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Comment by beat | Hacker News Reader

Tesla is a growth company that could be a giant. BMW is a stable old blue chip. Different market values entirely.

At the individual car level, Tesla S is priced to match mid/high end sedans from BMW, Mercedes, and Audi, so that's the quality level they need to hit. And such quality isn't about reliability so much as fit and finish. Tesla is doing extremely well against very established competition in that regard.

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Tesla' market cap is $30B. GM is $53B. Ford is $61B. If you're buying Tesla, you have to believe that they will become a huge player, and soon. They can't just be bigger, they have to be huge or else you're radically overpaying for a niche producer.

I want to play the game where we can make a fortune on high-growth stocks without any risk.

Become a bank and issue IPO's :)

Don't forget batteries. Rolls-Royce did well with jet engines, probably better than cars.

Agreed and don't forget licensing. OK so TSLA makes squeeky sunroofs, who cares, they can sell batteries and controllers and motors to ... construction crane companies or something. You know all the weird details of making a tow truck, cool, here's the parts to make it electric.

Happens all the time in the automotive industry. The first "american" hatchback car I ever drove had a nice VW engine. Ironically it was something to do with low emissions.

Well, Tesla buys their batteries from Panasonic. And the motor is a standard induction motor, not very different from what the actual (Nikolai) Tesla invented back in 1887. I agree that their control system is going to be fairly complicated, since induction motors require the AC frequency to be a function of the torque as well as the RPM.

But then most applications outside "quick 0-60 pure electric car" use brushless DC motors instead, where the controllers are simpler. Even the insane McLaren P1 hybrid, which eats Teslas for breakfast, uses a brushless DC motor. So I'm not sure there is as much of a market for Tesla's expertise as you'd think.

There are standard components, and then there's the work done to make and certify them as EV-ready. Tesla currently sells components to Daimler-Benz and Toyota.

I had no idea Tesla but the batteries from Panasonic, I thought the entire point of Tesla is that they build them in house? And what about the Gigafactory?

If it's all truly Panasonic's tech, I am surprised so many people put their money into Tesla.

Panasonic is a major investor and partner in the Gigafactory. They're also providing the initial cell manufacturing technology and over a hundred Panasonic employees will be on site helping with the setup.

With that thought, I wonder if GE, Siemens, Mitsubishi, etc will move into the market of creating electric motors for automotive use. They all have a lot of experience in electric motors.

Except it is Panasonic who makes Tesla's cells. The "batteries" can't really be used for much else because they're so customized to the car.

http://pop.h-cdn.co/assets/15/07/980x490/landscape_142375080...

Tesla Home isn't doing too hot, as far as I can tell. Even SolarCity isn't recommending it to anybody... and SolarCity is Elon's baby as well!

Panasonic may make the general-purpose cells, but that doesn't mean that Tesla can't add value by making them more suitable for the EV market. In fact, it does sell components to other car companies: https://en.wikipedia.org/wiki/Tesla_Motors#Technology

Aren't the cells just 18650s?

Well, be huge, or be smaller and maintain huge margins. That's also an avenue.

Exactly... it isn't that GM-style revenues are priced into the stock it is that much greater than GM-style margins are priced in.

Whether they will achieve that is a different (and still open) question.

Tesla is showing what a car can be - Excellent UX, a nontraditional but really nice drivetrain, a good UI for the secondary systems with frequent software upgrades, etc.

It's not hard to see the trend - it's been coming for the last 15 years at least. All drivetrains will be electric, and connected to a battery and optionally a range extender of some sort. The control panel will be all big screens and apps.

Meanwhile, the existing manufacturer are perfecting the ultimate gearbox. They are in at least partial denial now, but they will soon need to dismantle those investments and some others to stay alive. Ex, Audi that has kept a really complicated gearbox instead of doing what Mitsubishi did, using a fixed gear system and a serial hybrid approach.

(To be fair, they have nothing to gain from these changes, they just want to stay slightly better than the rest.)

The bet against them is that some of them will not be able to reinvent themselves and then wither out into obsolescence.

I think that this risk might not be fully included in the price right now.

>> "The control panel will be all big screens and apps."

Noooo - tactile feedback is so important in vehicle subsystem control! [0] Please do not take away my knobs and dials.

[0] http://www.ecnmag.com/article/2014/01/keeping-feel-automotiv...

Not to ruin your day, but they're taking away your knobs, dials, and control of the vehicle.

Honestly I might not mind being unable to control the vehicle as long as I could adjust the temperature with a hardware control.

I think the endgame of a car is an artificial womb - moving you around, self-adjusting for maximum personal comfort - but with you being the one that tells it where to go.

This is actually ruining my day and night, idiotic move to impress... who actually? Soccer mums? Drivers need to focus on the road constantly, if i look away, there can be atomic blast right ahead of me and I will not notice it properly. Even a glance for 1-2s can have grave consequences in heavy traffic.

Knobs are excellent thing. Touch screen is good only for passengers. In my knob-full car i can adjust most things without a glance away from road. Good luck hunting some effin' ipad screen

I agree. But a big oled screen for a map, settings, and secondary systems can never be wrong can it.

It reminds me of the transition from analog recording to digital recording. The finest analog recording technologies were developed just before the switch.

That's probably mostly because we stopped trying to invent finer analog technologies once we got digital.

Check out the PEG ratio, which factors in growth. Rapid and sustained growth is not guaranteed and bad press can inhibit it. But you need that growth to justify the valuation. Priced for perfection.

Priced to be the supplier for every other vehicle company that needs batteries, every utility that needs utility scale battery storage, and possibly even an Uber competitor.

Properly priced.

Right. So when tesla appears to stumble on this path, that is going to impact the share price more severely than it would a company whose value is more inline with its peers.

But Tesla hasn't stumbled on this path, its stumbled on its vehicles. The vehicles have simply been a method to bootstrap their Supercharger network and Gigafactory, which are both on schedule. Arguably, once enough vehicle manufacturers were producing electric cars, Tesla could close up their vehicle manufacturing business if they were so inclined (and exist solely to provide battery packs).

So their success in these new markets is a foregone conclusion at this point and stumbling in their most significant product doesn't affect it?

Ok. I don't buy that but it's a perfectly reasonable assertion. Buy the dips if you believe that.

> Buy the dips if you believe that.

I do!

When it comes to batteries, Tesla are more of an integrator than a manufacturer - they package up commercially available, off-the-shelf cells into batteries with some cooling and a mostly off-the-shelf battery management solution (based around a Texas Instruments IC marketed specifically for battery management in electric cars, the BQ76PL536A). That's not a high-margin business to be in because there's not much of a barrier to entry for new competitors.

Isn't PEG just based on their existing growth within the luxury market, whereas they have publicized plans of entering mass market?

No, it's their PE ratio divided by their growth rate.

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