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I am, roughly speaking... (1) Bearish on Elon, I think he's nuts. (2) Bullish on Tesla the business - electric cars are clearly the future, Tesla builds hones

I am, roughly speaking... (1) Bearish on Elon, I think he's nuts. (2) Bullish on Tesla the business - electric cars are clearly the future, Tesla builds honestly really great cars. I don't have a car, but if I were to buy one it would no question be a Tesla. They're going to make and sell a lot more cars, period. (3) Bearish on the valuation. At this price its still worth about as much as every other car company put together, and their competitors are growing into electric too. Market breakdowns seem to show that where options exist people do not pick Tesla 100% of the time. It's more like 12%, equal to VW in Norway. It is however a cult meme stonk, so there's no real rationality behind it. [edit] I've been making good money selling weekly iron condors. As much as it's moving, it's still been moving less than cultists anticipate haha.

ajross 5y ago
> Market breakdowns seem to show that where options exist people do not pick Tesla 100% of the time. It's more like 12% That's an extraordinarily hard analysis to do. Basically everyone in the industry is production-limited at this point (Tesla by factory bandwidth, everyone else by part shortages). Total volume reflects industrial realities far more than it does consumer choice.
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- rossdavidh 5y ago
  True, but it still seems unlikely that the unconstrained choice would be 100% Tesla. Do we really think Toyota will be incapable of retaining any significant % of EV sales once that's where the industry mostly is at?
  - random314 5y ago
    VW, Renault- maybe. Toyota has a lot of work to do if it has to avoid getting wiped out by the EV revolution.
  - ajross 5y ago
    The 100% isn't really the right analysis. Market caps for auto manufacturers tend to be quite low because it's a low-growth industry, and the biggest players are non-US securities where low market caps are more routine. Total world automotive revenue is something like $1.5T (I forget the source, that's from my head). At the same price/revenue ratio as AAPL (a similarly dominant player in a rather different industry), TSLA would only have to make up 8% of the world revenue to justify it's current share price. Is that comparing Apples (heh) to oranges? Yeah, it is. But the point is there's no magic principle that says "auto companies get impoverished share prices relative to tech companies" either. Broadly: the market is betting Tesla gets valued like a tech stock and not a heavy industry stock. And the valuation is pretty much where you'd expect if that were the case.
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dd36 5y ago
How does Apple’s valuation compare to every other cell phone maker?
- arcticbull 5y ago
  Apple owns 75% of the entire profit share of the global smartphone business while making 13% of the phones. Tesla isn't even close to that kind of performance. [edited, I mistyped 75% as 85% initially] [1] https://www.counterpointresearch.com/global-handset-market-operating-profit-q2-2021/ https://www.counterpointresearch.com/global-handset-market-o...
  - dd36 5y ago
    At scale at current margins, Tesla will be substantially more profitable than traditional car makers.
    - kaesar14 5y ago
      What current margins? At what scale? Toyota has a best-in-class 6% profit margin, substantially better than its competitors sitting at 3%, and earns 20 billion dollars. Even at the most optimistic margins Tesla is vastly overvalued.
      - dd36 5y ago
        Gross margins. Tesla is scaling right now and continuing to innovate on the tech side.
        kaesar14 5y ago
        Ok, so what margin do you see justifying their valuation? 10%? 15%? The margins of a company like Microsoft who makes their money on software (30%)? Even if you used that last figure, they'd more than 80x over valuation on current earnings. This is a car company. There are fundamental limits on how much money you can make.
rsp1984 5y ago
Tesla builds honestly really great cars. I don't have a car, but if I were to buy one it would no question be a Tesla. Did you ever drive one? I did a Model 3 test drive the other day. Acceleration is out of this world, but everything else... meh. Interior looks and feels like it lasts for about 2-3 years. Brakes feel like stepping into a pile of mud. Huge central screen for everything is more distracting than useful. I was happy to get back into my 2007 BMW when the test drive was over. Still feels solid after 14 years.
- arcticbull 5y ago
  Yeah, I rent them on Turo when I've got a road trip lined up. I agree about the fit and finish, but the driving dynamics are just so much fun. I suspect they'll be able to fix up their fit and finish in time. My favorite interiors tend to be Audis fwiw.
  - rsp1984 5y ago
    The thing is heavy though. That was also a dealbreaker for me. I'm used to ~1.3 tons of my BMW. Just fun to throw into corners. The Model 3 I tested had about 1.8 or 1.9 and it certainly felt like it. Understeered like crazy. Also I was constantly moving left and right on the seat.
  - henrikschroder 5y ago
    > but the driving dynamics are just so much fun Try the other EVs then. Try a Taycan, try a Mach-E, try an E-tron GT. I'm not trying to call out you specifically, but there are so many people who are completely unaware of what the auto market actually looks like, and then they compare a new Tesla with whatever old mid-range ICE they had before, and of course the Tesla seems like a magical space-age vehicle that is better than anything else they've ever driven. But the competition isn't slouching. The Taycan isn't far behind the Plaid in performance, and it beats the Tesla in repeating launches. The EQS has longer range and way more tech. Super Cruise and Blue Cruise are better than Autopilot in the areas they are enabled. There's plenty of cheaper EVs than Teslas, like the VW ID.4 or ID.3. There will be tons of Rivians and EV Hummers and F150 Lightnings on the roads before the first Cybertruck is delivered, if at all. You can get a EV truck from Volvo, today, and other truck makers are following suit, so you'll get an electric semi from the competition way before the Tesla Semi sees the light of day. And every single one of them has better interior quality, better fit-and-finish, and better customer service than Tesla.
tgsovlerkhgsel 5y ago
I think seeing Tesla as only a car company is a mistake. They're a car company, but also a battery company, which means they have the potential to be huge in everything that requires batteries (e.g. cars manufactured by others, grid scale electricity storage) even when they don't make the final product. I'm not even sure that the car business will be their main business in the long term.
- misiti3780 5y ago
  agree, they are an AI Company, a car company, an energy company (potentially), and a battery company.
- arcticbull 5y ago
  If you sum the market cap of any leaders in any of those spaces you won't get anywhere close to Tesla's current valuation let alone fully realized valuation. I'll include them as an AI company once their FSD model stops trying to kill YouTubers. - Utilities: PGE is worth 22B. - Insurance: Libery Mutual is 16B. - Robotics and AI: ABB is 71B. - Batteries: Panasonic is 30B. - Cars: Toyota is 288B. - Financing: Included in Toyota's valuation. Ok so, if we sum all of these mature businesses together we get $427B, less than half of Tesla's current market cap. That's one heck of a bull case when you consider Toyota ships literally 10X as many cars as Tesla does, and all those other companies, you know, exist. Anyone else I should huck onto the pile? There's still a half trillion dollars in market cap to make up for after all.
  - tgsovlerkhgsel 5y ago
    E.ON seems bigger than PGE (assuming you go by market cap), and I have no clue who is actually the biggest. And these each seem to represent one single regional power company. OTOH, I didn't realize Tesla's market cap has grown that big. That is indeed kinda insane.
  - trhway 5y ago
    You miss that Tesla is better in a given space than any of the leaders you mentioned. And not just better. More importantly, and this is why it is better, is that Tesla is a tech company in each of those spaces - eg. PG&E is an utilities company while Tesla is a tech company in the electric energy space. That is the half-trillion you're looking for.
throw8383833jj 5y ago
Don't forget about the whole energy side of the business: most people underestimate the potential of this because they can't see all the stuff that's coming. there's enormous potential for that to be even bigger than their automotive stuff.
DennisP 5y ago
I don't think Tesla is priced as a car company. It's priced as a car company, solar company, grid-scale battery company, and potential self-driving taxi company. Whether that justifies their price I don't know (and suspect not), I just think it's misleading to look only at their car sales, even though that's the bulk of their business right now.

ajross 5y ago

> Market breakdowns seem to show that where options exist people do not pick Tesla 100% of the time. It's more like 12% That's an extraordinarily hard analysis to do. Basically everyone in the industry is production-limited at this point (Tesla by factory bandwidth, everyone else by part shortages). Total volume reflects industrial realities far more than it does consumer choice.

deleted 5y ago
[deleted]
rossdavidh 5y ago
True, but it still seems unlikely that the unconstrained choice would be 100% Tesla. Do we really think Toyota will be incapable of retaining any significant % of EV sales once that's where the industry mostly is at?
- random314 5y ago
  VW, Renault- maybe. Toyota has a lot of work to do if it has to avoid getting wiped out by the EV revolution.
- ajross 5y ago
  The 100% isn't really the right analysis. Market caps for auto manufacturers tend to be quite low because it's a low-growth industry, and the biggest players are non-US securities where low market caps are more routine. Total world automotive revenue is something like $1.5T (I forget the source, that's from my head). At the same price/revenue ratio as AAPL (a similarly dominant player in a rather different industry), TSLA would only have to make up 8% of the world revenue to justify it's current share price. Is that comparing Apples (heh) to oranges? Yeah, it is. But the point is there's no magic principle that says "auto companies get impoverished share prices relative to tech companies" either. Broadly: the market is betting Tesla gets valued like a tech stock and not a heavy industry stock. And the valuation is pretty much where you'd expect if that were the case.
  - deleted 5y ago
    [deleted]

dd36 5y ago

How does Apple’s valuation compare to every other cell phone maker?

arcticbull 5y ago
Apple owns 75% of the entire profit share of the global smartphone business while making 13% of the phones. Tesla isn't even close to that kind of performance. [edited, I mistyped 75% as 85% initially] [1] https://www.counterpointresearch.com/global-handset-market-operating-profit-q2-2021/ https://www.counterpointresearch.com/global-handset-market-o...
- dd36 5y ago
  At scale at current margins, Tesla will be substantially more profitable than traditional car makers.
  - kaesar14 5y ago
    What current margins? At what scale? Toyota has a best-in-class 6% profit margin, substantially better than its competitors sitting at 3%, and earns 20 billion dollars. Even at the most optimistic margins Tesla is vastly overvalued.
    - dd36 5y ago
      Gross margins. Tesla is scaling right now and continuing to innovate on the tech side.
      - kaesar14 5y ago
        Ok, so what margin do you see justifying their valuation? 10%? 15%? The margins of a company like Microsoft who makes their money on software (30%)? Even if you used that last figure, they'd more than 80x over valuation on current earnings. This is a car company. There are fundamental limits on how much money you can make.

rsp1984 5y ago

Tesla builds honestly really great cars. I don't have a car, but if I were to buy one it would no question be a Tesla. Did you ever drive one? I did a Model 3 test drive the other day. Acceleration is out of this world, but everything else... meh. Interior looks and feels like it lasts for about 2-3 years. Brakes feel like stepping into a pile of mud. Huge central screen for everything is more distracting than useful. I was happy to get back into my 2007 BMW when the test drive was over. Still feels solid after 14 years.

arcticbull 5y ago
Yeah, I rent them on Turo when I've got a road trip lined up. I agree about the fit and finish, but the driving dynamics are just so much fun. I suspect they'll be able to fix up their fit and finish in time. My favorite interiors tend to be Audis fwiw.
- rsp1984 5y ago
  The thing is heavy though. That was also a dealbreaker for me. I'm used to ~1.3 tons of my BMW. Just fun to throw into corners. The Model 3 I tested had about 1.8 or 1.9 and it certainly felt like it. Understeered like crazy. Also I was constantly moving left and right on the seat.
- henrikschroder 5y ago
  > but the driving dynamics are just so much fun Try the other EVs then. Try a Taycan, try a Mach-E, try an E-tron GT. I'm not trying to call out you specifically, but there are so many people who are completely unaware of what the auto market actually looks like, and then they compare a new Tesla with whatever old mid-range ICE they had before, and of course the Tesla seems like a magical space-age vehicle that is better than anything else they've ever driven. But the competition isn't slouching. The Taycan isn't far behind the Plaid in performance, and it beats the Tesla in repeating launches. The EQS has longer range and way more tech. Super Cruise and Blue Cruise are better than Autopilot in the areas they are enabled. There's plenty of cheaper EVs than Teslas, like the VW ID.4 or ID.3. There will be tons of Rivians and EV Hummers and F150 Lightnings on the roads before the first Cybertruck is delivered, if at all. You can get a EV truck from Volvo, today, and other truck makers are following suit, so you'll get an electric semi from the competition way before the Tesla Semi sees the light of day. And every single one of them has better interior quality, better fit-and-finish, and better customer service than Tesla.

tgsovlerkhgsel 5y ago

I think seeing Tesla as only a car company is a mistake. They're a car company, but also a battery company, which means they have the potential to be huge in everything that requires batteries (e.g. cars manufactured by others, grid scale electricity storage) even when they don't make the final product. I'm not even sure that the car business will be their main business in the long term.

misiti3780 5y ago
agree, they are an AI Company, a car company, an energy company (potentially), and a battery company.
arcticbull 5y ago
If you sum the market cap of any leaders in any of those spaces you won't get anywhere close to Tesla's current valuation let alone fully realized valuation. I'll include them as an AI company once their FSD model stops trying to kill YouTubers. - Utilities: PGE is worth 22B. - Insurance: Libery Mutual is 16B. - Robotics and AI: ABB is 71B. - Batteries: Panasonic is 30B. - Cars: Toyota is 288B. - Financing: Included in Toyota's valuation. Ok so, if we sum all of these mature businesses together we get $427B, less than half of Tesla's current market cap. That's one heck of a bull case when you consider Toyota ships literally 10X as many cars as Tesla does, and all those other companies, you know, exist. Anyone else I should huck onto the pile? There's still a half trillion dollars in market cap to make up for after all.
- tgsovlerkhgsel 5y ago
  E.ON seems bigger than PGE (assuming you go by market cap), and I have no clue who is actually the biggest. And these each seem to represent one single regional power company. OTOH, I didn't realize Tesla's market cap has grown that big. That is indeed kinda insane.
- trhway 5y ago
  You miss that Tesla is better in a given space than any of the leaders you mentioned. And not just better. More importantly, and this is why it is better, is that Tesla is a tech company in each of those spaces - eg. PG&E is an utilities company while Tesla is a tech company in the electric energy space. That is the half-trillion you're looking for.

throw8383833jj 5y ago

Don't forget about the whole energy side of the business: most people underestimate the potential of this because they can't see all the stuff that's coming. there's enormous potential for that to be even bigger than their automotive stuff.

DennisP 5y ago

I don't think Tesla is priced as a car company. It's priced as a car company, solar company, grid-scale battery company, and potential self-driving taxi company. Whether that justifies their price I don't know (and suspect not), I just think it's misleading to look only at their car sales, even though that's the bulk of their business right now.