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The market cap of the 7 big car-companies combined (Toyota, Honda, Mercedes, VW, Ford, GM, BMW) = $557b. Tesla market cap = $527b. This means at comparable mar

by screye 4y ago

The market cap of the 7 big car-companies combined (Toyota, Honda, Mercedes, VW, Ford, GM, BMW) = $557b. Tesla market cap = $527b. This means at comparable margins, for Tesla to reach its current valuation, 3/4 cars sold in the developed world would have to be Teslas. For reference, the marketcap of the entire automobile industry [1] minus Tesla is $1300b. [1] https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/ https://companiesmarketcap.com/automakers/largest-automakers... Tesla is a stock to gamble on. Unlike GME, there is probably a lower bound on how much you can lose. (maybe ~70% at worst if Elon has a heart attack). But, 70% is a long way down.

flutas 4y ago
> This means at comparable margins, So what about in reality, where Tesla makes over double the margins of GM or Ford[0] or on the extreme end, 8x Toyota's profit margins[1]? [0]: https://www.reuters.com/business/autos-transportation/teslas-lush-profit-margin-raises-sustainability-doubts-wall-street-2022-04-21/ https://www.reuters.com/business/autos-transportation/teslas... [1]: https://asia.nikkei.com/Business/Automobiles/Tesla-earns-8-times-more-profit-than-Toyota-per-car https://asia.nikkei.com/Business/Automobiles/Tesla-earns-8-t...
- screye 4y ago
  Tesla has a similar operating margins as BMW or Mercedes, which makes sense because they only sell premium cars. Once Tesla starts selling Prius & Corolla competitors, their margins should go down accordingly.
- MrMan 4y ago
  I am no MBA but how do mass market auto makers defend margins like these in the presence of robust competition? Porsche is a brand built basically on top of VW infrastructure and they painfully win their high margins from expensive add-ons to cars which are (mostly) shared platforms with VW and Audi. Can Tesla carve out a similar niche? If you look at value, Teslas are not at the top of the list in terms of quality or the percentage by which their batteries empirically under/over-perform their range ratings. Consumers are slowly coming to learn how to compare EVs and no matter how well things go for Tesla I am a bit skeptical that their profit margins will survive fully intact.

by screye 4y ago

flutas 4y ago

> This means at comparable margins, So what about in reality, where Tesla makes over double the margins of GM or Ford[0] or on the extreme end, 8x Toyota's profit margins[1]? [0]: https://www.reuters.com/business/autos-transportation/teslas-lush-profit-margin-raises-sustainability-doubts-wall-street-2022-04-21/ https://www.reuters.com/business/autos-transportation/teslas... [1]: https://asia.nikkei.com/Business/Automobiles/Tesla-earns-8-times-more-profit-than-Toyota-per-car https://asia.nikkei.com/Business/Automobiles/Tesla-earns-8-t...

screye 4y ago
Tesla has a similar operating margins as BMW or Mercedes, which makes sense because they only sell premium cars. Once Tesla starts selling Prius & Corolla competitors, their margins should go down accordingly.
MrMan 4y ago
I am no MBA but how do mass market auto makers defend margins like these in the presence of robust competition? Porsche is a brand built basically on top of VW infrastructure and they painfully win their high margins from expensive add-ons to cars which are (mostly) shared platforms with VW and Audi. Can Tesla carve out a similar niche? If you look at value, Teslas are not at the top of the list in terms of quality or the percentage by which their batteries empirically under/over-perform their range ratings. Consumers are slowly coming to learn how to compare EVs and no matter how well things go for Tesla I am a bit skeptical that their profit margins will survive fully intact.