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Looking at the stock price, it still trades at 110x P/E and 16x price to revenue. I wonder what the market is pricing this on. Future margin expansion? Business

Looking at the stock price, it still trades at 110x P/E and 16x price to revenue. I wonder what the market is pricing this on. Future margin expansion? Businesses like robotaxis?

toomuchtodo 2y ago
Likely robotaxis and other reality distortion ("hope"). Cybertruck sales have slowed [1], and while Model Y sales are still somewhat robust, BYD is within spitting distance of Tesla sales [2]. Something interesting to note is that there are no tariffs applied to batteries for stationary storage in the US, which is where Tesla is seeing good margins and overwhelming demand (California and Texas, primarily [3]), although I don't see project developers leveraging this yet at scale. My analysis: They squandered their lead, and I am far more confident in Waymo vs Tesla to deliver on autonomy as of this comment. US tariffs mean US consumers are held captive to US EV production and availability, but any worldwide TAM (without domestic auto industry to defend with tariffs) will be captured by BYD at their current expansion rates [4] [5] [6]. This will force legacy automakers to contract (VW [7] [8]) or merge (Honda, Nissan, Mitsubishi [9]) to attempt to survive what is coming for them. > Last fall in Malta, BYD began selling the Atto 3, an all-electric compact crossover. Strip away the company’s futuristic logo, and it looks almost indistinguishable from other small, sporty SUVs. But inside it’s full of treats, including heated seats in vegan leather and a 360-degree rotating touchscreen. The 60-kilowatt-hour battery gives it a range of 260 miles, enough to circle Malta’s main island twice. And by European standards, it’s inexpensive, at about $28,000. It’s a novelty in Malta. But the real reason BYD is entering the European Union’s tiniest member state? The company’s happy place is emerging markets and countries with no domestic auto industry to defend: “You can basically describe them as a ‘chicken rib market,’ ” says Yu Zhang, the managing director of consulting firm AutoForesight in Shanghai. “All the chicken ribs added up together, it’s more than 10 million cars.” > After increasing its annual sales in China 15 times over, to 3 million cars in only three years, BYD is now exporting to roughly 95 markets, including 20 new ones this year. The company is building, has recently opened or has announced plans for assembly plants outside China in 10 countries on three continents. The speed and scope of this expansion have caught the global auto industry off guard and triggered protectionist tariffs in the US and EU, where policymakers fear Chinese players such as BYD will, in the words of Elon Musk, “demolish” their domestic automakers. [1] https://cleantechnica.com/2024/12/23/demand-for-tesla-cybertruck-is-weakening/ https://cleantechnica.com/2024/12/23/demand-for-tesla-cybert... ("Cleantechnica: Demand For Tesla Cybertruck Is Weakening") [2] https://www.bbc.com/news/articles/c36edjp1l9ko https://www.bbc.com/news/articles/c36edjp1l9ko ("BBC: China's BYD closes in on Tesla as sales jump") [3] https://web.archive.org/web/20250102025145/https://www.eia.gov/electricity/monthly/images/figure_6_01_c.png https://web.archive.org/web/20250102025145/https://www.eia.g... (gray circles are planned US storage deployments over the next twelve months as reported to the US EIA) [4] https://www.bloomberg.com/news/features/2024-10-16/electric-car-brand-byd-leads-race-to-make-cheap-evs-despite-tariffs https://www.bloomberg.com/news/features/2024-10-16/electric-... | https://archive.today/uJLa4 https://archive.today/uJLa4 ("Bloomberg: BYD Is Winning the Global Race to Make Cheaper EVs") [5] https://news.ycombinator.com/item?id=42228138 https://news.ycombinator.com/item?id=42228138 ("HN: The size of BYD's factory") [6] https://www.visualcapitalist.com/mapped-where-tesla-and-byd-make-their-cars/ https://www.visualcapitalist.com/mapped-where-tesla-and-byd-... ("Mapped: Where Tesla and BYD Make Their Cars") [7] https://www.volkswagen-group.com/en/press-releases/agreement-reached-volkswagen-ag-positions-itself-competitively-for-the-future-18911 https://www.volkswagen-group.com/en/press-releases/agreement... ("Agreement reached: Volkswagen AG positions itself competitively for the future") [8] https://www.bloomberg.com/news/articles/2024-10-28/vw-eyes-closing-three-german-factories-in-cost-cutting-push https://www.bloomberg.com/news/articles/2024-10-28/vw-eyes-c... | https://archive.today/QpqQ8 https://archive.today/QpqQ8 ("Bloomberg: VW Seeks Unprecedented Plant Closings as Auto Crisis Deepens") [9] https://global.honda/en/newsroom/news/2024/c241223ceng.html https://global.honda/en/newsroom/news/2024/c241223ceng.html ("Nissan, Honda, and Mitsubishi Motors sign MOU on collaborative considerations")
- InkCanon 2y ago
  Good analysis. I suspect the same, that ten years from now Tesla will rule the US but be surrounded by a sea of BYDs
- toomuchtodo 2y ago
  Additional citation: https://wolfstreet.com/2025/01/03/ugly-charts-of-us-auto-sales-2024-stellantis-spirals-into-catastrophe-gm-toyota-ford-honda-rise-but-far-below-their-peaks-hyundai-kia-sets-record-ev-sales-10-despite-teslas-dip/ https://wolfstreet.com/2025/01/03/ugly-charts-of-us-auto-sal... ("Ugly Charts of US Auto Sales, 2024: Stellantis Spirals into Catastrophe, GM, Toyota, Ford, Honda Rise but far Below Peaks. Hyundai-Kia Sets Record. EV Sales +10% despite Tesla’s Dip")
jerlam 2y ago
Expected regulatory capture, due to Elon injecting himself into the US government, despite expected cancellation of many EV subsidies. If you look at Tesla's stock price, it had a huge bump at and after the US election. The robotaxi reveal actually caused a minor drop.

Looking at the stock price, it still trades at 110x P/E and 16x price to revenue. I wonder what the market is pricing this on. Future margin expansion? Businesses like robotaxis?

toomuchtodo 2y ago

Likely robotaxis and other reality distortion ("hope"). Cybertruck sales have slowed [1], and while Model Y sales are still somewhat robust, BYD is within spitting distance of Tesla sales [2]. Something interesting to note is that there are no tariffs applied to batteries for stationary storage in the US, which is where Tesla is seeing good margins and overwhelming demand (California and Texas, primarily [3]), although I don't see project developers leveraging this yet at scale. My analysis: They squandered their lead, and I am far more confident in Waymo vs Tesla to deliver on autonomy as of this comment. US tariffs mean US consumers are held captive to US EV production and availability, but any worldwide TAM (without domestic auto industry to defend with tariffs) will be captured by BYD at their current expansion rates [4] [5] [6]. This will force legacy automakers to contract (VW [7] [8]) or merge (Honda, Nissan, Mitsubishi [9]) to attempt to survive what is coming for them. > Last fall in Malta, BYD began selling the Atto 3, an all-electric compact crossover. Strip away the company’s futuristic logo, and it looks almost indistinguishable from other small, sporty SUVs. But inside it’s full of treats, including heated seats in vegan leather and a 360-degree rotating touchscreen. The 60-kilowatt-hour battery gives it a range of 260 miles, enough to circle Malta’s main island twice. And by European standards, it’s inexpensive, at about $28,000. It’s a novelty in Malta. But the real reason BYD is entering the European Union’s tiniest member state? The company’s happy place is emerging markets and countries with no domestic auto industry to defend: “You can basically describe them as a ‘chicken rib market,’ ” says Yu Zhang, the managing director of consulting firm AutoForesight in Shanghai. “All the chicken ribs added up together, it’s more than 10 million cars.” > After increasing its annual sales in China 15 times over, to 3 million cars in only three years, BYD is now exporting to roughly 95 markets, including 20 new ones this year. The company is building, has recently opened or has announced plans for assembly plants outside China in 10 countries on three continents. The speed and scope of this expansion have caught the global auto industry off guard and triggered protectionist tariffs in the US and EU, where policymakers fear Chinese players such as BYD will, in the words of Elon Musk, “demolish” their domestic automakers. [1] https://cleantechnica.com/2024/12/23/demand-for-tesla-cybertruck-is-weakening/ https://cleantechnica.com/2024/12/23/demand-for-tesla-cybert... ("Cleantechnica: Demand For Tesla Cybertruck Is Weakening") [2] https://www.bbc.com/news/articles/c36edjp1l9ko https://www.bbc.com/news/articles/c36edjp1l9ko ("BBC: China's BYD closes in on Tesla as sales jump") [3] https://web.archive.org/web/20250102025145/https://www.eia.gov/electricity/monthly/images/figure_6_01_c.png https://web.archive.org/web/20250102025145/https://www.eia.g... (gray circles are planned US storage deployments over the next twelve months as reported to the US EIA) [4] https://www.bloomberg.com/news/features/2024-10-16/electric-car-brand-byd-leads-race-to-make-cheap-evs-despite-tariffs https://www.bloomberg.com/news/features/2024-10-16/electric-... | https://archive.today/uJLa4 https://archive.today/uJLa4 ("Bloomberg: BYD Is Winning the Global Race to Make Cheaper EVs") [5] https://news.ycombinator.com/item?id=42228138 https://news.ycombinator.com/item?id=42228138 ("HN: The size of BYD's factory") [6] https://www.visualcapitalist.com/mapped-where-tesla-and-byd-make-their-cars/ https://www.visualcapitalist.com/mapped-where-tesla-and-byd-... ("Mapped: Where Tesla and BYD Make Their Cars") [7] https://www.volkswagen-group.com/en/press-releases/agreement-reached-volkswagen-ag-positions-itself-competitively-for-the-future-18911 https://www.volkswagen-group.com/en/press-releases/agreement... ("Agreement reached: Volkswagen AG positions itself competitively for the future") [8] https://www.bloomberg.com/news/articles/2024-10-28/vw-eyes-closing-three-german-factories-in-cost-cutting-push https://www.bloomberg.com/news/articles/2024-10-28/vw-eyes-c... | https://archive.today/QpqQ8 https://archive.today/QpqQ8 ("Bloomberg: VW Seeks Unprecedented Plant Closings as Auto Crisis Deepens") [9] https://global.honda/en/newsroom/news/2024/c241223ceng.html https://global.honda/en/newsroom/news/2024/c241223ceng.html ("Nissan, Honda, and Mitsubishi Motors sign MOU on collaborative considerations")

InkCanon 2y ago
Good analysis. I suspect the same, that ten years from now Tesla will rule the US but be surrounded by a sea of BYDs
toomuchtodo 2y ago
Additional citation: https://wolfstreet.com/2025/01/03/ugly-charts-of-us-auto-sales-2024-stellantis-spirals-into-catastrophe-gm-toyota-ford-honda-rise-but-far-below-their-peaks-hyundai-kia-sets-record-ev-sales-10-despite-teslas-dip/ https://wolfstreet.com/2025/01/03/ugly-charts-of-us-auto-sal... ("Ugly Charts of US Auto Sales, 2024: Stellantis Spirals into Catastrophe, GM, Toyota, Ford, Honda Rise but far Below Peaks. Hyundai-Kia Sets Record. EV Sales +10% despite Tesla’s Dip")

jerlam 2y ago

Expected regulatory capture, due to Elon injecting himself into the US government, despite expected cancellation of many EV subsidies. If you look at Tesla's stock price, it had a huge bump at and after the US election. The robotaxi reveal actually caused a minor drop.