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> So Tesla has many years to grow at very large rates (40%, 50%, etc.) before it arrives at saturation. You missed the GP's point - even if they take 100% of

by mbesto 5y ago

> So Tesla has many years to grow at very large rates (40%, 50%, etc.) before it arrives at saturation. You missed the GP's point - even if they take 100% of the car market, it's not like the car market is growing exponentially. So this car market growth is "already priced in" and it's TAM is the combination of all of their car companies (even assuming they were to get 100% market share which is unrealistic), which Tesla is already valued at higher than all of those companies combined. The narrative is that Tesla becomes a "battery company" (which is basically just their JV with Panasonic anyway). But they haven't proven anything in that market yet. So the point is this -> Microsoft may not just be a PC computing company anymore (selling Windows OS) but it already has proven cloud revenue for example, so you can speculate that those revenues will grow by X% with its own TAM.

runako 5y ago
I didn't miss the point, I promise! One narrative is indeed that their core market is EVs (or call it Auto 2.0 if you include software, advanced driver assist, etc.), and that this market is indeed growing rapidly. This part of the narrative assumes the legacy makers will not pivot fast enough, so the EV market will be divided among the newcomers. Under this view, Tesla is not competing against BMW any more than the iPhone was competing against the Nokia feature phones. Thus, the EV market is essentially a new market (goes the narrative). Investors clearly buy into this narrative at some level. You do make a good point that Tesla has multiple narratives working in its favor. At one point, it was the self-driving company. When necessary, it can push the solar roofs angle. It has a couple of narratives it can use to goose the stock.
- mbesto 5y ago
  > Thus, the EV market is essentially a new market (goes the narrative). Investors clearly buy into this narrative at some level. Huh? Again, you're missing the point - there is total addressable market of vehicles that all of the major automakers currently capture and have forward looking valuations based on future expectations. It doesn't matter whether that vehicle uses diesel, gasoline, electric, nuclear, hydrogen, whatever... > Under this view, Tesla is not competing against BMW any more than the iPhone was competing against the Nokia feature phones. Literally no. People aren't going to magically buy more vehicles because they run using a battery. A car gets you from point A to point B. A smartphone and dumbphone both make a call from point a to point B, but one also has an internet connect computer which opens thousands of new opportunities of communication (video, images, spreadsheets, word processing, etc.). Also iPhones cost substantially more than Nokias for a reason. This is a bad analogy. There is a total amount of money every year the population is willing to pay for for transportation. Let's say that number is $1T (idk what is for sure, just using that as an example). Tesla is fighting to gain that market share of $1T - its zero sum (sans overall increases in demand for vehicles every year). The only way this changes is if Tesla reaches level 5 autonomous navigation which is (1) not even built in the cars today and (2) Tesla still has Level 3~4 that is not fully productive. So this is like saying "yup but their dumbphone can access the internet...but only when they are in this one building in NYC...think of the future!"

by mbesto 5y ago

runako 5y ago

I didn't miss the point, I promise! One narrative is indeed that their core market is EVs (or call it Auto 2.0 if you include software, advanced driver assist, etc.), and that this market is indeed growing rapidly. This part of the narrative assumes the legacy makers will not pivot fast enough, so the EV market will be divided among the newcomers. Under this view, Tesla is not competing against BMW any more than the iPhone was competing against the Nokia feature phones. Thus, the EV market is essentially a new market (goes the narrative). Investors clearly buy into this narrative at some level. You do make a good point that Tesla has multiple narratives working in its favor. At one point, it was the self-driving company. When necessary, it can push the solar roofs angle. It has a couple of narratives it can use to goose the stock.

mbesto 5y ago
> Thus, the EV market is essentially a new market (goes the narrative). Investors clearly buy into this narrative at some level. Huh? Again, you're missing the point - there is total addressable market of vehicles that all of the major automakers currently capture and have forward looking valuations based on future expectations. It doesn't matter whether that vehicle uses diesel, gasoline, electric, nuclear, hydrogen, whatever... > Under this view, Tesla is not competing against BMW any more than the iPhone was competing against the Nokia feature phones. Literally no. People aren't going to magically buy more vehicles because they run using a battery. A car gets you from point A to point B. A smartphone and dumbphone both make a call from point a to point B, but one also has an internet connect computer which opens thousands of new opportunities of communication (video, images, spreadsheets, word processing, etc.). Also iPhones cost substantially more than Nokias for a reason. This is a bad analogy. There is a total amount of money every year the population is willing to pay for for transportation. Let's say that number is $1T (idk what is for sure, just using that as an example). Tesla is fighting to gain that market share of $1T - its zero sum (sans overall increases in demand for vehicles every year). The only way this changes is if Tesla reaches level 5 autonomous navigation which is (1) not even built in the cars today and (2) Tesla still has Level 3~4 that is not fully productive. So this is like saying "yup but their dumbphone can access the internet...but only when they are in this one building in NYC...think of the future!"