epistasis 5y ago
    When it comes to utility-scale grid storage, Tesla definitely gets the most press, but I would agree that there are serious competitors like AES and Vestra. I would be interested to hear some names from your endlessly long list, because I can't come up with many of them. For the home battery market, Tesla is definitely one of the leaders. I think the primary reason Tesla has not shipped more batteries that are permanently attached to the grid, either in from or behind the meter, is that selling a car is a far higher margin destination for their batteries. So as long as Tesla car sales can suck up batteries, the battery factories are probably going to be using most of their time making batteries for cars.
agloeregrets 5y ago
> I think they will be very successful and become a big, dominant car maker. I'm not sure really. They keep throwing the entire company at insanely poorly leveraged bets with unfulfilled promises. (Cybertruck is on track to be delivered at a longer timeframe than any car tesla has ever made, they haven't even built the factory or unveiled the final design, same for Semi and Roadster, the new Model S was supposed to be shipping in..uh.. March?) I think they are scaled too big to breathe and survive, eventually being bought in a post-Elon world by a Ford, GM, or possibly Google or Apple.
- cduzz 5y ago
  They bet the company on the OG roadster, S, and 3. They don't need to now. The 3 and Y are quite successful and quite profitable. The Truck, Semi, Roadster, Leaf Blower, and such are all distractions that aren't worth building until they've managed to establish much larger battery volumes and aren't selling every Y and 3 they make months before they make them. What's their run rate? They've got a ton of cash and viable products (3 and Y) where there are people lined up to buy them before they're even made. And they've got the supercharger network which is an enormous differentiator against any other EV. Their biggest threat is if there's some enormous unseen flaw in their battery design where they get swamped with battery warranty claims. The share price is absurdly high, but it is similarly absurd to project the company going out of business.
  - agloeregrets 5y ago
    They already are betting the company on a bunch of things. Their cash on hand is almost entirely debt. Additionally, they are merely meeting demand on Model 3 sales right now, don't forget that they spun down production rate on the 3/Y and are slowing China production as well. US charging networks are growing at a faster rate than Superchargers as well, so in roughly 2 years you are looking at a market where Electrify America is as big as the Supercharger network, the current NY to LA EV record is held by a Taycan on EA's network, not a Tesla. The Model 3 is not very profitable at all either, sure it sells well (as it should, it's a great car being sold at almost a loss!) but a M3 without AP is not profitable. Still, to this day, they haven't made a penny on their business other than with selling credits but they are not even investing that heavily back into the business right now. Finally, the Cybertruck was told to reservation holders to be shipping in 2021... which isn't happening. What I find kinda funny is this: You call the truck a distraction..when it is the #1 best selling category in the US AND they have fast encroaching competition that owns the market. That's like calling the Rav4 a distraction for Toyota. The Ford F150 Lightning will likely outsell the cycbertruck in the US as Ford will have two years to scale and keep it in that scale by time the Cybertruck does actually launch. It has been Ford's #1 R&D goal for the last three years as it should be, it's their #1 selling vehicle. Ford sells two F150s in the US for every car Tesla makes globally and the margin is way more per unit. I'm not saying they are going to go out of business today or this decade. I'm just saying that their differentiation will disappear, customer's will to deal with terrible timelines will evaporate when they can go the next door over and get it today, and once Elon is gone from TSLA (which will happen and should terrify shareholders; he clearly wants little to do with Tesla), the stock will fall like a rock and the debt leverage will fall with it finding Tesla way upside down on a LOT of money that they can't borrow more to cover and without the market and profit explosion the company is betting on.
incrudible 5y ago
> I won't short them tough, in the end I'm just a dog on the internet and have no clue how stonks work. To be clear, Michael Burry didn't short Tesla, he bought put options, which gives him the right but not the obligation to sell Tesla stock for a certain price, on a certain date. If the bet works against him, his options expire worthless. This puts an upper limit on his losses. If you have an actual short position, your potential losses are unlimited.
- alex_young 5y ago
  > If you have an actual short position, your potential losses are unlimited. Isn’t this a bit like saying that the potential upside of holding any stock is unlimited?
  - benmller313 5y ago
    Yes. Is that not true?
    - enos_feedler 5y ago
      Yes. It's just more likely that your shares become valued at zero then anyone valuing them at 'infinite'
    - ljm 5y ago
      It is, that's the wager.
  - LeifCarrotson 5y ago
    No, and this distinction is critical to understanding the risk that short sellers take. To use a slightly anomalous stock which hasn't split as an easy example, if you had shorted $BRK in 1980 when the price was $300, the potential upside was just 100%: In your best outcome, they go bankrupt and the most you earn is $300. Unfortunately for you, Berkshire Hathaway shares are now worth $430,000, so your $300 or 100% upside turned out to be a rounding error against the approximately -150000% loss. Edit: The reverse is technically symmetrical, but the consequences make it work out differently for the markets and society. Yes, if you'd bought BRK in 1980 you'd have had a liability of $300 (your cash input could be worthless if they went bankrupt) and a potential upside of hundreds of thousands if it went to the moon. The difference is that if you held the stock and it goes bankrupt, you're only liable for the amount that you put in. Worst case, you bet the farm and you're going to be washing dishes to put food on the table, but it's your loss to lose and your gain to win. If instead you bet the farm in a short position, you never had and will never have thousands of farms to bet in the first place; you're going to declare bankruptcy and someone else is going to have to pay for the bad bet you made. That effectively pushes the losses back on society but privatizes the gains.
yumraj 5y ago
And, they have a genius but an unstable genius as a CEO where no one knows what he will do next. Not sure how the stock market quantifies that.
- fleetingmoments 5y ago
  Are you saying they should get a stable genius in?
  - chrisco255 5y ago
    Stable geniuses are unfortunately even more rare than unstable ones.
  - WJW 5y ago
    There is at least one of those available who recently left his previous position... Joking, joking :D
  - yumraj 5y ago
    Stable person yes. The stable genius, hell no. Stable genius, if they can find one, yes!!
- mdoms 5y ago
  Elon Musk isn't a genius. He's a dumb guy who got lucky. Go and read literally anything he writes. Obvious dumb guy.
akomtu 5y ago
I'd think of Tesla as of an iPhone for affluent hipsters. Teslas remain connected to the manufacturer that collects extensive info on drivers (spying, some would say) and can use it for marketing or other purposes later. Teslas can be a powerful distribution channel if Musk figures a way to discreetly advertise to them right in their cars. Teslas are a golf club in a sense: a directory of important people, except that the club has managed to install mics, gps trackers and a internet connected screen right in the members' cars.
- caconym_ 5y ago
  Is Tesla the only car company collecting usage data? Off the top of my head, I don't think so. Your comment kind of reminds me of how much shit "Big Tech" gets for data collection, just because they're highly visible, while the really scary shit (e.g. cell carriers offering granular per-user location data APIs to anybody with money) flies under the radar because it doesn't have that sexy down-with-big-tech angle that (ironically?) seems to drive the most clicks. That's not to say the usual "Big Tech" suspects are choirboys, but the public discourse's focus on their data collection activities is absurdly myopic.
Shacklz 5y ago
> I think they will be very successful and become a big, dominant car maker. "Big, dominant" in the same sense as maybe Ferrari: Prestigious cars for a niche audience that are willing to pay a premium for the brand.
- Hamuko 5y ago
  Ferrari is way more exclusive than Tesla. I would rather imagine Tesla becoming a Jaguar - kinda exclusive but not that rare.
  - Xenoamorphous 5y ago
    Indeed. Probably Tesla made more cars last year than Ferrari in all its history. Porsche is perhaps a better comparison.
    - Dah00n 5y ago
      Not really comparable but Porsche sold approximately half as many cars last year as Tesla. Shows how small Tesla actually is (approx. 500.000 cars). Ferrari sold ~10.000.
rubyn00bie 5y ago
I'm not one to typically paraphrase billionaires, or think they're too connected to reality... but something I heard Mark Cuban say the other day was kind of "oh, shit that's true" moment for me. It was something to the affect of (I can't find the clip at the moment), "Back in 2010 we never thought we'd see a company hit $1 trillion. We never thought Apple or Amazon (et. al) would be able to continue their growth year after year to even be those $2 trillion dollar companies..." All I could think was "oh shit, yeah, I never thought I'd see it either." Ten years ago, Apple was worth $297 billion dollars, today it's worth $2.1 trillion dollars. I think Tesla stands a good a chance to be worth these seemingly absurd valuations. The market price isn't solely defined by the current value. With tech companies especially, it reflects expected value, and Tesla still has a lot of room to grow. I'd be more skeptical but EVs are eventually going to cost way less to make than typical ICE (internal combustion engine) cars, and per unit that savings translates into a lot of fucking profit. Not to mention the additional profit they're raking in thanks to the public's image of Tesla's and the experience generally being "magical" (even if gimmicky). Also, a "green crypto" if a Tesla branded play (I feel musk is bringing this soon) will cause a pretty gigantic boost to the company's bottom line. For at least the next 2-5 years Tesla is gonna be pretty safe, and I'd guess that 2-5 will buy it like 3-5 more years just being the incumbent... I don't think Burry is going to be to happy on this one. Mark Spiegel has already fallen to the beast, and I suspect Burry is likely going to as well. shrug just my two cents.
- dustingetz 5y ago
  The question imo is if time benefits the incumbents (due to monopoly / network consolidation) or if time benefits the disruptors (due to the commoditization of growth/scale, the shrinking of the distance between 0-$1B, and tech monopolies being based on 90s web tech which is stretched to breaking point). How will climate disruption fit into this, who benefits as the world starts to break faster and faster.
- kaesar14 5y ago
  "Tech" companies here encompasses quite a broad list of markets. Just because Apple and Amazon managed to upend expectations doesn't mean that Tesla will. Most of these gigantic technology companies are software companies that have incredible profit margins and really hard to disrupt market positions. Apple is unique in that it manages to sell a premium product with premium pricing without it affecting overall demand with the best-in-class product differentiation that the Apple brand is known for. Yes, Tesla's managed to do something somewhat similar, but will that continue to hold? Even as automobile competitors finally wake up and start competing on electric cars? Will they become the largest automaker in the world? Tough questions to answer.
jrsj 5y ago
F150 Lightning being unveiled in a couple days is a good example of this. The F150 is the most popular vehicle in America & this has a good chance at being a pretty big success.
- Freestyler_3 5y ago
  What crypto can I use at checkout?
  - foodstances 5y ago
    The same one you can use at checkout on tesla.com.
  - JustSomeNobody 5y ago
    How many people planning to buy an F150 (lightning or otherwise) have or even have heard of crypto? That's just not the market.
  - ceejayoz 5y ago
    You missed https://www.cnbc.com/2021/05/12/elon-musk-says-tesla-will-stop-accepting-bitcoin-for-car-purchases.html https://www.cnbc.com/2021/05/12/elon-musk-says-tesla-will-st... last week, I take it?
clomond 5y ago
While I won't dispute that Tesla's share price is high given where the company is at right now when valued as an auto business, there are a few things I think are worth mentioning and commenting on in your post. > Building an electric car is not that hard, especially if Tesla already did all the hard lifting for you. This couldn't be further from the truth. While making a prototype EV is relatively easy, yes. EV industry followers will note that the real challenge is scaling EV production, and specifically the batteries' production. You don't need to look further then to answer: 'Why don't all of these automakers have tonnes of EVs on their lots available today as we speak? Why are they all '2022 release' or even 'dozens of models in 2025'. Because all of the tier 1 and tier 2 li-ion battery supplies have already been allocated from now to several years out, and if you want 'EV model volume' scale batteries, you better be ready to fork over the capital or purchase commitment for a batttery cell production line that might not have had a shovel hitting the ground yet. And waiting a few years for assembled product. > But their price only makes sense if they end up being the only car maker left. Assuming both the gross margin profile and auto ownership model stay the same - sure. Tesla has proven to generate more gross margin per vehicle than other automakers as is, they have 'practically' infinite demand (stimulated by expanding geographies and targeted price reductions when demand sags). And this isn't accounting for GM expansion for vehicles that could be a part of a ride hailing network (autonomous or not). I do believe, like other 'Tesla fans', that when factoring in their lead in scale and tech, unit cost advantage as well as how things look on a decade or two time horizon, I think it is quite likely that there will not be a better time to become a shareholder in the next 1-2 decades. One way I look at it is by comparing it to Apple, a ~$2T market cap company in 2020 dollars. ARPU of an Apple customer compared to a Tesla customer is probably between 1/4-1/10 (how much iphone/mac/apple services does one buy versus transportation spend on an annual basis). If you project Tesla margins to look more like Apple's 10 years from now (yes, a big bet), even with similar market share breakdowns of iOS/Android today - it isn't a huge stretch to imagine with ~50-100M EVs on the roads by then - that you could have Tesla with a market cap between 10T and 20T in 2020 dollars. Particularly when factoring in their business segments beyond personal transport/light vehicles. They are so far the only company making EVs to have crossed the 'valley of death'[See: crossing the chasm]. Startups and established automakers will need to spend billions in order to get EVs sold at scale that generate FCF per unit. It is a tall order. (Not financial advice do your own research etc etc) EDIT: Also note that Tesla has stated in an earnings call that they are looking at 50% CAGRs moving forward, and I do think that they could be undershooting this number a bit.
bryanlarsen 5y ago
The statement "Tesla market value is the same as everybody else put together" means either Tesla is expensive or everybody else is cheap or the statement is inaccurate. It's a little bit of all three. All other car companies are primarily debt financed rather than equity financed. Ford's market cap is $45B, but because it has $120B in debt which means it is worth $120B to it's bondholders and $45B to stockholders for a total enterprise value of $160B. So Tesla isn't worth as much as all of the companies put together, it's worth about as much as 2 or 3 of the big ones. Which is still a lot. But all the other car companies are facing an existential threat. Climate change and the EV transition are going to be tough. That has to be depressing their valuations some. Tesla also has a really good profit margin. If they can keep that up, it goes a long way to justifying their prices. Pretty big if, that one -- the general assumption is that it will go down as they go downmarket to chase volume. Vertical integration might let them keep it up, though. Think of it like Apple -- 20% market share but >80% of the profit. What I'm saying is that if Toyota or Volkswagen had no debt, a Tesla level profit margin and no overhanging challenge like the transition to EV, they'd have a market cap similar to Tesla's. That still doesn't justify Tesla's market cap, but it makes it seem less insane.
- treis 5y ago
  >Ford's market cap is $45B, but because it has $120B in debt which means it is worth $120B to it's bondholders and $45B to stockholders for a total enterprise value of $160B. I believe that's a bit misleading because it includes Ford's lending arm. They borrow money and lend it out at higher rates. So lots of Ford debt is lent back out to consumers at profit.
  - cl0ckt0wer 5y ago
    I thought money that was owed to you was counted as an asset, not a debt?
    - thaumasiotes 5y ago
      If I borrow $300,000 at 2% interest and lend it to you at 5% interest, I have an asset based on my loan to you and a liability based on my debt to whoever loaned me the same amount. They don't net out -- if you default, my asset will disappear without taking the liability with it. But it might be strange to say that I'm worth $300,000 based on my debt, when the whole concept of that debt is that it's theoretically guaranteed by, and related to, that asset. This combined situation does not suggest that I'm personally worth $300,000; I'm earning the difference in interest, and my debt to my creditor is based mostly off of your net worth, not my net worth.
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rllearneratwork 5y ago
TSLA price may be justified in the future IFF they are not "just a car maker". I think with batteries, self-driving, something else?, they have a potential to be "more" than a "dominant car maker" but they are definitely not there yet. Will they ever be in such position? This is a bet some are willing to make. Personally, I invested in them near their IPO price right when Elon joined betting that they will become "the best EV maker". They achieved that. Will they achieve a much bigger bet of being "much more than a carmaker"? I am not yet comfortable making such bet. At least not at this cost.
gonzo41 5y ago
Telsa's only significant achievement was to create a company structure that allowed it to pursue a loss making manufacturing startup to begin with. The big auto makers have golden handcuffs and can't risk that sort of paradigm shift to a new market. Now they know people will buy them they will easily retool towards electric. I think Tesla will either be crushed or end up a midsized player.
nik_bhintade 5y ago
Also other companies can buy self driving part from someone like george hotz. So that part is also solved. But tesla price was never based on actual company financial, they were based on the dream Elon was selling his investors.
rorykoehler 5y ago
Tesla is also an energy company. They could be worth trillions in a decade or two.

jdmoreira 5y ago

On the internet no one knows you are a dog :)

verelo 5y ago
This comment reminds me of a car auction i went to years ago: This 2 yr old car with around 250,000kms on it came up, likely used for long distance travel as this was in rural Australia. The car looked like a 2 year old car inside and out, it was completely normal except for the odometer reading. The auctioneer used the line "No one can read the odometer when you're driving on by". I wouldn't have bought it, but i liked the line.

toomuchtodo 5y ago

The world needs enormous amounts of stationary storage to transition to zero carbon electrical generation, and nuclear ain’t happening. Tesla sells batteries in lots of products, some with better margins than others.

cryptoz 5y ago

Tesla isn't a car company, though. They even removed "Motors" from their name years ago - showing wider interest, and not just batteries. Solar roofing as well, and others. I don't hold TSLA right now, regretfully, I entered pre-split at $27 and sold at $200. I also think the current price is way too high, for what it's worth. WAY too high. But it's not at all about cars, at least not for me, when trying to justify the valuation. It's about energy at large scale, and transportation at large scale. Not just car sales. Or battery sales. Edit: Currently P/E is ~570! I remember it being 1,300 recently. Yikes.

kikokikokiko 5y ago
Take a look at the "Common Sense Skeptic" youtube channel. Tesla's purchase of Solar City is a scandal on itself, it was never a play on entering the solar roof business. It was just a bail out using Tesla's shareholders money to save Musks and his business partners (which were Musks cousins btw) investments. This channel also destroys all the hype surrounding Starship, it's a joy to watch.
- epistasis 5y ago
  It's quite possible for the Solar City purchase to have been executed at a terrible price that is basically crony capitalism and deserves jail time, while it simultaneously being a great value add for Tesla. Controlling solar generation, backup batteries, and car charging all at once is difficult when cobbling together pieces from vendors that don't interoperate, when there's nobody else willing to write the middle ware to connect it all. With Tesla's ridiculous valuation, they can make all sorts of terrible purchases like that and still succeed just fine.
- karolist 5y ago
  Everyone should watch this video, more so people who refer to other car companies as "legacy automakers". Another good channel to remove the veil is Thunderf00t.
  - Robotbeat 5y ago
    Thunderf00t’s criticisms ring pretty hollow, TBH. Criticism of Musk is one thing. The whole “remove the veil” sorta “red-pill” type language, criticism that Musk has never done anything useful or noteworthy other than scamming falls apart for anyone who has been paying attention for more than a couple years. Electric cars pre-Tesla were a joke. Tesla had enormous influence. And SpaceX (which was founded by Musk, who runs it as chief engineer) launched more mass to orbit last year than the rest of the world combined, a remarkable turnaround from the failure of US companies to be commercially competitive. There are things worth being skeptical of. “Full self-driving,” for instance or even, sure, the Solar City deal (although arguable). Perma-skeptics like Thunderf00t, though, never acknowledge this kind of stuff.

epistasis 5y ago

There's also solar, in addition to storage. All three technologies are really key parts of the future, and controlling that aspect of the suburban home energy profile have absolutely huge synergies. As we get to higher penetration of renewables, our grid will change from the current model of supplying whatever power is demanded, to a far more two way mode where excess supply will drive time-shifted demand. Right now the only monetization strategy on the grid for solar/storage providers are 1) net-metered solar, and 2) backup electricity for outages. This will change. The most expensive component of an EV is the battery, and it's likely we will have as much grid-attached non-EV storage as we have EV storage. IMHO the current price is unhinged from any analysis, and fully in the tulip bulb stage of share pricing. But I think that Tesla is better positioned to take advantage of three core technologies of our energy future, three techs that must be tightly coupled, and no other player is even really thinking of that.

batmenace 5y ago
That may be true for car makers, but in the energy world, other than some battery storage projects, Tesla is really not a major player at all, and there is an endlessly long list of companies that are more meaningful for this market and better able to take advantage of the increased renewables rollout around the world.
- epistasis 5y ago
  When it comes to utility-scale grid storage, Tesla definitely gets the most press, but I would agree that there are serious competitors like AES and Vestra. I would be interested to hear some names from your endlessly long list, because I can't come up with many of them. For the home battery market, Tesla is definitely one of the leaders. I think the primary reason Tesla has not shipped more batteries that are permanently attached to the grid, either in from or behind the meter, is that selling a car is a far higher margin destination for their batteries. So as long as Tesla car sales can suck up batteries, the battery factories are probably going to be using most of their time making batteries for cars.

agloeregrets 5y ago

> I think they will be very successful and become a big, dominant car maker. I'm not sure really. They keep throwing the entire company at insanely poorly leveraged bets with unfulfilled promises. (Cybertruck is on track to be delivered at a longer timeframe than any car tesla has ever made, they haven't even built the factory or unveiled the final design, same for Semi and Roadster, the new Model S was supposed to be shipping in..uh.. March?) I think they are scaled too big to breathe and survive, eventually being bought in a post-Elon world by a Ford, GM, or possibly Google or Apple.

cduzz 5y ago
They bet the company on the OG roadster, S, and 3. They don't need to now. The 3 and Y are quite successful and quite profitable. The Truck, Semi, Roadster, Leaf Blower, and such are all distractions that aren't worth building until they've managed to establish much larger battery volumes and aren't selling every Y and 3 they make months before they make them. What's their run rate? They've got a ton of cash and viable products (3 and Y) where there are people lined up to buy them before they're even made. And they've got the supercharger network which is an enormous differentiator against any other EV. Their biggest threat is if there's some enormous unseen flaw in their battery design where they get swamped with battery warranty claims. The share price is absurdly high, but it is similarly absurd to project the company going out of business.
- agloeregrets 5y ago
  They already are betting the company on a bunch of things. Their cash on hand is almost entirely debt. Additionally, they are merely meeting demand on Model 3 sales right now, don't forget that they spun down production rate on the 3/Y and are slowing China production as well. US charging networks are growing at a faster rate than Superchargers as well, so in roughly 2 years you are looking at a market where Electrify America is as big as the Supercharger network, the current NY to LA EV record is held by a Taycan on EA's network, not a Tesla. The Model 3 is not very profitable at all either, sure it sells well (as it should, it's a great car being sold at almost a loss!) but a M3 without AP is not profitable. Still, to this day, they haven't made a penny on their business other than with selling credits but they are not even investing that heavily back into the business right now. Finally, the Cybertruck was told to reservation holders to be shipping in 2021... which isn't happening. What I find kinda funny is this: You call the truck a distraction..when it is the #1 best selling category in the US AND they have fast encroaching competition that owns the market. That's like calling the Rav4 a distraction for Toyota. The Ford F150 Lightning will likely outsell the cycbertruck in the US as Ford will have two years to scale and keep it in that scale by time the Cybertruck does actually launch. It has been Ford's #1 R&D goal for the last three years as it should be, it's their #1 selling vehicle. Ford sells two F150s in the US for every car Tesla makes globally and the margin is way more per unit. I'm not saying they are going to go out of business today or this decade. I'm just saying that their differentiation will disappear, customer's will to deal with terrible timelines will evaporate when they can go the next door over and get it today, and once Elon is gone from TSLA (which will happen and should terrify shareholders; he clearly wants little to do with Tesla), the stock will fall like a rock and the debt leverage will fall with it finding Tesla way upside down on a LOT of money that they can't borrow more to cover and without the market and profit explosion the company is betting on.

incrudible 5y ago

> I won't short them tough, in the end I'm just a dog on the internet and have no clue how stonks work. To be clear, Michael Burry didn't short Tesla, he bought put options, which gives him the right but not the obligation to sell Tesla stock for a certain price, on a certain date. If the bet works against him, his options expire worthless. This puts an upper limit on his losses. If you have an actual short position, your potential losses are unlimited.

alex_young 5y ago
> If you have an actual short position, your potential losses are unlimited. Isn’t this a bit like saying that the potential upside of holding any stock is unlimited?
- benmller313 5y ago
  Yes. Is that not true?
  - enos_feedler 5y ago
    Yes. It's just more likely that your shares become valued at zero then anyone valuing them at 'infinite'
  - ljm 5y ago
    It is, that's the wager.
- LeifCarrotson 5y ago
  No, and this distinction is critical to understanding the risk that short sellers take. To use a slightly anomalous stock which hasn't split as an easy example, if you had shorted $BRK in 1980 when the price was $300, the potential upside was just 100%: In your best outcome, they go bankrupt and the most you earn is $300. Unfortunately for you, Berkshire Hathaway shares are now worth $430,000, so your $300 or 100% upside turned out to be a rounding error against the approximately -150000% loss. Edit: The reverse is technically symmetrical, but the consequences make it work out differently for the markets and society. Yes, if you'd bought BRK in 1980 you'd have had a liability of $300 (your cash input could be worthless if they went bankrupt) and a potential upside of hundreds of thousands if it went to the moon. The difference is that if you held the stock and it goes bankrupt, you're only liable for the amount that you put in. Worst case, you bet the farm and you're going to be washing dishes to put food on the table, but it's your loss to lose and your gain to win. If instead you bet the farm in a short position, you never had and will never have thousands of farms to bet in the first place; you're going to declare bankruptcy and someone else is going to have to pay for the bad bet you made. That effectively pushes the losses back on society but privatizes the gains.

yumraj 5y ago

And, they have a genius but an unstable genius as a CEO where no one knows what he will do next. Not sure how the stock market quantifies that.

fleetingmoments 5y ago
Are you saying they should get a stable genius in?
- chrisco255 5y ago
  Stable geniuses are unfortunately even more rare than unstable ones.
- WJW 5y ago
  There is at least one of those available who recently left his previous position... Joking, joking :D
- yumraj 5y ago
  Stable person yes. The stable genius, hell no. Stable genius, if they can find one, yes!!
mdoms 5y ago
Elon Musk isn't a genius. He's a dumb guy who got lucky. Go and read literally anything he writes. Obvious dumb guy.

akomtu 5y ago

I'd think of Tesla as of an iPhone for affluent hipsters. Teslas remain connected to the manufacturer that collects extensive info on drivers (spying, some would say) and can use it for marketing or other purposes later. Teslas can be a powerful distribution channel if Musk figures a way to discreetly advertise to them right in their cars. Teslas are a golf club in a sense: a directory of important people, except that the club has managed to install mics, gps trackers and a internet connected screen right in the members' cars.

caconym_ 5y ago
Is Tesla the only car company collecting usage data? Off the top of my head, I don't think so. Your comment kind of reminds me of how much shit "Big Tech" gets for data collection, just because they're highly visible, while the really scary shit (e.g. cell carriers offering granular per-user location data APIs to anybody with money) flies under the radar because it doesn't have that sexy down-with-big-tech angle that (ironically?) seems to drive the most clicks. That's not to say the usual "Big Tech" suspects are choirboys, but the public discourse's focus on their data collection activities is absurdly myopic.

Shacklz 5y ago

> I think they will be very successful and become a big, dominant car maker. "Big, dominant" in the same sense as maybe Ferrari: Prestigious cars for a niche audience that are willing to pay a premium for the brand.

Hamuko 5y ago
Ferrari is way more exclusive than Tesla. I would rather imagine Tesla becoming a Jaguar - kinda exclusive but not that rare.
- Xenoamorphous 5y ago
  Indeed. Probably Tesla made more cars last year than Ferrari in all its history. Porsche is perhaps a better comparison.
  - Dah00n 5y ago
    Not really comparable but Porsche sold approximately half as many cars last year as Tesla. Shows how small Tesla actually is (approx. 500.000 cars). Ferrari sold ~10.000.

rubyn00bie 5y ago

I'm not one to typically paraphrase billionaires, or think they're too connected to reality... but something I heard Mark Cuban say the other day was kind of "oh, shit that's true" moment for me. It was something to the affect of (I can't find the clip at the moment), "Back in 2010 we never thought we'd see a company hit $1 trillion. We never thought Apple or Amazon (et. al) would be able to continue their growth year after year to even be those $2 trillion dollar companies..." All I could think was "oh shit, yeah, I never thought I'd see it either." Ten years ago, Apple was worth $297 billion dollars, today it's worth $2.1 trillion dollars. I think Tesla stands a good a chance to be worth these seemingly absurd valuations. The market price isn't solely defined by the current value. With tech companies especially, it reflects expected value, and Tesla still has a lot of room to grow. I'd be more skeptical but EVs are eventually going to cost way less to make than typical ICE (internal combustion engine) cars, and per unit that savings translates into a lot of fucking profit. Not to mention the additional profit they're raking in thanks to the public's image of Tesla's and the experience generally being "magical" (even if gimmicky). Also, a "green crypto" if a Tesla branded play (I feel musk is bringing this soon) will cause a pretty gigantic boost to the company's bottom line. For at least the next 2-5 years Tesla is gonna be pretty safe, and I'd guess that 2-5 will buy it like 3-5 more years just being the incumbent... I don't think Burry is going to be to happy on this one. Mark Spiegel has already fallen to the beast, and I suspect Burry is likely going to as well. shrug just my two cents.

dustingetz 5y ago
The question imo is if time benefits the incumbents (due to monopoly / network consolidation) or if time benefits the disruptors (due to the commoditization of growth/scale, the shrinking of the distance between 0-$1B, and tech monopolies being based on 90s web tech which is stretched to breaking point). How will climate disruption fit into this, who benefits as the world starts to break faster and faster.
kaesar14 5y ago
"Tech" companies here encompasses quite a broad list of markets. Just because Apple and Amazon managed to upend expectations doesn't mean that Tesla will. Most of these gigantic technology companies are software companies that have incredible profit margins and really hard to disrupt market positions. Apple is unique in that it manages to sell a premium product with premium pricing without it affecting overall demand with the best-in-class product differentiation that the Apple brand is known for. Yes, Tesla's managed to do something somewhat similar, but will that continue to hold? Even as automobile competitors finally wake up and start competing on electric cars? Will they become the largest automaker in the world? Tough questions to answer.

jrsj 5y ago

F150 Lightning being unveiled in a couple days is a good example of this. The F150 is the most popular vehicle in America & this has a good chance at being a pretty big success.

Freestyler_3 5y ago
What crypto can I use at checkout?
- foodstances 5y ago
  The same one you can use at checkout on tesla.com.
- JustSomeNobody 5y ago
  How many people planning to buy an F150 (lightning or otherwise) have or even have heard of crypto? That's just not the market.
- ceejayoz 5y ago
  You missed https://www.cnbc.com/2021/05/12/elon-musk-says-tesla-will-stop-accepting-bitcoin-for-car-purchases.html https://www.cnbc.com/2021/05/12/elon-musk-says-tesla-will-st... last week, I take it?

clomond 5y ago

While I won't dispute that Tesla's share price is high given where the company is at right now when valued as an auto business, there are a few things I think are worth mentioning and commenting on in your post. > Building an electric car is not that hard, especially if Tesla already did all the hard lifting for you. This couldn't be further from the truth. While making a prototype EV is relatively easy, yes. EV industry followers will note that the real challenge is scaling EV production, and specifically the batteries' production. You don't need to look further then to answer: 'Why don't all of these automakers have tonnes of EVs on their lots available today as we speak? Why are they all '2022 release' or even 'dozens of models in 2025'. Because all of the tier 1 and tier 2 li-ion battery supplies have already been allocated from now to several years out, and if you want 'EV model volume' scale batteries, you better be ready to fork over the capital or purchase commitment for a batttery cell production line that might not have had a shovel hitting the ground yet. And waiting a few years for assembled product. > But their price only makes sense if they end up being the only car maker left. Assuming both the gross margin profile and auto ownership model stay the same - sure. Tesla has proven to generate more gross margin per vehicle than other automakers as is, they have 'practically' infinite demand (stimulated by expanding geographies and targeted price reductions when demand sags). And this isn't accounting for GM expansion for vehicles that could be a part of a ride hailing network (autonomous or not). I do believe, like other 'Tesla fans', that when factoring in their lead in scale and tech, unit cost advantage as well as how things look on a decade or two time horizon, I think it is quite likely that there will not be a better time to become a shareholder in the next 1-2 decades. One way I look at it is by comparing it to Apple, a ~$2T market cap company in 2020 dollars. ARPU of an Apple customer compared to a Tesla customer is probably between 1/4-1/10 (how much iphone/mac/apple services does one buy versus transportation spend on an annual basis). If you project Tesla margins to look more like Apple's 10 years from now (yes, a big bet), even with similar market share breakdowns of iOS/Android today - it isn't a huge stretch to imagine with ~50-100M EVs on the roads by then - that you could have Tesla with a market cap between 10T and 20T in 2020 dollars. Particularly when factoring in their business segments beyond personal transport/light vehicles. They are so far the only company making EVs to have crossed the 'valley of death'[See: crossing the chasm]. Startups and established automakers will need to spend billions in order to get EVs sold at scale that generate FCF per unit. It is a tall order. (Not financial advice do your own research etc etc) EDIT: Also note that Tesla has stated in an earnings call that they are looking at 50% CAGRs moving forward, and I do think that they could be undershooting this number a bit.

bryanlarsen 5y ago

The statement "Tesla market value is the same as everybody else put together" means either Tesla is expensive or everybody else is cheap or the statement is inaccurate. It's a little bit of all three. All other car companies are primarily debt financed rather than equity financed. Ford's market cap is $45B, but because it has $120B in debt which means it is worth $120B to it's bondholders and $45B to stockholders for a total enterprise value of $160B. So Tesla isn't worth as much as all of the companies put together, it's worth about as much as 2 or 3 of the big ones. Which is still a lot. But all the other car companies are facing an existential threat. Climate change and the EV transition are going to be tough. That has to be depressing their valuations some. Tesla also has a really good profit margin. If they can keep that up, it goes a long way to justifying their prices. Pretty big if, that one -- the general assumption is that it will go down as they go downmarket to chase volume. Vertical integration might let them keep it up, though. Think of it like Apple -- 20% market share but >80% of the profit. What I'm saying is that if Toyota or Volkswagen had no debt, a Tesla level profit margin and no overhanging challenge like the transition to EV, they'd have a market cap similar to Tesla's. That still doesn't justify Tesla's market cap, but it makes it seem less insane.

treis 5y ago
>Ford's market cap is $45B, but because it has $120B in debt which means it is worth $120B to it's bondholders and $45B to stockholders for a total enterprise value of $160B. I believe that's a bit misleading because it includes Ford's lending arm. They borrow money and lend it out at higher rates. So lots of Ford debt is lent back out to consumers at profit.
- cl0ckt0wer 5y ago
  I thought money that was owed to you was counted as an asset, not a debt?
  - thaumasiotes 5y ago
    If I borrow $300,000 at 2% interest and lend it to you at 5% interest, I have an asset based on my loan to you and a liability based on my debt to whoever loaned me the same amount. They don't net out -- if you default, my asset will disappear without taking the liability with it. But it might be strange to say that I'm worth $300,000 based on my debt, when the whole concept of that debt is that it's theoretically guaranteed by, and related to, that asset. This combined situation does not suggest that I'm personally worth $300,000; I'm earning the difference in interest, and my debt to my creditor is based mostly off of your net worth, not my net worth.

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rllearneratwork 5y ago

TSLA price may be justified in the future IFF they are not "just a car maker". I think with batteries, self-driving, something else?, they have a potential to be "more" than a "dominant car maker" but they are definitely not there yet. Will they ever be in such position? This is a bet some are willing to make. Personally, I invested in them near their IPO price right when Elon joined betting that they will become "the best EV maker". They achieved that. Will they achieve a much bigger bet of being "much more than a carmaker"? I am not yet comfortable making such bet. At least not at this cost.

gonzo41 5y ago

Telsa's only significant achievement was to create a company structure that allowed it to pursue a loss making manufacturing startup to begin with. The big auto makers have golden handcuffs and can't risk that sort of paradigm shift to a new market. Now they know people will buy them they will easily retool towards electric. I think Tesla will either be crushed or end up a midsized player.

nik_bhintade 5y ago

Also other companies can buy self driving part from someone like george hotz. So that part is also solved. But tesla price was never based on actual company financial, they were based on the dream Elon was selling his investors.

rorykoehler 5y ago

Tesla is also an energy company. They could be worth trillions in a decade or two.