4 ms·

At scale at current margins, Tesla will be substantially more profitable than traditional car makers.

by dd36 5y ago

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.
    - dd36 5y ago
      Current earnings aren’t really relevant when they’re poised to continue growing fast.
    - rio517 5y ago
      Didn't they say their operating margin is 14.7% and automotive is indeed close to 30?
      - kaesar14 5y ago
        Those include massive subsidies by the government.
        dd36 5y ago
        Wasn’t the non-subsidy margin only like 5% less?
colinmhayes 5y ago
How will Tesla keep current margins once every other car company is releasing high quality electric cars?
- dd36 5y ago
  Battery costs. It has a substantial lead and should continue to as it is far ahead in terms of scaling and reducing cost.
  - colinmhayes 5y ago
    You think Tesla will have cheaper batteries than literally everyone else forever? Incredibly hard for me to believe that at least one company won't be able to create a competing battery. Differentiating on hardware has never been a way to create a trillion dollar company. It requires lock in via incredibly brand loyalty and Tesla doesn't have a big enough customer base atm.
    - dd36 5y ago
      Not forever but long enough to become the leader. Apple continues to innovate despite plenty of opportunity for everyone else to catch up.
- darth_avocado 5y ago
  > Once every other company is releasing high quality electric cars? Like who exactly? Only the American automakers are taking this seriously. Most have them have a target of maybe 50% of their offerings to be electric by 2030. Some European brands are now starting to play serious VW at the forefront of it. And the ones resisting the most are the Japanese. Mazda doesn’t even commit to a hybrid and realizing more efficient ICs coming soon in 2024. Toyota and Honda are actively seeking to block incentives to EV makers. And even if startups like Rivian or big players like Ford,GM and VW eventually start making cars at a much better quality, they still have to match the level of vertical integration that Tesla has. The lead they have is no joke.
  - 5y ago

At scale at current margins, Tesla will be substantially more profitable than traditional car makers.

by dd36 5y ago

At scale at current margins, Tesla will be substantially more profitable than traditional car makers.

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.
  - dd36 5y ago
    Current earnings aren’t really relevant when they’re poised to continue growing fast.
  - rio517 5y ago
    Didn't they say their operating margin is 14.7% and automotive is indeed close to 30?
    - kaesar14 5y ago
      Those include massive subsidies by the government.
      - dd36 5y ago
        Wasn’t the non-subsidy margin only like 5% less?

colinmhayes 5y ago

How will Tesla keep current margins once every other car company is releasing high quality electric cars?

dd36 5y ago
Battery costs. It has a substantial lead and should continue to as it is far ahead in terms of scaling and reducing cost.
- colinmhayes 5y ago
  You think Tesla will have cheaper batteries than literally everyone else forever? Incredibly hard for me to believe that at least one company won't be able to create a competing battery. Differentiating on hardware has never been a way to create a trillion dollar company. It requires lock in via incredibly brand loyalty and Tesla doesn't have a big enough customer base atm.
  - dd36 5y ago
    Not forever but long enough to become the leader. Apple continues to innovate despite plenty of opportunity for everyone else to catch up.
darth_avocado 5y ago
> Once every other company is releasing high quality electric cars? Like who exactly? Only the American automakers are taking this seriously. Most have them have a target of maybe 50% of their offerings to be electric by 2030. Some European brands are now starting to play serious VW at the forefront of it. And the ones resisting the most are the Japanese. Mazda doesn’t even commit to a hybrid and realizing more efficient ICs coming soon in 2024. Toyota and Honda are actively seeking to block incentives to EV makers. And even if startups like Rivian or big players like Ford,GM and VW eventually start making cars at a much better quality, they still have to match the level of vertical integration that Tesla has. The lead they have is no joke.
- 5y ago