3 ms·

> For Tesla, the company, to grow into its stock price, it has to make more cars than Toyota, GM, Ford, Volkswagen, and the rest of the top 12 car companies put

> For Tesla, the company, to grow into its stock price, it has to make more cars than Toyota, GM, Ford, Volkswagen, and the rest of the top 12 car companies put together. You’re right that Tesla is valued on future performance but this part is just factually wrong. They will need ultimately to make more profits than those companies combined, but the number of cars is not that important. Apple has a ~25% share of the phone market but makes most of the profit.

dlisboa 4y ago
> They will need ultimately to make more profits than those companies combined, but the number of cars is not that important That climbs pretty linearly with car sales. There's only so much margin you can make with a vehicle in any market. Apple manages to have higher profit at lower sales because selling a phone for $1000 that cost $200 is possible since millions of people can afford $1000. Selling a $100k car that cost $20k is a much bigger margin than maybe Toyota has, but there are very few people who can afford $100k cars. Eventually you need volume. Apple itself has huge volume, they are outsold by around 20-30% against Samsung, not by 5000%.
- Animats 4y ago
  Yes, automakers can push the "more car per car" thing. Luxury cars don't really cost that much more to make than low-end cars, and the profit margins are much better. But the market for high-price cars is limited, and there are too many companies in it already. The volume is in the low-priced cars.
- encoderer 4y ago
  No. Tesla literally has sold for years the right to a software only $10k upgrade. Who cares if that’s crazy or not they’ve done it. And they have vertically integrated, after automakers spent decades spinning out. Much more value capture. And they have secured better rights to raw materials (lithium).
TheDarkestSoul 4y ago
These sorts of discussions start to seem nitpicky when you're talking about the sheer magnitude by which they're overvalued. Whether they have to make more _profits_ or _cars_ than every other car company combined doesn't really matter because it's so ridiculous.
- encoderer 4y ago
  Truly, it’s not. Many industries have single companies making the majority of profits. It’s really not uncommon.

dlisboa 4y ago

> They will need ultimately to make more profits than those companies combined, but the number of cars is not that important That climbs pretty linearly with car sales. There's only so much margin you can make with a vehicle in any market. Apple manages to have higher profit at lower sales because selling a phone for $1000 that cost $200 is possible since millions of people can afford $1000. Selling a $100k car that cost $20k is a much bigger margin than maybe Toyota has, but there are very few people who can afford $100k cars. Eventually you need volume. Apple itself has huge volume, they are outsold by around 20-30% against Samsung, not by 5000%.

Animats 4y ago
Yes, automakers can push the "more car per car" thing. Luxury cars don't really cost that much more to make than low-end cars, and the profit margins are much better. But the market for high-price cars is limited, and there are too many companies in it already. The volume is in the low-priced cars.
encoderer 4y ago
No. Tesla literally has sold for years the right to a software only $10k upgrade. Who cares if that’s crazy or not they’ve done it. And they have vertically integrated, after automakers spent decades spinning out. Much more value capture. And they have secured better rights to raw materials (lithium).

TheDarkestSoul 4y ago

These sorts of discussions start to seem nitpicky when you're talking about the sheer magnitude by which they're overvalued. Whether they have to make more _profits_ or _cars_ than every other car company combined doesn't really matter because it's so ridiculous.

encoderer 4y ago
Truly, it’s not. Many industries have single companies making the majority of profits. It’s really not uncommon.