58 ms·

Investors conclude that Tesla is a carmaker, not a tech firm

193 points by evo_9 4y ago

mempko 4y ago
Well that's not good, because the build quality of the car isn't that great... Seems other companies have caught up in the EV space.
seydor 4y ago
... at least until interest rates go down again
- ragnot 4y ago
  I think this is really the answer. We've entered into a scary scenario for the US economy: it lives and dies on cheap credit supplied by the Fed. When the Fed drops rates, people chase yield and you get stuff like NFTs and valuations that are detached from fundamentals. When interest rates go up, the market just waits for them to go down again...
arcticbull 4y ago
Cathie Wood is not going to like this. I think her bear case is TSLA is a $7T company by 2026. I can’t say I agree with her.
- GalenErso 4y ago
  The entire worldwide car industry won't be worth 7 trillion dollars in 2026.
  - deleted 4y ago
    [deleted]
  - snordgren 4y ago
    Car companies were asleep at the wheel before Tesla. Selling EVs is perfect because they have lower OpEx at the cost of a higher CapEx. Higher CapEx means more revenue for the car manufacturers, and higher valuations in the long run if they can maintain their profit margin. Car manufacturing will be a more valuable industry as EVs become the standard, but definitely not fast enough to quadruple the value of the industry in a handful of years. Not unless we start overvaluing every company like Tesla.
- sidibe 4y ago
  She is amazing, somehow manages to take Elon at his word on everything when even his biggest fans use phrases like "Elon time" Her valuation makes sense if you think Tesla's going to dominate the car industry and robotaxi and displace truckers with FSD and have Tesla robots replace all factory workers and nurse, rent out the supreme dojo chips to the whole world, etc.
  - ericmay 4y ago
    A good thing to remember here is that most of the media-based investing is the product that Wall Street* sells. Cathie Woods' job is marketing and sales. She needs to make "big bets" or say outlandish things because her market niche is hyper-focused on tech futurism. She'll take her carry and move on with her life and so long as she can always move the goalposts people will continue to invest based on that marketing. Once 2026 and Tesla isn't a $7 trillion company (though I personally think it still has massive upside if Elon quit being a fucking lunatic) she can say the pandemic or Twitter or something stymied the growth and it's actually 2036 now that it'll be a $7 trillion company and so invest now! Etc. etc. * This is an oversimplification and financial firms do provide very valuable services and products to customers and clients around the world.
msoad 4y ago
I have a Tesla and I also hold a short position on TSLA. My Tesla is a great car. The best car that I've ever driven but I'm not sure if it has anything that other car manufacturers can't replicate. I think Apple can make an even better car than Tesla if they build the hardware and software like their phones and computers. The idea that Autopilot has some magic sauce that nobody else can replicate is laughable.
- moonchrome 4y ago
  > I think Apple can make an even better car than Tesla if they build the hardware and software like their phones and computers. I'm not sure outsourcing manufacturing and focusing on design works in auto industry - but could be wrong.
  - jasonwatkinspdx 4y ago
    "Outsourcing" is a very poor way to describe Apple's supply chain. They are deeply integrated. For example Apple owns most of the CNCs and similar equipment used. Having tight control over all logistics is core to Apple's strategy of huge global product launches.
  - multiplegeorges 4y ago
    Fisker is trying it and should have a car to market next year. They've been hitting all their targets. They outsource their manufacturing to Magna Steyr.
  - papruapap 4y ago
    like how they outsourced their chips, right? They only designed a square with a M1 stamped on it.
  - deleted 4y ago
    [deleted]
  - hef19898 4y ago
    It does, Magna's whole business model is based around that.
Tempest1981 4y ago
Why are Rivian and Lucid stocks also getting hammered? All 3 seem to move together. Feels more like EV stocks being dumped.
- moojd 4y ago
  Maybe its incumbent automakers finally ramping up the competition and putting electric vehicles on the road. Telsa has probably been overvalued for a while and needed to come back to earth but between their R&D and massive lead in charging networks I still think they have a bright future. I think the R1T is the coolest truck on the market right now and the R1S is my most desired suv but now that all of the incumbents are starting to ship electric trucks its going to be hard for them to compete. Those vehicles are like $100k+ with a reasonable configuration. I don't understand Lucid at all.
  - rootusrootus 4y ago
    I think competition is the key. 2022 was the year that we started to really see the incumbents flex their muscle and prove that they could build just as good an EV as a dedicated EV manufacturer. Combine that with their proven ability to build cars profitably and it starts to make the future of the startup manufacturers look pretty bleak. It's an extremely competitive market with a huge barrier to entry. My suspicion is that in the next 5 years or so, Rivian, Lucid, and similar startups will be defunct. I expect Tesla to persist long term, as their financials are decent now. Though I think their product strategy is very non-conventional and if consumers aren't convinced by it then it could be a stumbling block to their future success.
    - bluGill 4y ago
      > Rivian, Lucid, and similar startups will be defunct. I expect some will be bought out, and a brand of someone else. Some will be defunt as in bankrupt. I wouldn't be surprised if one of them survives as a small niche manufacture.
- rootusrootus 4y ago
  Rivian, for one, spends over twice as much to build a car than they end up selling it for. The disparity is larger than Tesla's has ever been, as I recall, and there's every reason to believe they can't simply scale their way out of it. They have to figure out how to fundamentally build the car using less than half the effort and material it takes today.
crypot 4y ago
In 2021, Tesla pivoted to become the leading AI/Robotics company in the world. They had an investor day with a robot and everything.
- 0xAFFFF 4y ago
  Did they really pivot or is this just Elon Musk's usual smokes and mirrors bullshit to distract people from other issues?
  - dr_dshiv 4y ago
    I mean the idea that Elon Musk could extend Tesla into a robot company is laughable — and as laughable all the other things Elon Musk has actually accomplished.
    - CBarkleyU 4y ago
      Is that more or less laughable than all the things that he promised but didn't accomplish?
      - fallingknife 4y ago
        The vast majority of businesses that are started don't accomplish what they promise. It's not really a valid criticism of an entrepreneur.
- mempko 4y ago
  Ok, but, have you seen Boston dynamics robots? Much more capable. In fact, what Tesla showed seem worse than the old Honda Asimo robots in terms of tech. So to call it a leading robotics company is just so strange since they are just entering the space. You can see that Asimo has very capable hands, which even boston dynamics robots don't. Just like in art, the hands are the hardest to replicate. https://www.youtube.com/watch?v=zMyxgmW9TyE https://www.youtube.com/watch?v=zMyxgmW9TyE https://asimo.honda.com/ https://asimo.honda.com/
- ceejayoz 4y ago
turbobooster 4y ago
What did Elon do to make Tesla earn so much money that the original founders couldnt do? Is it just about debt loans needed?
- hiddencost 4y ago
  He's very good at pushing people to work overtime.
  - turbobooster 4y ago
    Is it like Steve Jobs and his workers took who the abuse because they were paid well? Or they had Stockholm syndrome?
    - pjmlp 4y ago
      It is more the latter than the former, plus wanting to have name X on the CV. Games industry follows a similar pattern.
- lawn 4y ago
  Suckering people to believe that the company will go to the moon. Or in other words, generate hype.
- HDThoreaun 4y ago
  He sold cars. Turned Tesla into an absolute hype monster.
- leesec 4y ago
  The original founders were not making a mass market car.
- xorcist 4y ago
  Tesla wasn't earning any money at all until two years ago. Until then it was coasting by on debt and selling carbon credits. The whole 2010s was a debt driven economic cycle. Very cheap money for those who can dream up a use for it. And some people are great at selling dreams.
_uhtu 4y ago
I'm not sure you can say that when the market cap is still 10x car companies that deliver orders of magnitude more cars than them. Even a high growth car company wouldn't justify that valuation. No, Tesla is still very overpriced for a car company based on hype.
- klyrs 4y ago
  > The latest blow came on January 3rd... It lost 12% of its value—roughly $50bn, or one Ford Motor Company—in a day. It's not going to completely correct in a day. As you note, its value may be inflated by two orders of magnitude. Musk's hijinks with Twitter have cost him dearly in investor confidence -- both indirectly, as his behavior there is erratic, and directly, as his loans for that deal are backed with Tesla stock. And then there's the non-delivery of FSD, which is the real "dream" that he's been selling so hard.
- sumeno 4y ago
  It's very overpriced as a tech company for what it actually delivers as well
- DennisP 4y ago
  I'm not gonna say TSLA isn't overpriced but number of cars isn't a great metric. Let's look at some financials: Tesla: mcap $388B, debt $9B, op income $12B, free cash flow $9B GM: mcap $49B, debt $110B, op income $10B, free cash flow $1B Ford: mcap $48B, debt $139B, op income $11B, free cash flow $3B Tesla makes more money than Ford or GM, while having much less debt. The fact that they sell fewer cars means their margins are higher, and they have more room to grow. Maybe they shouldn't be worth eight times more than Ford or GM, but they should definitely be worth more. And if you believe that the industry is going electric, then Tesla is already there, while legacy auto has a lot of work to do, and Tesla's low debt load makes them better positioned to do lots of R&D.
  - rllearneratwork 4y ago
    yeah, and then there is a "little" asset like Superchargers network which makes Tesla ownership, at least in US, much more attractive. Edit. I'm not implying that Tesla is fairly priced, underpriced or overpriced. But this whole situation reminds me a time when I invested in Tesla IPO after reading lots of "Don't DO IT!" articles in media.
shmatt 4y ago
They're definitely still a tech firm, just one that consistently misses promised release/delivery dates by 2-3 years Any other company that would miss release dates as much as Tesla does would have crashed by 90% by now
- Zigurd 4y ago
  FSD has missed, and will continue to miss delivery by much longer. Cybertruck is a child's drawing of a cool truck. Frito-Lay doesn't seem to believe the full load range for the Semi. <cough>Roadster</cough>. Teslabot? Any recent sightings? Elon's "genius" is that he pushes companies to take bigger than normal risks. But then he gets lost in survivorship bias. Not an uncommon trajectory in business.
md_ 4y ago
This is true for so many "tech" darlings: Should Uber be priced like a tech company, or a cab company? Is Amazon a tech company or a retailer? Are ecommerce outlets like Warby Parker and Away tech companies, or just retailers with good CSS? It continues to amaze me how investors seem bamboozled by the appearance of "tech company-ness", by businesses which are obviously in markets that don't support the high price to earnings of "tech companies"--valuations which are premised on strong network effects (present, to a degree, with Telsa, in the form of the charging network--but they will open that up to other carmakers, I guess?) and low unit costs (um, not for cars), and which fundamentally make no sense for things like retail (high unit costs, no network effects) or scooter rentals (high capital costs, high unit costs, limited network effects). But investors--showing the wisdom of crowds, I guess--seem frequently unable to look past the shiny CSS and the fact that the founder/CEO wears a turtleneck and the headquarters office has a beer tap.
- miragecraft 4y ago
  Amazon has AWS, Prime services and robots. They’re not like the other companies listed.
  - magic_man 4y ago
    Amazon is an everything company. A little tech, a little retail, a little ads,a little logistics, a little entertainment.
- philipov 4y ago
  If their main business does not involve selling information technology to other people and companies, they're not a tech company.
  - JumpCrisscross 4y ago
    > selling tech to other companies By that measure, Apple and Google aren’t tech companies. (Apple sells devices to consumers. Google sells ads to companies.) They are. They just aren’t software companies.
jelliclesfarm 4y ago
Tesla owns so much data that it has collected(and will only continue to amass more in the future)from its customers that it is the very definition of a successful tech company. Economist is an embarrassment for journalism.
- helsontaveras18 4y ago
  Don’t other car companies also collect data? Data isn’t what makes a tech company successful. It’s the application of that data into a product. They have Autopilot as their seminal data product, but it is buggy.
  - jelliclesfarm 4y ago
    I think you underestimate the value of data. It is stock in trade. Without data there is no automation. A lot of it is noise and very little signal. The one who reigns the era of automation and AI will be the one who possesses all our data.
- md_ 4y ago
  That's an odd definition for "tech company." Is your point, though, that that data are valuable? If so, what for?
  - dylan604 4y ago
    Selling to interested buyers to use that information in target ad campaigns? --I want to target my new car advertising campaign at any Tesla owner with FSD that recently had a wreck or near-wreck. --I want to target my bloated overpriced techy product that will collect all sorts of personal data specifically at Tesla owners as they are clearly okay with this behavior.
    - jelliclesfarm 4y ago
      Regardless, that doesn’t NOT make Tesla a tech company. Calling Tesla a ‘car maker’ is like calling Amazon a used bookseller.
gwbas1c 4y ago
Tesla is a battery manufacturer that happens to make cars. Remember, they also make the Powerwall and grid-scale storage. I think the bigger question we should ask ourselves is, "What is a tech company?"
- samwillis 4y ago
  Tesla are a battery pack manufacturer, they mostly use cells manufactured by Panasonic and CATL.
  - speedgoose 4y ago
    LG too.
  - dylan604 4y ago
    I thought the Gigafactories manufactured the batteries whose design they license from someone else that then get assembled into packs of various sizes. Are you saying the Gigafactories are not making batteries at all?
    - DennisP 4y ago
      Tesla does manufacture their own battery cells, though they're having trouble scaling up. https://www.reuters.com/business/autos-transportation/inside-teslas-drive-keep-musks-battery-promise-2022-09-06/ https://www.reuters.com/business/autos-transportation/inside...
    - phpisthebest 4y ago
      Pretty sure the Gigafactory in NV has LG staff inside them making the Cells, or rather running the machines that makes the cells. While it is under one roof I think there are 2 businesses inside, one LG and 1 Telsa
      - dylan604 4y ago
        interesting. was not aware they were 4-walling the set up to keep them separated to that extent. does that say anything about how LG feels about the relationship with Tesla, or anything about how LG feels about the ability of Tesla employees? Are the batteries coming out of the Gigafactory only for use by Tesla, or are they making LG branded batteries to be sold to LG customers? If they are selling LG products, then I could see why LG would have a much more vested interest in the factory. If they are only Tesla products via a licensing deal, why would they be as interested?
checkyoursudo 4y ago
What happened in 2020 that made investors think Tesla was a tech company instead of a car company? Based on the graph in TFA, it seems like investors maybe used to price the valuation right. (Caveat: I have no idea if they did, but the valuation used to be in line with other car companies, I guess?)
- rootusrootus 4y ago
  > What happened in 2020 that made investors think Tesla was a tech company instead of a car company? My guess is nothing. Investors just piled on looking to make a quick buck on a rising stock, and it fed an enormous bubble. Money was looking for somewhere to go. The market is only rational over a very long timeline.
- xorcist 4y ago
  That was the year when major central banks said publicly that low interest rates were here to stay for a long time. The companies with the most debt were the ones to gain the most. Those promises did not age well however and valuations are still correcting from that.
- trefoiled 4y ago
  Not sure of the exact timeline here, but for a while Musk was explicitly promising that within a few years, true FSD would be a reality. He said you'd have to be insane not to buy a Tesla, because your car would be out there making money for you as an autonomous taxi when you're not using it. A car that pays for itself and then some would be a true paradigm shift, but as we can see now, his predictions were hot air.
- sonotathrowaway 4y ago
  They had a lot of money and needed somewhere to put it. Then just back-rationalized the higher multiples from there.
hsuduebc2 4y ago
Investors stated fact.
teekert 4y ago
So does this mean investors can't create new catergories and must think in absolute terms and existing boxes? How would could we, humans who know boxed thinking leads to fallacies and know the world is made of continuums in many (infinte?) dimension, use that to beat the market...?
- moomin 4y ago
  There’s a saying in trading “The market can stay irrational longer than you can stay solvent.”
indymike 4y ago
It's not about tech or not tech, it's about potential for growth and earnings. TSLA does not have the upside we all thought, and they are showing no signs of wanting to acquire huge swaths of market share by buying competitors while they have/had the valuation to do so. In other words, TSLA is not realizing their potential to "take over the world" and is behaving like a normal, big company in a mature market.
rootusrootus 4y ago
In the most optimistic scenario possible, it is difficult to imagine how their future is bright enough to justify a valuation on the order of 10x GM. They would have to take the entirety of the car market, which is obviously not going to happen.
jupp0r 4y ago
Investors conclude that Tesla has successfully alienated the vast majority of their potential customers via their CEO pushing baseless conspiracy theories on Twitter as visible in declining demand in the last few months since Elon unraveled.
anonporridge 4y ago
Absurd headline. It's still WAY too overpriced to conclude that investor consensus is that it's just a carmaker. Market cap has a long way to fall before that conclusion holds.
- warinukraine 4y ago
  Exactly. Tesla stock price should be looked at in a log plot.
  - anonporridge 4y ago
    Regardless, it's still 10x overvalued if we're simply considering it to be a carmaker. It's currently 7x the value of Ford with a fraction of the production.
    - fallingknife 4y ago
      Fraction of production, but a multiple of profits, and a massive advantage in growth rate. Companies are priced on cashflow and growth rate, not production.
    - panick21_ 4y ago
      Tesla has a far better debt position, has far, far larger growth and is already making far more money then Ford. Not to mention the battery manufacture, super charger network and so on and so on. Saying that Tesla is a 'fraction of production' is just an incredibly ignorant analysis of a company.
dawnerd 4y ago
We’ve also been shown that Elon doesn’t know how to run a tech company. It’s been obvious before the Twitter takeover from all the half baked features that were shoehorned in and abandoned.
- aardvarkr 4y ago
  Oh no, Elon failed so hard at running tech companies that he accidentally built three of the most innovative companies of the last 20 years and became the worlds richest man… you can hate him all you want but don’t underestimate him. I hate that I have to be the voice of reason here since I really hate his god complex but I can at least respect what he’s built. That list includes X/PayPal, Tesla, and SpaceX. Don’t let your hatred blind you. He sucks but running innovative companies is his bread and butter. Twitter isn’t innovative though and I hope it crushes him.
  - hannasanarion 4y ago
    Elon didn't "build" any of his businesses, he is and always was the "money guy". He provided startup capital for X.com and SpaceX, but never did any substantial technical work on either. He bought Tesla after they already had several prototypes and started cosplaying as "founder" and fired everybody who called BS.
    - megaman821 4y ago
      Any tips for the rest of us on how we can "money guy" our way to one of the richest people on earth?
      - hannasanarion 4y ago
        Step 1: Inherit a fortune from your family of modern day slavers Step 2: Have those loads of that money available during the first months of a widely anticipated telecom revolution. Step 3: pour that money into the most obviously practical use case of the brand new technology to quickly capture market share, optimally one where network effects will solidify your monopoly in perpetuity, such as payment processing
pjdemers 4y ago
Tesla, and even more Uber, were priced as if self driving cars are almost here. The idea that services like Uber without the drivers would make car ownership obsolete drove those valuations. Now that self driving cars are many decades away, instead of less than one decade away, is bring stock prices down. I always questions how fast we would see self driving cars, not because of the technology, but because of consumer demand. There was a survey a few years ago of how much more people would be willing to pay for cars that could drive themself, and the median answer was $0. This is because quite a few people gave a negative number, that is, they would pay extra for a car that could not drive itself.
- helen___keller 4y ago
  > There was a survey a few years ago of how much more people would be willing to pay for cars that could drive themself, and the median answer was $0. This is because quite a few people gave a negative number, that is, they would pay extra for a car that could not drive itself. I think there's an inherent distrust (which I share) of giving technology the power to end our lives with one bug. Trust in technology, in general, is pretty low right now, so that reflects back on perceived future technology where one bad steer or missed brake ruins your life. Although I happen to share this pessimism with the human aspect of driving as well, I've almost died before because I wasn't focused while driving (IRL nerd sniping basically), and I know it could happen again in the future no matter how much I want to be a safe driver. The truth is, if full self driving cars actually happened, with safety statistics better than humans and with a low barrier to entry, you can bet that people would change their opinion real fast. Much like Americans who have a revelation after experiencing European or Asian public transit, the realization that they could have an extra hour per day that was previously spent staring at a road, would be a big motivator to change opinions on technology. Add in that three of your friends already use it daily and they're not dead yet, and you rode with them and it seemed like a safe driver.
  - phpisthebest 4y ago
    >>with safety statistics better than humans The problem is that will not be the expectation. It will need to be perfect or near perfect. full self driving cars can drive a million of miles with no accident, but if on 1,000,001 miles there is a accident with a death it is all over the news, and people proclaiming the technology is terrible, unsafe and not ready. In that same 1,000,001 miles humans have caused far more damange and death but that is just "normal" so....
graycrow 4y ago
Every time there is an article about Tesla, the vast majority of comments here are either too critical, too ignorant, or just FUD. It's too unbalanced, no other company (good or bad) gets such bad treatment here. I see many of the HN audience here are just repeating the media narrative without their own experience or even trying to understand the topic. Yes, Tesla is moving at the forefront of EV development, and yes, sometimes not everything is delivered as promised or on time. But on the other hand, this is HN, we're supposed to love new technology and engineering! Why so negative? It's pathetic.
- wara23arish 4y ago
  Yeah, some comments here also feel the need to justify that they’re not an “Elon fanboi” if they’re saying positives about tesla which shows how bad it is. The whole FSD debacle feels like people just arguing semantics and gotchas. I recently watched some videos of FSD operating in tight, hilly and unusual roads in CA. I was very impressed, its obv not perfect, but its fucking cool. People here made it sound like a scam.
  - zethus 4y ago
    As a FSD purchaser, I can tell you that watching videos do not give you the full experience of sitting in the driver's seat while FSD is on. The amount of times I need to regularly overtake control in both urban and rural environments on simple turns is enough to make me not recommend the FSD option to prospective Tesla buyers. At this point, the way it's marketed, I would lean more towards scam than even gimmick.
    - misiti3780 4y ago
      But do you agree it's getting better with every update?
      - myko 4y ago
        Each update is erratic with its own set of positives and negatives, I wouldn't say there is a particular trendline. Random.
mbesto 4y ago
Obligatory "tech is not an industry, but an operating model": https://news.ycombinator.com/item?id=27693634 https://news.ycombinator.com/item?id=27693634
Maledictus 4y ago
https://archive.ph/hNC7i https://archive.ph/hNC7i
tamaharbor 4y ago
TSLA is a good trading stock. I am buying here at $110. The negativity is a good thing.
- crypot 4y ago
  Elon hit 11 out of 12 milestones of his 10 year pay package in 2 years and then sold $40 billion of stock to buy another company. Seems like a solid buy here.
AlbertCory 4y ago
Car companies tend to be priced (as investments) in one range. Some good, some bad. Real estate companies, same thing. Cab companies, you know the drill. So being one of those, but with computers & the web, does not permanently lift you out of your lane. Tesla is a car company, WeWork is a real estate company, and Uber/Lyft are cab companies.
fassssst 4y ago
Yea having test driven the Mach E, Ioniq 5, and XC40 Recharge there is no way I’d buy a Tesla either. We liked all of those better than Model Y and Model 3. Going with the Volvo, it just feels nicer to actually drive, and has built in Google Maps with Google voice controls.
- opdahl 4y ago
  Talking from experience you will not be disappointed with the XC40!
- simonebrunozzi 4y ago
  I am intrigued by the V60 cross country, but it seems that it's one step behind the various XC (40, 60, 90), in terms of hybrid engine, etc.
sithlord 4y ago
My opinion is that Tesla wanted to be a tech company, wanted to lead the game with autopilot and other tech features, and eventually stop making cars and license out the tech. Turns out, its not that "hard" to get to the point they are at
zzzeek 4y ago
great article, but: "And the natural Tesla-owners among the wealthy progressive set are less prepared to overlook Mr Musk’s libertarian antics at Twitter" banning journalists and parodies he doesnt like == libertarian, got it!
- LarryMullins 4y ago
  Real libertarianism hasn't been tried.
  - myko 4y ago
    The closest attempt failed miserably: https://www.politico.com/magazine/story/2017/06/30/colorado-springs-libertarian-experiment-america-215313/ https://www.politico.com/magazine/story/2017/06/30/colorado-...
COGlory 4y ago
This is a pointless distinction. All car companies are tech companies.
- colinmorelli 4y ago
  It seems like you are thinking about "tech" from a value proposition standpoint (i.e. that car manufacturers are building value through technology, and thus that makes them a tech company). This article is referring to the term used in more of a financial context - referring to how the company will grow and scale. In this context, "tech company" refers to a company with very low marginal CoGS that exponentially decays with scale. The distinction is highly relevant if you're deciding how to value a stock. For whatever reason the public markets had been valuing Tesla (and every other EV startup) as though it was going to benefit from tech-like high margins and free distribution.
charles_f 4y ago
Even if the market can remain irrational for a while, in the end it very much remains driven by expectations of growth and revenue. "tech" as it's called benefits from a non-linear scale factor: serving one more person does not directly correlate to a static increase in cost, it's more derivative in nature (cost increases onefold with each order of magnitude). Add to that globalisation for free. That's how you can expect more growth and revenue from a "tech" company than from traditional industries. Service has an almost 1:1 relationship, manufacturing is kind of in the middle, where you benefit from scale but still need to purchase matter, and time from people to build stuff. In that way tesla is not a tech company. To build an additional tesla you need more people and more robots. You need to purchase steel, lithium, leather, etc. You need to ship that Tesla. Growth doesn't come to them at a derivative cost. As an investor you might judge that they might have better software, or better cars, and ride a wave of electrification that other manufacturers don't, which justified a higher price because their potential for growth is higher. That's not entirely true anymore, everyone else is producing electric cars now, at prices that are often cheaper, so their advantage is not that big anymore.
yalogin 4y ago
The only advantage Tesla has is their charging network. They were forced to build it out because they were the first car out there and they needed to provide a way for their customers to use their cars. However now it has become their strength. Without a fast charging network all the other cars are restricted to a narrow radius. The car itself should be commoditized any day now.
- Faaak 4y ago
  Tesla is not the only fast charging network though. In Switzerland for example there are many (Move, GoFast, Ionity, etc.) and some are even cheaper than Tesla.
  - darknavi 4y ago
    In the US at least their charging network is top tier. EA is rolling out pretty wide with US highways but most non-Tesla Supercharger site's reliability is laughable right now. To the point where they simply don't work when it's cold outside [0]. We (US) really need more competition in this space. 0: https://www.youtube.com/watch?v=fq0RAjJ1PKQ https://www.youtube.com/watch?v=fq0RAjJ1PKQ
    - Symbiote 4y ago
      According to the International Energy Agency, Europe (includes UK) has 49 thousand fast chargers vs. the USA's 22 thousand. (Also 307 thousand slow chargers vs 92 thousand.) That's a much bigger difference than I would have expected. Probably the slow charger need is less in the USA with more houses and fewer apartments, but the fast charger requirement should be higher, with longer average journeys and more interstate travel. I don't often travel by car, so I'm rarely in the kinds of places a fast charger would be located, but on a recent trip to Britain I was surprised to see so many chargers. I think they were in almost all the car parks we used. The UK has 7 thousand fast chargers, 29 thousand slow. (China's numbers are incredible, 470 thousand fast chargers!) https://www.iea.org/reports/global-ev-outlook-2022/trends-in-charging-infrastructure https://www.iea.org/reports/global-ev-outlook-2022/trends-in... https://www.zap-map.com/statistics/ https://www.zap-map.com/statistics/
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specialist 4y ago
Viewing Tesla from afar, I've noticed... -- The Good: I remain excited by their large die castings, aka gigipresses. It seems to me this will lead to better fit and finish (eg. the unforgivable panel gaps). I support their cradle to grave supply chain integration. I like that they make their own tech such as chips and batteries. IIRC, Tesla leads in reducing part count and labor hours. -- The Bad: Terrible labor relations. Psychotic spokesmodel. Declining brand value. Reportedly poor quality software. Bad FSD strategy. No LIDAR, wtf? -- The Unknown: Future cost of capital? Tesla previously had some clever sources of revenue. Govt investment, incentives for EVs, selling emissions credits to other OEMs, customer provided capital thru pre-sales. What's Tesla future play? Tesla could offer auto insurance, capturing some of that idle capital, a la Buffet & Geico. Employee morale. Compensation thru stock options is fantastic for growth companies. With the recent devaluation, I'd be super pissed and looking for a new gig. Their rollout of the 4680 battery with new chemistry seems to troubled. This seems important. Can their reboot of FSD R&D catch up? New team, finally accepting need for LIDAR, etc. Rollout of Cybertruck seems contingent on 4680 transition. What's plan 'B'? Will executive board (investors) boot Elon Musk? He really seems like Tesla's ongoing biggest risk, biggest liability. ("Thank you your service, here's your award plaque, now please go away.")
Animats 4y ago
Right. Tesla's problems are car-company problems. Build quality. Production backlog. Delayed new models. Repair parts stocking. Repair center operations. Cost growth. All the dull and boring stuff they have to fix, or their market cap shrinks to what their production output justifies.
- TheCleric 4y ago
  Well, they have those problems AND a CEO that (at best) can be called divisive, and who staked a lot of his stock in a separate company that is also (at best) divisive.
DustinBrett 4y ago
I don't own a Tesla or stock cause I am poor, but I believe in Tesla and a lot of what Elon Musk has said in the past. I thought the Giga Factory idea was great. The Cyber Truck actually looks cool to me, mostly cause it's futuristic and different. I also don't think Elon cares that much if the stock goes down, as long as he is able to move forward with his vision, which hopefully he is able to do, because if I were being optimistic and taking him at his word, then it's an exciting future. It won't all go as planned, but nothing ever does.
- ryanwaggoner 4y ago
  What would it take to shake your beliefs? You of course can think whatever you want, but it seems to me that many people, myself included, once felt like you do about Tesla and Musk. But for many of us, his actions over the past several years have caused me to adjust our perspective. I no longer believe he has good intentions, or will deliver on most of what he promises. I wouldn’t buy a Tesla at this point, and I definitely would have a few years ago. I’m just curious if you’ve thought about what might make you adjust your view of him.
  - myko 4y ago
    I'm in this boat. I've been happy overall with my Model S purchase but compared to luxury car makers it is overpriced and nowhere near as good. The best thing about owning a Tesla in the US is the Supercharger network. Things that turned me off: - Many times under warranty getting stupid things repaired that were clearly manufacturing problems or just boneheaded mistakes when putting the car together. Crazy for a $102k automobile. - Once warranty wore off ran into an issue where the car warned me it might not start again and it needed service immediately. Tesla scheduled my service 2 weeks out and charged me $1000, for something that when I googled it was a common problem and that the service center told me wasn't something I had done. At this point I was pretty frustrated. - Elon's antics: when he called one of the heroes who rescued those kids from the cave a pedo to sate his own ego I was flabbergasted. I've paid more attention to his actions since then and they've only made me think less of the man. I truly think he has done too many recreational drugs and has destroyed his mind.
danans 4y ago
From the perspective of addressable market opportunity, personal vehicles are a steady size and satisfied market. There are cars that you can buy from $500 junkers to $500k monstrosities, and there is little opportunity to 10x the addressable market size. Electrification of cars, while critically important for the climate, does not open an entirely new modality of life in the way that cars initially did. It's not transformative as a business model. Therefore, unless they cause a major behavioral switch that is monetizable, EVs will just eventually replace the current car market. Tesla's potential growth as an EV maker is directly proportional to traditional automakers' car market loss, to the extent that happens. Does that justify a 10 or 20x valuation? Only if you think they will reach dominant global market share of all cars. To do so they would have to have an non-replicable comparative advantage, which they have failed to demonstrate.
michpoch 4y ago
I believe the reason is much simpler - 2017-2019 was a peak of hopes for Tesla. New models, scaling up, Roadster, Semi, Cybertruck announced, the competition was weak and sky was the limit. FSD / Robotaxi was promised to be ready in matter of weeks/months. The shares were around $20-25 (today's worth, taking in account the splits). I do not see any reason why it would be worth more than that. - Roadster and Cybertruck are not only late, they were even removed from their landing page. DOA. Ford, Rivian and even GM brought solid product (pickups) to the market and the fat cake is being eaten. - Semi was very late and doesn't look too promising. - FSD turned from an advantage to a huge liability. I believe it has now a negative value (current and potential future lawsuits). - competitors started producing comparable or better cars at better prices (VW ID3, Mercedes EQE, any EVs from Hyundai/Kia) - there's a strong perception of Elon being bored with Tesla. We've got a billion dollar ship with no captain. I do not believe in Elon's political involvement having such a great impact, other than taking his attention away.
college_physics 4y ago
Manias, panics and crashes - nothing new under the sun. But actually no, in the age of 24/7 viral digital titilation, manias have been upgraded to hysterias. Once the dust of this cycle settles the tangible "tech" advances booked will actually quite meager and people will not believe how many got so excited about so little. Entire theses and books will be written about how general STEM illiteracy and FOMO coupled with unprecedented liquidity create fertile soil for all sorts of bizarre collective phenomena.
russellbeattie 4y ago
I went to CES in 2020 and there were almost no electric cars. This year, there a ton (from what I can gather from news and video coverage). Additionally, there are companies like Nvidia who are building out all the tech needed as off-the-shelf parts for the tech that Tesla has had to build itself. Cars are becoming like PCs. Tesla had its decade head start, and it did amazingly. In my opinion, however, there is no way it can compete with the entire ecosystem of high-tech plus the manufacturing knowledge of the major car companies.
ElfinTrousers 4y ago
The giveaway was all the cars they make.

193 points by evo_9 4y ago

Well that's not good, because the build quality of the car isn't that great... Seems other companies have caught up in the EV space.

seydor 4y ago

... at least until interest rates go down again

ragnot 4y ago
I think this is really the answer. We've entered into a scary scenario for the US economy: it lives and dies on cheap credit supplied by the Fed. When the Fed drops rates, people chase yield and you get stuff like NFTs and valuations that are detached from fundamentals. When interest rates go up, the market just waits for them to go down again...

arcticbull 4y ago

Cathie Wood is not going to like this. I think her bear case is TSLA is a $7T company by 2026. I can’t say I agree with her.

GalenErso 4y ago
The entire worldwide car industry won't be worth 7 trillion dollars in 2026.
- deleted 4y ago
  [deleted]
- snordgren 4y ago
  Car companies were asleep at the wheel before Tesla. Selling EVs is perfect because they have lower OpEx at the cost of a higher CapEx. Higher CapEx means more revenue for the car manufacturers, and higher valuations in the long run if they can maintain their profit margin. Car manufacturing will be a more valuable industry as EVs become the standard, but definitely not fast enough to quadruple the value of the industry in a handful of years. Not unless we start overvaluing every company like Tesla.
sidibe 4y ago
She is amazing, somehow manages to take Elon at his word on everything when even his biggest fans use phrases like "Elon time" Her valuation makes sense if you think Tesla's going to dominate the car industry and robotaxi and displace truckers with FSD and have Tesla robots replace all factory workers and nurse, rent out the supreme dojo chips to the whole world, etc.
- ericmay 4y ago
  A good thing to remember here is that most of the media-based investing is the product that Wall Street* sells. Cathie Woods' job is marketing and sales. She needs to make "big bets" or say outlandish things because her market niche is hyper-focused on tech futurism. She'll take her carry and move on with her life and so long as she can always move the goalposts people will continue to invest based on that marketing. Once 2026 and Tesla isn't a $7 trillion company (though I personally think it still has massive upside if Elon quit being a fucking lunatic) she can say the pandemic or Twitter or something stymied the growth and it's actually 2036 now that it'll be a $7 trillion company and so invest now! Etc. etc. * This is an oversimplification and financial firms do provide very valuable services and products to customers and clients around the world.

msoad 4y ago

I have a Tesla and I also hold a short position on TSLA. My Tesla is a great car. The best car that I've ever driven but I'm not sure if it has anything that other car manufacturers can't replicate. I think Apple can make an even better car than Tesla if they build the hardware and software like their phones and computers. The idea that Autopilot has some magic sauce that nobody else can replicate is laughable.

moonchrome 4y ago
> I think Apple can make an even better car than Tesla if they build the hardware and software like their phones and computers. I'm not sure outsourcing manufacturing and focusing on design works in auto industry - but could be wrong.
- jasonwatkinspdx 4y ago
  "Outsourcing" is a very poor way to describe Apple's supply chain. They are deeply integrated. For example Apple owns most of the CNCs and similar equipment used. Having tight control over all logistics is core to Apple's strategy of huge global product launches.
- multiplegeorges 4y ago
  Fisker is trying it and should have a car to market next year. They've been hitting all their targets. They outsource their manufacturing to Magna Steyr.
- papruapap 4y ago
  like how they outsourced their chips, right? They only designed a square with a M1 stamped on it.
- deleted 4y ago
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- hef19898 4y ago
  It does, Magna's whole business model is based around that.

Tempest1981 4y ago

Why are Rivian and Lucid stocks also getting hammered? All 3 seem to move together. Feels more like EV stocks being dumped.

moojd 4y ago
Maybe its incumbent automakers finally ramping up the competition and putting electric vehicles on the road. Telsa has probably been overvalued for a while and needed to come back to earth but between their R&D and massive lead in charging networks I still think they have a bright future. I think the R1T is the coolest truck on the market right now and the R1S is my most desired suv but now that all of the incumbents are starting to ship electric trucks its going to be hard for them to compete. Those vehicles are like $100k+ with a reasonable configuration. I don't understand Lucid at all.
- rootusrootus 4y ago
  I think competition is the key. 2022 was the year that we started to really see the incumbents flex their muscle and prove that they could build just as good an EV as a dedicated EV manufacturer. Combine that with their proven ability to build cars profitably and it starts to make the future of the startup manufacturers look pretty bleak. It's an extremely competitive market with a huge barrier to entry. My suspicion is that in the next 5 years or so, Rivian, Lucid, and similar startups will be defunct. I expect Tesla to persist long term, as their financials are decent now. Though I think their product strategy is very non-conventional and if consumers aren't convinced by it then it could be a stumbling block to their future success.
  - bluGill 4y ago
    > Rivian, Lucid, and similar startups will be defunct. I expect some will be bought out, and a brand of someone else. Some will be defunt as in bankrupt. I wouldn't be surprised if one of them survives as a small niche manufacture.
rootusrootus 4y ago
Rivian, for one, spends over twice as much to build a car than they end up selling it for. The disparity is larger than Tesla's has ever been, as I recall, and there's every reason to believe they can't simply scale their way out of it. They have to figure out how to fundamentally build the car using less than half the effort and material it takes today.

crypot 4y ago

In 2021, Tesla pivoted to become the leading AI/Robotics company in the world. They had an investor day with a robot and everything.

0xAFFFF 4y ago
Did they really pivot or is this just Elon Musk's usual smokes and mirrors bullshit to distract people from other issues?
- dr_dshiv 4y ago
  I mean the idea that Elon Musk could extend Tesla into a robot company is laughable — and as laughable all the other things Elon Musk has actually accomplished.
  - CBarkleyU 4y ago
    Is that more or less laughable than all the things that he promised but didn't accomplish?
    - fallingknife 4y ago
      The vast majority of businesses that are started don't accomplish what they promise. It's not really a valid criticism of an entrepreneur.
mempko 4y ago
Ok, but, have you seen Boston dynamics robots? Much more capable. In fact, what Tesla showed seem worse than the old Honda Asimo robots in terms of tech. So to call it a leading robotics company is just so strange since they are just entering the space. You can see that Asimo has very capable hands, which even boston dynamics robots don't. Just like in art, the hands are the hardest to replicate. https://www.youtube.com/watch?v=zMyxgmW9TyE https://www.youtube.com/watch?v=zMyxgmW9TyE https://asimo.honda.com/ https://asimo.honda.com/
ceejayoz 4y ago

turbobooster 4y ago

What did Elon do to make Tesla earn so much money that the original founders couldnt do? Is it just about debt loans needed?

hiddencost 4y ago
He's very good at pushing people to work overtime.
- turbobooster 4y ago
  Is it like Steve Jobs and his workers took who the abuse because they were paid well? Or they had Stockholm syndrome?
  - pjmlp 4y ago
    It is more the latter than the former, plus wanting to have name X on the CV. Games industry follows a similar pattern.
lawn 4y ago
Suckering people to believe that the company will go to the moon. Or in other words, generate hype.
HDThoreaun 4y ago
He sold cars. Turned Tesla into an absolute hype monster.
leesec 4y ago
The original founders were not making a mass market car.
xorcist 4y ago
Tesla wasn't earning any money at all until two years ago. Until then it was coasting by on debt and selling carbon credits. The whole 2010s was a debt driven economic cycle. Very cheap money for those who can dream up a use for it. And some people are great at selling dreams.

_uhtu 4y ago

I'm not sure you can say that when the market cap is still 10x car companies that deliver orders of magnitude more cars than them. Even a high growth car company wouldn't justify that valuation. No, Tesla is still very overpriced for a car company based on hype.

klyrs 4y ago
> The latest blow came on January 3rd... It lost 12% of its value—roughly $50bn, or one Ford Motor Company—in a day. It's not going to completely correct in a day. As you note, its value may be inflated by two orders of magnitude. Musk's hijinks with Twitter have cost him dearly in investor confidence -- both indirectly, as his behavior there is erratic, and directly, as his loans for that deal are backed with Tesla stock. And then there's the non-delivery of FSD, which is the real "dream" that he's been selling so hard.
sumeno 4y ago
It's very overpriced as a tech company for what it actually delivers as well
DennisP 4y ago
I'm not gonna say TSLA isn't overpriced but number of cars isn't a great metric. Let's look at some financials: Tesla: mcap $388B, debt $9B, op income $12B, free cash flow $9B GM: mcap $49B, debt $110B, op income $10B, free cash flow $1B Ford: mcap $48B, debt $139B, op income $11B, free cash flow $3B Tesla makes more money than Ford or GM, while having much less debt. The fact that they sell fewer cars means their margins are higher, and they have more room to grow. Maybe they shouldn't be worth eight times more than Ford or GM, but they should definitely be worth more. And if you believe that the industry is going electric, then Tesla is already there, while legacy auto has a lot of work to do, and Tesla's low debt load makes them better positioned to do lots of R&D.
- rllearneratwork 4y ago
  yeah, and then there is a "little" asset like Superchargers network which makes Tesla ownership, at least in US, much more attractive. Edit. I'm not implying that Tesla is fairly priced, underpriced or overpriced. But this whole situation reminds me a time when I invested in Tesla IPO after reading lots of "Don't DO IT!" articles in media.

shmatt 4y ago

They're definitely still a tech firm, just one that consistently misses promised release/delivery dates by 2-3 years Any other company that would miss release dates as much as Tesla does would have crashed by 90% by now

Zigurd 4y ago
FSD has missed, and will continue to miss delivery by much longer. Cybertruck is a child's drawing of a cool truck. Frito-Lay doesn't seem to believe the full load range for the Semi. <cough>Roadster</cough>. Teslabot? Any recent sightings? Elon's "genius" is that he pushes companies to take bigger than normal risks. But then he gets lost in survivorship bias. Not an uncommon trajectory in business.

md_ 4y ago

This is true for so many "tech" darlings: Should Uber be priced like a tech company, or a cab company? Is Amazon a tech company or a retailer? Are ecommerce outlets like Warby Parker and Away tech companies, or just retailers with good CSS? It continues to amaze me how investors seem bamboozled by the appearance of "tech company-ness", by businesses which are obviously in markets that don't support the high price to earnings of "tech companies"--valuations which are premised on strong network effects (present, to a degree, with Telsa, in the form of the charging network--but they will open that up to other carmakers, I guess?) and low unit costs (um, not for cars), and which fundamentally make no sense for things like retail (high unit costs, no network effects) or scooter rentals (high capital costs, high unit costs, limited network effects). But investors--showing the wisdom of crowds, I guess--seem frequently unable to look past the shiny CSS and the fact that the founder/CEO wears a turtleneck and the headquarters office has a beer tap.

miragecraft 4y ago
Amazon has AWS, Prime services and robots. They’re not like the other companies listed.
- magic_man 4y ago
  Amazon is an everything company. A little tech, a little retail, a little ads,a little logistics, a little entertainment.
philipov 4y ago
If their main business does not involve selling information technology to other people and companies, they're not a tech company.
- JumpCrisscross 4y ago
  > selling tech to other companies By that measure, Apple and Google aren’t tech companies. (Apple sells devices to consumers. Google sells ads to companies.) They are. They just aren’t software companies.

jelliclesfarm 4y ago

Tesla owns so much data that it has collected(and will only continue to amass more in the future)from its customers that it is the very definition of a successful tech company. Economist is an embarrassment for journalism.

helsontaveras18 4y ago
Don’t other car companies also collect data? Data isn’t what makes a tech company successful. It’s the application of that data into a product. They have Autopilot as their seminal data product, but it is buggy.
- jelliclesfarm 4y ago
  I think you underestimate the value of data. It is stock in trade. Without data there is no automation. A lot of it is noise and very little signal. The one who reigns the era of automation and AI will be the one who possesses all our data.
md_ 4y ago
That's an odd definition for "tech company." Is your point, though, that that data are valuable? If so, what for?
- dylan604 4y ago
  Selling to interested buyers to use that information in target ad campaigns? --I want to target my new car advertising campaign at any Tesla owner with FSD that recently had a wreck or near-wreck. --I want to target my bloated overpriced techy product that will collect all sorts of personal data specifically at Tesla owners as they are clearly okay with this behavior.
  - jelliclesfarm 4y ago
    Regardless, that doesn’t NOT make Tesla a tech company. Calling Tesla a ‘car maker’ is like calling Amazon a used bookseller.

gwbas1c 4y ago

Tesla is a battery manufacturer that happens to make cars. Remember, they also make the Powerwall and grid-scale storage. I think the bigger question we should ask ourselves is, "What is a tech company?"

samwillis 4y ago
Tesla are a battery pack manufacturer, they mostly use cells manufactured by Panasonic and CATL.
- speedgoose 4y ago
  LG too.
- dylan604 4y ago
  I thought the Gigafactories manufactured the batteries whose design they license from someone else that then get assembled into packs of various sizes. Are you saying the Gigafactories are not making batteries at all?
  - DennisP 4y ago
    Tesla does manufacture their own battery cells, though they're having trouble scaling up. https://www.reuters.com/business/autos-transportation/inside-teslas-drive-keep-musks-battery-promise-2022-09-06/ https://www.reuters.com/business/autos-transportation/inside...
  - phpisthebest 4y ago
    Pretty sure the Gigafactory in NV has LG staff inside them making the Cells, or rather running the machines that makes the cells. While it is under one roof I think there are 2 businesses inside, one LG and 1 Telsa
    - dylan604 4y ago
      interesting. was not aware they were 4-walling the set up to keep them separated to that extent. does that say anything about how LG feels about the relationship with Tesla, or anything about how LG feels about the ability of Tesla employees? Are the batteries coming out of the Gigafactory only for use by Tesla, or are they making LG branded batteries to be sold to LG customers? If they are selling LG products, then I could see why LG would have a much more vested interest in the factory. If they are only Tesla products via a licensing deal, why would they be as interested?

checkyoursudo 4y ago

What happened in 2020 that made investors think Tesla was a tech company instead of a car company? Based on the graph in TFA, it seems like investors maybe used to price the valuation right. (Caveat: I have no idea if they did, but the valuation used to be in line with other car companies, I guess?)

rootusrootus 4y ago
> What happened in 2020 that made investors think Tesla was a tech company instead of a car company? My guess is nothing. Investors just piled on looking to make a quick buck on a rising stock, and it fed an enormous bubble. Money was looking for somewhere to go. The market is only rational over a very long timeline.
xorcist 4y ago
That was the year when major central banks said publicly that low interest rates were here to stay for a long time. The companies with the most debt were the ones to gain the most. Those promises did not age well however and valuations are still correcting from that.
trefoiled 4y ago
Not sure of the exact timeline here, but for a while Musk was explicitly promising that within a few years, true FSD would be a reality. He said you'd have to be insane not to buy a Tesla, because your car would be out there making money for you as an autonomous taxi when you're not using it. A car that pays for itself and then some would be a true paradigm shift, but as we can see now, his predictions were hot air.
sonotathrowaway 4y ago
They had a lot of money and needed somewhere to put it. Then just back-rationalized the higher multiples from there.

hsuduebc2 4y ago

Investors stated fact.

teekert 4y ago

So does this mean investors can't create new catergories and must think in absolute terms and existing boxes? How would could we, humans who know boxed thinking leads to fallacies and know the world is made of continuums in many (infinte?) dimension, use that to beat the market...?

moomin 4y ago
There’s a saying in trading “The market can stay irrational longer than you can stay solvent.”

indymike 4y ago

It's not about tech or not tech, it's about potential for growth and earnings. TSLA does not have the upside we all thought, and they are showing no signs of wanting to acquire huge swaths of market share by buying competitors while they have/had the valuation to do so. In other words, TSLA is not realizing their potential to "take over the world" and is behaving like a normal, big company in a mature market.

rootusrootus 4y ago

In the most optimistic scenario possible, it is difficult to imagine how their future is bright enough to justify a valuation on the order of 10x GM. They would have to take the entirety of the car market, which is obviously not going to happen.

jupp0r 4y ago

Investors conclude that Tesla has successfully alienated the vast majority of their potential customers via their CEO pushing baseless conspiracy theories on Twitter as visible in declining demand in the last few months since Elon unraveled.

anonporridge 4y ago

Absurd headline. It's still WAY too overpriced to conclude that investor consensus is that it's just a carmaker. Market cap has a long way to fall before that conclusion holds.

warinukraine 4y ago
Exactly. Tesla stock price should be looked at in a log plot.
- anonporridge 4y ago
  Regardless, it's still 10x overvalued if we're simply considering it to be a carmaker. It's currently 7x the value of Ford with a fraction of the production.
  - fallingknife 4y ago
    Fraction of production, but a multiple of profits, and a massive advantage in growth rate. Companies are priced on cashflow and growth rate, not production.
  - panick21_ 4y ago
    Tesla has a far better debt position, has far, far larger growth and is already making far more money then Ford. Not to mention the battery manufacture, super charger network and so on and so on. Saying that Tesla is a 'fraction of production' is just an incredibly ignorant analysis of a company.

dawnerd 4y ago

We’ve also been shown that Elon doesn’t know how to run a tech company. It’s been obvious before the Twitter takeover from all the half baked features that were shoehorned in and abandoned.

aardvarkr 4y ago
Oh no, Elon failed so hard at running tech companies that he accidentally built three of the most innovative companies of the last 20 years and became the worlds richest man… you can hate him all you want but don’t underestimate him. I hate that I have to be the voice of reason here since I really hate his god complex but I can at least respect what he’s built. That list includes X/PayPal, Tesla, and SpaceX. Don’t let your hatred blind you. He sucks but running innovative companies is his bread and butter. Twitter isn’t innovative though and I hope it crushes him.
- hannasanarion 4y ago
  Elon didn't "build" any of his businesses, he is and always was the "money guy". He provided startup capital for X.com and SpaceX, but never did any substantial technical work on either. He bought Tesla after they already had several prototypes and started cosplaying as "founder" and fired everybody who called BS.
  - megaman821 4y ago
    Any tips for the rest of us on how we can "money guy" our way to one of the richest people on earth?
    - hannasanarion 4y ago
      Step 1: Inherit a fortune from your family of modern day slavers Step 2: Have those loads of that money available during the first months of a widely anticipated telecom revolution. Step 3: pour that money into the most obviously practical use case of the brand new technology to quickly capture market share, optimally one where network effects will solidify your monopoly in perpetuity, such as payment processing

pjdemers 4y ago

Tesla, and even more Uber, were priced as if self driving cars are almost here. The idea that services like Uber without the drivers would make car ownership obsolete drove those valuations. Now that self driving cars are many decades away, instead of less than one decade away, is bring stock prices down. I always questions how fast we would see self driving cars, not because of the technology, but because of consumer demand. There was a survey a few years ago of how much more people would be willing to pay for cars that could drive themself, and the median answer was $0. This is because quite a few people gave a negative number, that is, they would pay extra for a car that could not drive itself.

helen___keller 4y ago
> There was a survey a few years ago of how much more people would be willing to pay for cars that could drive themself, and the median answer was $0. This is because quite a few people gave a negative number, that is, they would pay extra for a car that could not drive itself. I think there's an inherent distrust (which I share) of giving technology the power to end our lives with one bug. Trust in technology, in general, is pretty low right now, so that reflects back on perceived future technology where one bad steer or missed brake ruins your life. Although I happen to share this pessimism with the human aspect of driving as well, I've almost died before because I wasn't focused while driving (IRL nerd sniping basically), and I know it could happen again in the future no matter how much I want to be a safe driver. The truth is, if full self driving cars actually happened, with safety statistics better than humans and with a low barrier to entry, you can bet that people would change their opinion real fast. Much like Americans who have a revelation after experiencing European or Asian public transit, the realization that they could have an extra hour per day that was previously spent staring at a road, would be a big motivator to change opinions on technology. Add in that three of your friends already use it daily and they're not dead yet, and you rode with them and it seemed like a safe driver.
- phpisthebest 4y ago
  >>with safety statistics better than humans The problem is that will not be the expectation. It will need to be perfect or near perfect. full self driving cars can drive a million of miles with no accident, but if on 1,000,001 miles there is a accident with a death it is all over the news, and people proclaiming the technology is terrible, unsafe and not ready. In that same 1,000,001 miles humans have caused far more damange and death but that is just "normal" so....

graycrow 4y ago

Every time there is an article about Tesla, the vast majority of comments here are either too critical, too ignorant, or just FUD. It's too unbalanced, no other company (good or bad) gets such bad treatment here. I see many of the HN audience here are just repeating the media narrative without their own experience or even trying to understand the topic. Yes, Tesla is moving at the forefront of EV development, and yes, sometimes not everything is delivered as promised or on time. But on the other hand, this is HN, we're supposed to love new technology and engineering! Why so negative? It's pathetic.

wara23arish 4y ago
Yeah, some comments here also feel the need to justify that they’re not an “Elon fanboi” if they’re saying positives about tesla which shows how bad it is. The whole FSD debacle feels like people just arguing semantics and gotchas. I recently watched some videos of FSD operating in tight, hilly and unusual roads in CA. I was very impressed, its obv not perfect, but its fucking cool. People here made it sound like a scam.
- zethus 4y ago
  As a FSD purchaser, I can tell you that watching videos do not give you the full experience of sitting in the driver's seat while FSD is on. The amount of times I need to regularly overtake control in both urban and rural environments on simple turns is enough to make me not recommend the FSD option to prospective Tesla buyers. At this point, the way it's marketed, I would lean more towards scam than even gimmick.
  - misiti3780 4y ago
    But do you agree it's getting better with every update?
    - myko 4y ago
      Each update is erratic with its own set of positives and negatives, I wouldn't say there is a particular trendline. Random.

mbesto 4y ago

Obligatory "tech is not an industry, but an operating model": https://news.ycombinator.com/item?id=27693634 https://news.ycombinator.com/item?id=27693634

Maledictus 4y ago

https://archive.ph/hNC7i https://archive.ph/hNC7i

tamaharbor 4y ago

TSLA is a good trading stock. I am buying here at $110. The negativity is a good thing.

crypot 4y ago
Elon hit 11 out of 12 milestones of his 10 year pay package in 2 years and then sold $40 billion of stock to buy another company. Seems like a solid buy here.

AlbertCory 4y ago

Car companies tend to be priced (as investments) in one range. Some good, some bad. Real estate companies, same thing. Cab companies, you know the drill. So being one of those, but with computers & the web, does not permanently lift you out of your lane. Tesla is a car company, WeWork is a real estate company, and Uber/Lyft are cab companies.

fassssst 4y ago

Yea having test driven the Mach E, Ioniq 5, and XC40 Recharge there is no way I’d buy a Tesla either. We liked all of those better than Model Y and Model 3. Going with the Volvo, it just feels nicer to actually drive, and has built in Google Maps with Google voice controls.

opdahl 4y ago
Talking from experience you will not be disappointed with the XC40!
simonebrunozzi 4y ago
I am intrigued by the V60 cross country, but it seems that it's one step behind the various XC (40, 60, 90), in terms of hybrid engine, etc.

sithlord 4y ago

My opinion is that Tesla wanted to be a tech company, wanted to lead the game with autopilot and other tech features, and eventually stop making cars and license out the tech. Turns out, its not that "hard" to get to the point they are at

zzzeek 4y ago

great article, but: "And the natural Tesla-owners among the wealthy progressive set are less prepared to overlook Mr Musk’s libertarian antics at Twitter" banning journalists and parodies he doesnt like == libertarian, got it!

LarryMullins 4y ago
Real libertarianism hasn't been tried.
- myko 4y ago
  The closest attempt failed miserably: https://www.politico.com/magazine/story/2017/06/30/colorado-springs-libertarian-experiment-america-215313/ https://www.politico.com/magazine/story/2017/06/30/colorado-...

COGlory 4y ago

This is a pointless distinction. All car companies are tech companies.

colinmorelli 4y ago
It seems like you are thinking about "tech" from a value proposition standpoint (i.e. that car manufacturers are building value through technology, and thus that makes them a tech company). This article is referring to the term used in more of a financial context - referring to how the company will grow and scale. In this context, "tech company" refers to a company with very low marginal CoGS that exponentially decays with scale. The distinction is highly relevant if you're deciding how to value a stock. For whatever reason the public markets had been valuing Tesla (and every other EV startup) as though it was going to benefit from tech-like high margins and free distribution.

charles_f 4y ago

Even if the market can remain irrational for a while, in the end it very much remains driven by expectations of growth and revenue. "tech" as it's called benefits from a non-linear scale factor: serving one more person does not directly correlate to a static increase in cost, it's more derivative in nature (cost increases onefold with each order of magnitude). Add to that globalisation for free. That's how you can expect more growth and revenue from a "tech" company than from traditional industries. Service has an almost 1:1 relationship, manufacturing is kind of in the middle, where you benefit from scale but still need to purchase matter, and time from people to build stuff. In that way tesla is not a tech company. To build an additional tesla you need more people and more robots. You need to purchase steel, lithium, leather, etc. You need to ship that Tesla. Growth doesn't come to them at a derivative cost. As an investor you might judge that they might have better software, or better cars, and ride a wave of electrification that other manufacturers don't, which justified a higher price because their potential for growth is higher. That's not entirely true anymore, everyone else is producing electric cars now, at prices that are often cheaper, so their advantage is not that big anymore.

yalogin 4y ago

The only advantage Tesla has is their charging network. They were forced to build it out because they were the first car out there and they needed to provide a way for their customers to use their cars. However now it has become their strength. Without a fast charging network all the other cars are restricted to a narrow radius. The car itself should be commoditized any day now.

Faaak 4y ago
Tesla is not the only fast charging network though. In Switzerland for example there are many (Move, GoFast, Ionity, etc.) and some are even cheaper than Tesla.
- darknavi 4y ago
  In the US at least their charging network is top tier. EA is rolling out pretty wide with US highways but most non-Tesla Supercharger site's reliability is laughable right now. To the point where they simply don't work when it's cold outside [0]. We (US) really need more competition in this space. 0: https://www.youtube.com/watch?v=fq0RAjJ1PKQ https://www.youtube.com/watch?v=fq0RAjJ1PKQ
  - Symbiote 4y ago
    According to the International Energy Agency, Europe (includes UK) has 49 thousand fast chargers vs. the USA's 22 thousand. (Also 307 thousand slow chargers vs 92 thousand.) That's a much bigger difference than I would have expected. Probably the slow charger need is less in the USA with more houses and fewer apartments, but the fast charger requirement should be higher, with longer average journeys and more interstate travel. I don't often travel by car, so I'm rarely in the kinds of places a fast charger would be located, but on a recent trip to Britain I was surprised to see so many chargers. I think they were in almost all the car parks we used. The UK has 7 thousand fast chargers, 29 thousand slow. (China's numbers are incredible, 470 thousand fast chargers!) https://www.iea.org/reports/global-ev-outlook-2022/trends-in-charging-infrastructure https://www.iea.org/reports/global-ev-outlook-2022/trends-in... https://www.zap-map.com/statistics/ https://www.zap-map.com/statistics/

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specialist 4y ago

Viewing Tesla from afar, I've noticed... -- The Good: I remain excited by their large die castings, aka gigipresses. It seems to me this will lead to better fit and finish (eg. the unforgivable panel gaps). I support their cradle to grave supply chain integration. I like that they make their own tech such as chips and batteries. IIRC, Tesla leads in reducing part count and labor hours. -- The Bad: Terrible labor relations. Psychotic spokesmodel. Declining brand value. Reportedly poor quality software. Bad FSD strategy. No LIDAR, wtf? -- The Unknown: Future cost of capital? Tesla previously had some clever sources of revenue. Govt investment, incentives for EVs, selling emissions credits to other OEMs, customer provided capital thru pre-sales. What's Tesla future play? Tesla could offer auto insurance, capturing some of that idle capital, a la Buffet & Geico. Employee morale. Compensation thru stock options is fantastic for growth companies. With the recent devaluation, I'd be super pissed and looking for a new gig. Their rollout of the 4680 battery with new chemistry seems to troubled. This seems important. Can their reboot of FSD R&D catch up? New team, finally accepting need for LIDAR, etc. Rollout of Cybertruck seems contingent on 4680 transition. What's plan 'B'? Will executive board (investors) boot Elon Musk? He really seems like Tesla's ongoing biggest risk, biggest liability. ("Thank you your service, here's your award plaque, now please go away.")

Animats 4y ago

Right. Tesla's problems are car-company problems. Build quality. Production backlog. Delayed new models. Repair parts stocking. Repair center operations. Cost growth. All the dull and boring stuff they have to fix, or their market cap shrinks to what their production output justifies.

TheCleric 4y ago
Well, they have those problems AND a CEO that (at best) can be called divisive, and who staked a lot of his stock in a separate company that is also (at best) divisive.

DustinBrett 4y ago

I don't own a Tesla or stock cause I am poor, but I believe in Tesla and a lot of what Elon Musk has said in the past. I thought the Giga Factory idea was great. The Cyber Truck actually looks cool to me, mostly cause it's futuristic and different. I also don't think Elon cares that much if the stock goes down, as long as he is able to move forward with his vision, which hopefully he is able to do, because if I were being optimistic and taking him at his word, then it's an exciting future. It won't all go as planned, but nothing ever does.

ryanwaggoner 4y ago
What would it take to shake your beliefs? You of course can think whatever you want, but it seems to me that many people, myself included, once felt like you do about Tesla and Musk. But for many of us, his actions over the past several years have caused me to adjust our perspective. I no longer believe he has good intentions, or will deliver on most of what he promises. I wouldn’t buy a Tesla at this point, and I definitely would have a few years ago. I’m just curious if you’ve thought about what might make you adjust your view of him.
- myko 4y ago
  I'm in this boat. I've been happy overall with my Model S purchase but compared to luxury car makers it is overpriced and nowhere near as good. The best thing about owning a Tesla in the US is the Supercharger network. Things that turned me off: - Many times under warranty getting stupid things repaired that were clearly manufacturing problems or just boneheaded mistakes when putting the car together. Crazy for a $102k automobile. - Once warranty wore off ran into an issue where the car warned me it might not start again and it needed service immediately. Tesla scheduled my service 2 weeks out and charged me $1000, for something that when I googled it was a common problem and that the service center told me wasn't something I had done. At this point I was pretty frustrated. - Elon's antics: when he called one of the heroes who rescued those kids from the cave a pedo to sate his own ego I was flabbergasted. I've paid more attention to his actions since then and they've only made me think less of the man. I truly think he has done too many recreational drugs and has destroyed his mind.

danans 4y ago

From the perspective of addressable market opportunity, personal vehicles are a steady size and satisfied market. There are cars that you can buy from $500 junkers to $500k monstrosities, and there is little opportunity to 10x the addressable market size. Electrification of cars, while critically important for the climate, does not open an entirely new modality of life in the way that cars initially did. It's not transformative as a business model. Therefore, unless they cause a major behavioral switch that is monetizable, EVs will just eventually replace the current car market. Tesla's potential growth as an EV maker is directly proportional to traditional automakers' car market loss, to the extent that happens. Does that justify a 10 or 20x valuation? Only if you think they will reach dominant global market share of all cars. To do so they would have to have an non-replicable comparative advantage, which they have failed to demonstrate.

michpoch 4y ago

I believe the reason is much simpler - 2017-2019 was a peak of hopes for Tesla. New models, scaling up, Roadster, Semi, Cybertruck announced, the competition was weak and sky was the limit. FSD / Robotaxi was promised to be ready in matter of weeks/months. The shares were around $20-25 (today's worth, taking in account the splits). I do not see any reason why it would be worth more than that. - Roadster and Cybertruck are not only late, they were even removed from their landing page. DOA. Ford, Rivian and even GM brought solid product (pickups) to the market and the fat cake is being eaten. - Semi was very late and doesn't look too promising. - FSD turned from an advantage to a huge liability. I believe it has now a negative value (current and potential future lawsuits). - competitors started producing comparable or better cars at better prices (VW ID3, Mercedes EQE, any EVs from Hyundai/Kia) - there's a strong perception of Elon being bored with Tesla. We've got a billion dollar ship with no captain. I do not believe in Elon's political involvement having such a great impact, other than taking his attention away.

college_physics 4y ago

Manias, panics and crashes - nothing new under the sun. But actually no, in the age of 24/7 viral digital titilation, manias have been upgraded to hysterias. Once the dust of this cycle settles the tangible "tech" advances booked will actually quite meager and people will not believe how many got so excited about so little. Entire theses and books will be written about how general STEM illiteracy and FOMO coupled with unprecedented liquidity create fertile soil for all sorts of bizarre collective phenomena.

russellbeattie 4y ago

I went to CES in 2020 and there were almost no electric cars. This year, there a ton (from what I can gather from news and video coverage). Additionally, there are companies like Nvidia who are building out all the tech needed as off-the-shelf parts for the tech that Tesla has had to build itself. Cars are becoming like PCs. Tesla had its decade head start, and it did amazingly. In my opinion, however, there is no way it can compete with the entire ecosystem of high-tech plus the manufacturing knowledge of the major car companies.

ElfinTrousers 4y ago

The giveaway was all the cars they make.