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> I think Tesla will be successful, but the current valuation seems to assume that every IC car on the road will be replaced by a Tesla in the next 10 years. T

> I think Tesla will be successful, but the current valuation seems to assume that every IC car on the road will be replaced by a Tesla in the next 10 years. Their P/E at Q3 level of profit is 147. That's quite small for a company growing at more than 50% and whose margin keep improving. Also, the addressable market for vehicles, solar and stationary storage is almost limitless. We're not even talking FSD, where their lead continues to increase vs competitors (most are stopping their research, cf. BMW and Mercedes). >I think Ford and Toyota are going to figure out how to be tesla a lot sooner than Tesla is going to figure out how to be Ford and Toyota. Tesla keeps increasing its technology vs Ford in all the main areas (battery, power trains, casting, electronics, self-driving, but also market that Ford does not even pretend to serve such as energy generation and grid storage). Toyota is completely lost. They invest far less in EV than Tesla and the gap continues to increase. They only focus on PHEV, which people aren't interested in when they have become familiar with EV (see Norway, where climate does not even favor BEV). They'll try to do something with hydrogen only because the Japanese government will subsidize them for that.

Hypx_ 5y ago
Hydrogen will ultimately disrupt BEVs into oblivion. This is the obvious disruption event that no one is seeing.
kaesar14 5y ago
Where do you get a P/E of 147 from?
arcticbull 5y ago
P/E according to Google Finance is 452.73 vs Toyota at 9.6 They would have to see 50% YoY growth for 6 more years to reach the same number of deliveries as Toyota alone let alone the entire car market.
- verdverm 5y ago
  That's assuming you only count their auto division. They are entering into other major industries (utilities, insurance, and robotics)
  - arcticbull 5y ago
    I suppose, but those aren't huge, high-margin businesses. Let's grab a few examples. - Utilities: PGE is worth 22B. - Insurance: Libery Mutual is 16B. - Robotics: ABB is 71B. - Cars: Toyota, the biggest and highest margin is 288B (on 700B in revenue). So let's be very, very generous and assume Tesla is able to execute as well as Liberty + PGE + ABB + Toyota. Thats $400B. 44% of today's valuation. I don't see a path to $900B down the line, let alone today.
    - verdverm 5y ago
      Cherry picking a single company from each and not accounting for market growth will not be as accurate as estimating total market and Tesla's share in each. US electric market is $400B in revenue today, this needs to double for the fully electric fleet politicians are pushing for. This does not account for hardware sales. We could estimate that at 1T in 10 years, if Tesla gets 10%, then that is $100B in revenue. US auto ins market is $300B in revenue today, their market share there will likely be close to their share of vehicles. Robotics I suspect will be one of the largest industries in the future. They could become a supplier of batteries, electric motors, and self driving systems to other auto companies. Elon has said multiple times he will have the conversations. That's just the US market. You'd then have to extrapolate to the rest of the world. At a P/E like Apple or Microsoft, they would need to get to $30B earnings per year to hit $1T, which seems feasible. They have shown that they can build and scale faster than their competitors and spend many multiples more on R&D than they do as well. If they can maintain their 50% YoY growth for 10 years, then the P/E ratio on a $1T market cap would be under 10.
      - arcticbull 5y ago
        > If they can maintain their 50% YoY growth for 10 years, then the P/E ratio on a $1T market cap would be under 10. Assuming the present valuation holds. That's kind of the thing, I've zero interest in buying in if I think 10 years of 50% growth from now they might be worth today's sticker price. I like them as a company, but I hate them as an investment.
- rcMgD2BwE72F 5y ago
  Google's numbers are based on previous quarters, not Q3. 147 is based on today's results and stock price. And Tesla's income is growing fast so P/E is dropping at the same speed (the share price has remained stable since early 2021). Compared to Tesla, Toyota is stagnating. Their battery technology is outdated and they invest almost nothing in BEV. They're still making a full bet on PHEV and hydrogen light vehicles. For now, Toyota simply cannot compete in BEV. They won't have the batteries and/or the materials (lithium / nickel), and every year they do nothing, Tesla, VW and others are securing multi year procurement deals. Also, it would take years of great EV sales for Toyota to be able to outpace Tesla's battery purchasing power. And Tesla is making their own cells so they're not even playing the same game.
  - skohan 5y ago
    > Their battery technology is outdated and they invest almost nothing in BEV. Isn't Toyota investing heavily in solid-state batteries?
    - ecpottinger 5y ago
      And what information do you have on their progress.
      - skohan 5y ago
        What information do you have on Tesla's progress towards humanoid robots or fully autonomous vehicles?
- deleted 5y ago
  [deleted]
skohan 5y ago
Isn't Toyota investing heavily in battery tech? I thought they were farther along with solid-state batteries than anyone.
- ecpottinger 5y ago
  They claim to be further along, but I have not seen the batteries tested by an outside organization. There is no information on the costs of the batteries, their weight or their lifespan. There is more to it than just saying they are solid state.
  - skohan 5y ago
    I think the science is pretty clear that solid state batteries are the way forward if they can solve the dendrite problem. They should surpass LiIon in capacity, lifetime and safety if they can solve this issue.

Hypx_ 5y ago

Hydrogen will ultimately disrupt BEVs into oblivion. This is the obvious disruption event that no one is seeing.

kaesar14 5y ago

Where do you get a P/E of 147 from?

arcticbull 5y ago

P/E according to Google Finance is 452.73 vs Toyota at 9.6 They would have to see 50% YoY growth for 6 more years to reach the same number of deliveries as Toyota alone let alone the entire car market.

verdverm 5y ago
That's assuming you only count their auto division. They are entering into other major industries (utilities, insurance, and robotics)
- arcticbull 5y ago
  I suppose, but those aren't huge, high-margin businesses. Let's grab a few examples. - Utilities: PGE is worth 22B. - Insurance: Libery Mutual is 16B. - Robotics: ABB is 71B. - Cars: Toyota, the biggest and highest margin is 288B (on 700B in revenue). So let's be very, very generous and assume Tesla is able to execute as well as Liberty + PGE + ABB + Toyota. Thats $400B. 44% of today's valuation. I don't see a path to $900B down the line, let alone today.
  - verdverm 5y ago
    Cherry picking a single company from each and not accounting for market growth will not be as accurate as estimating total market and Tesla's share in each. US electric market is $400B in revenue today, this needs to double for the fully electric fleet politicians are pushing for. This does not account for hardware sales. We could estimate that at 1T in 10 years, if Tesla gets 10%, then that is $100B in revenue. US auto ins market is $300B in revenue today, their market share there will likely be close to their share of vehicles. Robotics I suspect will be one of the largest industries in the future. They could become a supplier of batteries, electric motors, and self driving systems to other auto companies. Elon has said multiple times he will have the conversations. That's just the US market. You'd then have to extrapolate to the rest of the world. At a P/E like Apple or Microsoft, they would need to get to $30B earnings per year to hit $1T, which seems feasible. They have shown that they can build and scale faster than their competitors and spend many multiples more on R&D than they do as well. If they can maintain their 50% YoY growth for 10 years, then the P/E ratio on a $1T market cap would be under 10.
    - arcticbull 5y ago
      > If they can maintain their 50% YoY growth for 10 years, then the P/E ratio on a $1T market cap would be under 10. Assuming the present valuation holds. That's kind of the thing, I've zero interest in buying in if I think 10 years of 50% growth from now they might be worth today's sticker price. I like them as a company, but I hate them as an investment.
rcMgD2BwE72F 5y ago
Google's numbers are based on previous quarters, not Q3. 147 is based on today's results and stock price. And Tesla's income is growing fast so P/E is dropping at the same speed (the share price has remained stable since early 2021). Compared to Tesla, Toyota is stagnating. Their battery technology is outdated and they invest almost nothing in BEV. They're still making a full bet on PHEV and hydrogen light vehicles. For now, Toyota simply cannot compete in BEV. They won't have the batteries and/or the materials (lithium / nickel), and every year they do nothing, Tesla, VW and others are securing multi year procurement deals. Also, it would take years of great EV sales for Toyota to be able to outpace Tesla's battery purchasing power. And Tesla is making their own cells so they're not even playing the same game.
- skohan 5y ago
  > Their battery technology is outdated and they invest almost nothing in BEV. Isn't Toyota investing heavily in solid-state batteries?
  - ecpottinger 5y ago
    And what information do you have on their progress.
    - skohan 5y ago
      What information do you have on Tesla's progress towards humanoid robots or fully autonomous vehicles?
deleted 5y ago
[deleted]

skohan 5y ago

Isn't Toyota investing heavily in battery tech? I thought they were farther along with solid-state batteries than anyone.

ecpottinger 5y ago
They claim to be further along, but I have not seen the batteries tested by an outside organization. There is no information on the costs of the batteries, their weight or their lifespan. There is more to it than just saying they are solid state.
- skohan 5y ago
  I think the science is pretty clear that solid state batteries are the way forward if they can solve the dendrite problem. They should surpass LiIon in capacity, lifetime and safety if they can solve this issue.