4 ms·

Tesla's market cap implies that kind of zero sum game -- it's only justified by the idea that they're going to own a bigger portion of the automobile market tha

Tesla's market cap implies that kind of zero sum game -- it's only justified by the idea that they're going to own a bigger portion of the automobile market than Toyota at some point, or that they'll move into providing some kind of tech that's worth 3x Toyota's value. https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/ https://companiesmarketcap.com/automakers/largest-automakers...

BbzzbB 4y ago
Anyone who says that hasn't paid attention to the industry that spawned the most highly valued company for a while now. Apple captures like 20% of devices and 80% of the industry's profit. Not saying that's gonna happen with Tesla, I'm not making that bet, but who's to say how it will turn out they could drive outsized margin from their peers with some mix of brand (not that Elon's been helping lately), differentiators and software add-on. In an industry where revenues are very high and margins very competitive (low), each percent of margin gained is really meaningful.
bottlepalm 4y ago
Tesla has a PE of 50 which is very reasonable for a growth stock https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.#Timeline_of_production_and_sales https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.#Timelin... (growth)
TrapLord_Rhodo 4y ago
Energy storage and energy demand arbitrage, brine mining, robots, Tesla only tunnels. That's what people are betting on. Not just that Tesla will beat Toyota in electric cars.
fallingknife 4y ago
You shouldn't be comparing by market cap, but instead enterprise value because TM has massive amounts of debt. In that case TSLA is 1.7x Toyota. Also, it doesn't matter what portion of the market you have. It matters how much profit you make and TSLA has the highest margins on EVs of any company. The Iphone is massively outsold by Android, but who makes more money? In this case I would say 1.7x Toyota is very fair, as Toyota is way behind EVs and is likely to get absolutely smoked by TSLA and VW in the EV transition.
- sidibe 4y ago
  Tesla margins are going to plummet with their price cuts. Enjoy the last week of being able to use that argument
- wwweston 4y ago
  > In that case TSLA is 1.7x Toyota While valued at 3x. The valuation still doesn't add up, though the debt issue is a decent point. > It matters how much profit you make and TSLA has the highest margins on EVs of any company. They've certainly enjoyed high margins while they were the primary game in EV town. But they're not anymore, and it remains to be seen what distinguishing features will let them command high margins in a newly competitive market. The slashed prices seem to indicate they're not sure they can do this either. > Toyota is way behind EVs Toyota had EVs on the road before TSLA was founded. They didn't focus on the hybrid game because they couldn't do it. They did it because they understood hybrids would (and did) dominate practical concerns during a transition period, and they were rewarded pretty strongly for that bet up through 2020 given that market's greater size than straight EVs through that time and their majority ownership of that market. They'll handle the shift to EV emphasis just fine. By somewhere around 2030 they'll probably be selling more EVs than TSLA and likely with similar margins but more effective manufacturing because they're very, very good at that.
  - fallingknife 4y ago
    Hybrids are not EVs. They are ICE cars with bigger batteries (Prius plugin has a 9kwh battery, Model 3 is 50 - 80). Toyota didn't get into the EV game late as some master strategy. That's just cope. They screwed up, and they know it, and are scrambling to catch up.
    - wwweston 4y ago
      > Hybrids are not EVs. My statement that Toyota had EVs on the road before Tesla was born is not based on any degree of confusion between hybrids and EVs. https://en.wikipedia.org/wiki/Toyota_RAV4_EV https://en.wikipedia.org/wiki/Toyota_RAV4_EV You can argue about specific capabilities, you could even argue about what it means that Toyota worked with Tesla on models in the 2010s. But whatever you think of Toyota's strategy since 1997, it was a choice, not a lack of capability, not ignoring the capacities of pure EV tech. As for whether they "screwed up," well, hybrids proved to be pretty popular, probably around twice as many of them sold as EVs through 2020ish, and Toyota dominated if not outright made that market. Even if hybrids eventually decline, that kind of win over two decades is something most businesses would take gladly, and my bet would be that hybrids will remain a non-trivial portion of the market even as EVs grow. There's going to be markets/applications where charging is inconvenient or unreliable for a while yet. Meanwhile, since (a) pure EVs are easier from an engineering standpoint and (b) Toyota has been making investments in the fundamental tech and engineering capacity for 25 years and (c) they're over a decade into plug-in hybrid territory (where the difference between hybrids and EVs gets especially narrow) and (d) their public roadmap has them ramping up ... I don't think the game they're playing is best described as "catch up" so much as "good timing." But hey, you want to bet on Tesla, be my guest. I thought it was a good bet myself 12 years ago, not sorry. Less so since 2020.
beambot 4y ago
Market cap is a function of revenue (cars sold) & margins, not just revenue. Tesla PE is 50x, and Toyota PE is 10x. Purely on the basis of earnings: If Tesla can 5x their sales (in a rapidly expanding market) while maintaining some of their pricing power, they'll be comparable to Toyota purely on the basis of multiples. The sales needn't come exclusively from automobiles either... And then there's equity-to-debt: Tesla has $3B USD in net debt; Toyota has $153B USD in net debt -- i.e. Toyota's enterprise value would be significantly higher if they had Tesla's debt load.
- wwweston 4y ago
  Debt is a decent point. Margins are not going to hold for Tesla. They had the privilege of being the only strong EV vehicle on the market. Those days are gone. They had a certain cache as a luxury-ideal brand; that's been deeply eroded by a reputation for iffy finish quality and a certain high-profile personality's choices. And if their falling prices are any indication, Tesla knows that its high margin days are numbered if not outright over, and they're headed towards being just another manufacturer.
stetrain 4y ago
This article is about Tesla's share of US EV sales going from 72% to 58%. Toyota's US market share for all autos is around 15%. So I don't think this data point says much about whether Tesla will end up with a larger slice of the pie than Toyota currently has, at least in the US.
blehn 4y ago
It's the latter. They're already in businesses outside of cars. I think bullish investors think of Tesla's potential as Toyota+Exxon+???.
- ulfw 4y ago
  How are they Exxon? They aren't vertically integrated to the same extend as a producer, explorer, refiner and distributor of oil such as Exxon. Super chargers are dispensers. They get the electricity from somewhere else. And they most of the time don't own the land the dispensers are built on either. https://insideevs.com/news/318545/tech-crunch-what-it-takes-to-be-a-tesla-supercharger-partner/ https://insideevs.com/news/318545/tech-crunch-what-it-takes-...

BbzzbB 4y ago

Anyone who says that hasn't paid attention to the industry that spawned the most highly valued company for a while now. Apple captures like 20% of devices and 80% of the industry's profit. Not saying that's gonna happen with Tesla, I'm not making that bet, but who's to say how it will turn out they could drive outsized margin from their peers with some mix of brand (not that Elon's been helping lately), differentiators and software add-on. In an industry where revenues are very high and margins very competitive (low), each percent of margin gained is really meaningful.

bottlepalm 4y ago

Tesla has a PE of 50 which is very reasonable for a growth stock https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.#Timeline_of_production_and_sales https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.#Timelin... (growth)

TrapLord_Rhodo 4y ago

Energy storage and energy demand arbitrage, brine mining, robots, Tesla only tunnels. That's what people are betting on. Not just that Tesla will beat Toyota in electric cars.

fallingknife 4y ago

You shouldn't be comparing by market cap, but instead enterprise value because TM has massive amounts of debt. In that case TSLA is 1.7x Toyota. Also, it doesn't matter what portion of the market you have. It matters how much profit you make and TSLA has the highest margins on EVs of any company. The Iphone is massively outsold by Android, but who makes more money? In this case I would say 1.7x Toyota is very fair, as Toyota is way behind EVs and is likely to get absolutely smoked by TSLA and VW in the EV transition.

sidibe 4y ago
Tesla margins are going to plummet with their price cuts. Enjoy the last week of being able to use that argument
wwweston 4y ago
> In that case TSLA is 1.7x Toyota While valued at 3x. The valuation still doesn't add up, though the debt issue is a decent point. > It matters how much profit you make and TSLA has the highest margins on EVs of any company. They've certainly enjoyed high margins while they were the primary game in EV town. But they're not anymore, and it remains to be seen what distinguishing features will let them command high margins in a newly competitive market. The slashed prices seem to indicate they're not sure they can do this either. > Toyota is way behind EVs Toyota had EVs on the road before TSLA was founded. They didn't focus on the hybrid game because they couldn't do it. They did it because they understood hybrids would (and did) dominate practical concerns during a transition period, and they were rewarded pretty strongly for that bet up through 2020 given that market's greater size than straight EVs through that time and their majority ownership of that market. They'll handle the shift to EV emphasis just fine. By somewhere around 2030 they'll probably be selling more EVs than TSLA and likely with similar margins but more effective manufacturing because they're very, very good at that.
- fallingknife 4y ago
  Hybrids are not EVs. They are ICE cars with bigger batteries (Prius plugin has a 9kwh battery, Model 3 is 50 - 80). Toyota didn't get into the EV game late as some master strategy. That's just cope. They screwed up, and they know it, and are scrambling to catch up.
  - wwweston 4y ago
    > Hybrids are not EVs. My statement that Toyota had EVs on the road before Tesla was born is not based on any degree of confusion between hybrids and EVs. https://en.wikipedia.org/wiki/Toyota_RAV4_EV https://en.wikipedia.org/wiki/Toyota_RAV4_EV You can argue about specific capabilities, you could even argue about what it means that Toyota worked with Tesla on models in the 2010s. But whatever you think of Toyota's strategy since 1997, it was a choice, not a lack of capability, not ignoring the capacities of pure EV tech. As for whether they "screwed up," well, hybrids proved to be pretty popular, probably around twice as many of them sold as EVs through 2020ish, and Toyota dominated if not outright made that market. Even if hybrids eventually decline, that kind of win over two decades is something most businesses would take gladly, and my bet would be that hybrids will remain a non-trivial portion of the market even as EVs grow. There's going to be markets/applications where charging is inconvenient or unreliable for a while yet. Meanwhile, since (a) pure EVs are easier from an engineering standpoint and (b) Toyota has been making investments in the fundamental tech and engineering capacity for 25 years and (c) they're over a decade into plug-in hybrid territory (where the difference between hybrids and EVs gets especially narrow) and (d) their public roadmap has them ramping up ... I don't think the game they're playing is best described as "catch up" so much as "good timing." But hey, you want to bet on Tesla, be my guest. I thought it was a good bet myself 12 years ago, not sorry. Less so since 2020.

beambot 4y ago

Market cap is a function of revenue (cars sold) & margins, not just revenue. Tesla PE is 50x, and Toyota PE is 10x. Purely on the basis of earnings: If Tesla can 5x their sales (in a rapidly expanding market) while maintaining some of their pricing power, they'll be comparable to Toyota purely on the basis of multiples. The sales needn't come exclusively from automobiles either... And then there's equity-to-debt: Tesla has $3B USD in net debt; Toyota has $153B USD in net debt -- i.e. Toyota's enterprise value would be significantly higher if they had Tesla's debt load.

wwweston 4y ago
Debt is a decent point. Margins are not going to hold for Tesla. They had the privilege of being the only strong EV vehicle on the market. Those days are gone. They had a certain cache as a luxury-ideal brand; that's been deeply eroded by a reputation for iffy finish quality and a certain high-profile personality's choices. And if their falling prices are any indication, Tesla knows that its high margin days are numbered if not outright over, and they're headed towards being just another manufacturer.

stetrain 4y ago

This article is about Tesla's share of US EV sales going from 72% to 58%. Toyota's US market share for all autos is around 15%. So I don't think this data point says much about whether Tesla will end up with a larger slice of the pie than Toyota currently has, at least in the US.

blehn 4y ago

It's the latter. They're already in businesses outside of cars. I think bullish investors think of Tesla's potential as Toyota+Exxon+???.

ulfw 4y ago
How are they Exxon? They aren't vertically integrated to the same extend as a producer, explorer, refiner and distributor of oil such as Exxon. Super chargers are dispensers. They get the electricity from somewhere else. And they most of the time don't own the land the dispensers are built on either. https://insideevs.com/news/318545/tech-crunch-what-it-takes-to-be-a-tesla-supercharger-partner/ https://insideevs.com/news/318545/tech-crunch-what-it-takes-...