Tesla is close to becoming the most valuable car company
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I was a (small time) shareholder from around 2013 until last year when I happily liquidated my position and put in an order for a Model 3.
I don't think anyone can really say whether this share price is justified even with all the future growth priced in. This is a company that has been at least partly responsible for some quite fundamental changes in mobility, and they're nowhere done yet. (I'm more excited about the Semi than Cybertruck).
They've also helped drive the price/watt of batteries right down which is having a multitude of knock-on effects across many industries. Without Tesla, would we have seen battery powered airplanes starting to be built? Maybe we would, but they would probably be at the least more expensive.
I can't wait to see what the future holds for Tesla, and despite all his shortcomings, I'm happy Musk is still in charge. This all simply would not have happened without his insane drive and determination.
(Strangely, HN, that loved Apple in Steve Jobs' glory days, seems to have a lot of irrational hatred for Tesla).
Jobs was vocal in public about products they have already launched. They delivered products that were obviously best at what they were intended for. Musk is vocal about - well, apparently everything - and ICE:s are still a superior option for a large category of car owners.
I think the biggest gripe is probably about overpromising autopilot capability years before it's actually production ready.
Still, Musk is up there with Ford on a list of industrialists who made a dent in the universe in my books.
Very fair! This has been a pretty spectacular overpromise. I firmly believe FSD will get here eventually but the timeframes were ridiculously off.
What I also read is an insane amount of comment on every SpaceX and Tesla post here about how bad it is to have touchscreens in cars or spacecraft, and how huge swathes of HN commenters are absolutely convinced touchscreens are dangerous, regressive, etc. Even when professional pilots chime in about how they're used in aircraft. Even when SpaceX designed their Dragon controls in consultation with the veteran astronauts who use them, HN was convinced this was bad, and don't even mention they dared used Chromium!
(Not really a Tesla specific thing using touchscreens but seems to be a very popular complaint about them here.)
Well ... depends.
Airliner FMS systems are awesome.
Small planes usually have Garmin 430 and 530 GPS units, which are not touchscreen (they have side buttons), and have shitty UIs. And those eye-watering navigation database update prices ... thousands per year.
https://trl.co.uk/reports/interacting-android-auto-and-apple...
Even when professional pilots chime in about how they're used in aircraft.
Flying an aircraft is a very different experience to driving a car. The procedures, instruments and control systems are so different that I'm not sure there's really any meaningful comparison at all.
As for the touchscreens, so much of that speaks to Musk's credibility. He seems to make decisions, like with Autopilot above, more for PR than for safety. I can see why people are going to be skeptical when he claims touchscreens are best for space usage/
I think the narrative that they are always late on everything is wrong. The set insane goals and most of the time they miss them, but they are still fast even in those cases.
I bought stocks for the first time right in the heart of the Covid-19 crisis, Tesla is riding two massive waves of change, electrification and self-driving. It will take 10-15 years to shake out completely but I think Tesla will be the big winner of this shakeout.
You do need some with the personality of Musk to take on the current automobile industry. But this also means Musk needs to be always in the news with a lot of unfulfilled claims: https://elonmusk.today/
It is absolute insanity.
Personally, based on a very superficial understanding of economy, I... don't actually mind - as long as their personnel, suppliers, and taxes are paid timely and adequately, they are doing their 'contribution' to the economy.
It appears that technically, your statement is incorrect in that they've produced some prototypes. And they have orders (not sure if that counts as sales), but they've not actually delivered a production vehicle yet. Which makes their market cap seem insane, but it seems like most publicly traded companies have had insane market caps since the 90s.
Usually public companies go threw funding rounds, this company knew they couldn't convince any real funds.
They claim to have battery technology that is way ahead of anybody else, and that just sounds like a nonsense claim. They basically do nothing inhouse, say about Tesla what you want but they have technical skills.
Seems to me Nikola is basically a scam designed to be as Tesla like as possible but with a little twist to make it seem just different enough.
The parts of this conglomerate are:
* The vehicle manufacturing. This one is obvious - they have a big lead on other automakers in producing EVs and this lead is not closing. They will keep expanding their portfolio of models and markets until they're near the top.
* The mobility service. This will grow out of their Autopilot efforts and take on Uber et all. This will be much wider though, as it will include public transit services with the Boring Co, private cars, and even taking on rail with fleets of Semis.
* The electricity utility business. This one is simple as well - there's a ton of cheap solar and wind power. Pairing it with batteries and Tesla's management software means they'll be providing the infrastructure utilities use. They likely won't become a utility themselves, as that requires local certifications etc.
* The homes business. Your home needs a battery, a roof that makes power and a geothermal HVAC system. Tesla wants to sell them to you all tied up with great software.
* Planes. Electric flight needs the best batteries and electric motors, Tesla would be pretty crazy not to pursue this. No, they're not going to take on Boeing or Airbus, but small, regional commuter planes (range of several hundred km) are within reach in 10 years.
Anyway, it's pretty simple. If you believe the above, go long. If you think it's BS, go short. If you think this is a bit too out-there/WTF, then just sit back and enjoy the show.
If you were to price this company as a combination of auto (Ford/GM) + energy (Chevron) + ridesharing? (Uber/Lyft), then you could maybe justify this valuation in the long run, but Tesla is yet to really prove any real revenue in energy and ridesharing, at scale. The current value is pure hype and expectation, and remains to be seen who ends up being correct in the long run.
at least as a car company
Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had.
Tesla is a car company.
Plus a static energy provider (powerwall, powerpack, megapack).
Plus a solar provider (solar panels + solar tiles)
Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone.
Plus a software company. Even if you want to joke about AP not being full self driving. Find a car you can buy right now that does all of the things that a Tesla on autopilot can do (in specific, stop lights / signs, smart summon, and navigate on autopilot). Last I checked, the closest was Mercedes's supercruise, which is very good and still doesn't have 1/2 of the functionality of Tesla. The OTA updates really are game changing. When I purchased my Model 3 in November 2018, it lacked an alarm system (Sentry Mode), dashcam (Tesla Cam), etc. I got this and a ton more functionality, for free via OTA updates. Unlike every other automotive company, I didn't have to wait for their next year's model. This is a radical rethink of the industry.
Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are.
I don't doubt that Tesla is a great car, I plan to buy one myself. The question is whether this justifies that kind of valuation. Cars are a commodity, and for as long as they've existed, there have always been great cars, shitty cars, and everything in between.
Re: cybertruck. Ford already has already demonstrated its F-series all electric pickup prototype. I don't doubt that the semi truck market is huge, but again I ask: what specifically does Tesla have that would make it a monopoly here? Seems like another commodity market.
> Plus a static energy provider (powerwall, powerpack, megapack).
> Plus a solar provider (solar panels + solar tiles)
In theory, yes, but in practice they haven't sold much of this at all. Remember, the current revenue growth is on the back of their car revenues. Vast majority of their opex is in car manufacturing and sales.
> Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone.
This is a strong point, but I'm not sure that it's really that much of a competitive advantage. While you're right that Tesla has a huge lead on everyone, that's just because the vast majority of consumers still drive ICE cars, and get the energy for that from Chevron/Arco/Shell/BP pumps sprinkled all over the world. The world will gradually shift away from ICE -> electric, but installing electric chargers at gas pumps isn't a huge lift for your Chevrons of the world — they already have the humans, capital, and real estate.
> Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are.
I don't doubt that Tesla will continue to exist and be hugely successful — I'm even rooting for Elon because he is IMO the most interesting industrialist of all time. It still doesn't necessarily mean that they are worth $200B+.
Tesla has demonstrated 25% margin, and their Model 3 is still a nightmare to manufacture. The Cybertruck promised to get there too. The Model Y based on breakdowns is pretty well designed to make good margin.
One argument one has to make is not why is Tesla so high, but why are the others so low. They have gigantic capital stock that is dropping in value like a stone, the used car market will be fludded with insane amounts of old ICEs. These companies have thin margins already, and they will need to make huge investments in batteries and new product lines to compete. All of that with a stock market that doesn't make it easy for them to raise money.
We saw this during Covid, companies like Ford and GM start dropping 10s of billions as soon as their margins slide.
Even given all of those good things, Tesla is still high. For me, the only thing that can make it worth it, is the taxi fleet idea. If you don't believe in that, then the evaluation is way to high.
I bought my stock at basically the lowest point in Covid, but I think I'm gone hold it longer. Just because even if you don't believe in the fundamentals, I think the hype cycle is at a peak yet.
And I think I believe in the taxi idea, simply because whatever people think Elon knows about the potential profit and is doing everything he can to get there. Others simply don't have that conviction and drive.
Just want to point out that Toyota Motor Company's gross profit has been at about $50 billion per year. That's their profit.
Honda's gross profit has been about $30 billion per year.
Ford's annual gross profit has been teetering $20-25B per year.
Tesla's gross profit is $4B (and increasing).
This isn't to knock Tesla, I just want to make sure you're not under-estimating the competition. I think it's too early to say for sure who is going to win the electric automobile market.
I'm fairly confident that some car companies will make it through the transition to electric, and that some won't, but I have no idea which. Tesla is going to be one of them, but that upside is already priced in. VW is investing tens of billions, maybe they'll be OK? OTOH Toyota's conservative strategy may be best -- I'm sure they'll introduce electric cars when there is a solid market for them. Perhaps being last to the party just means that it'll be cheaper for them to transition.
Ford has been problematic and their balance sheet is not that great, their margin are very thin and they totally relay on high margin trucks and SUV. Their electrification plans seem pretty terrible, so I would not bet on them at all.
Betting on Tesla is betting on the other car makers having trouble doing the transition and making profits at the same time. Tesla ability to continuation to execute year after year. And to justify the super high evaluations, bringing self driving to market.
Vertical integration is a huge difference between Tesla and other car companies. GM and Ford outsource a significantly higher percentage of their cars than Tesla. On top of this their an automotive dealer which captures more revenue and by making cars on demand has lower capital costs.
Bosch, Denso, Magna, Continental and ZF Friedrichshafen so more than just make auto parts, but still end up as huge players in the automotive industry.
This might be correct in a world with full-self-driving, though as others might point out, we're quite far away from that. Waymo is probably closer to full-self-driving than Tesla is [1].
If you're talking about just raw Tesla car ownership, then ride-sharing operations still requires a human being to be sitting in the driver's seat that expects to be fairly compensated, at which point you have the same supply growth problem that Uber/Lyft have.
I assume that the first sentence, including declining revenues, is in reference to the current state vs expectations. The disconnect may be in what “Declining revenues” was intended to mean, in this case it makes sense if it is against expected revenue instead of the global value.
Maybe car manufacturing isn’t one of those places, but I feel like that’s more difficult to dismiss as flippantly.
"There's too much risk either direction, stay away from it" sounds pretty sane to me.
If you insist on a single word, may I suggest "experience."
Plenty of people called the 90s dot com bubble, shorted tech stocks, then lost everything because the bubble kept going until they ran out of cash to make short bets. Same with the housing market more recently.
If you could magically know that Company X's stock is overvalued, and that it WILL collapse at some point, but you couldn't figure out when, just a vague "sometime in the next 10 years", going long would be a good way to lose money (it will collapse eventually), but going short would also be a good way to lose money. Timing matters just as much as direction.
Other car companies finance their operations through debt instead of equity. It directly effects their market cap. It doesn’t directly effect their “value”.
Toyota enterprise value: $325B
Tesla enterprise value: $200B
https://ycharts.com/companies/TM/enterprise_value https://ycharts.com/companies/TSLA/enterprise_value
Tesla only has to solve scale (which they're beginning to do) and spare parts availability (which is going to solve itself but it needs time to build out a network) to utterly dominate the car market of the future.
Not to mention most of their RnD and their capex goes towards manufacturing cars.
People will never understand Tesla unless they understand it really is just a car company.
There is no magic leap here. Cars are becoming smarter, and more electric and car manufacturers have been adjusting all along.
Most car buyers are not caught up in the heady-dreamspace that the Tesla brand is built on - they will just by what they perceive to be value at price.
What is 'amazing' is that someone was able to actually break into making cars in the 21st century! That's a hell of an achievement.
But it's just a car.
Although there may be a Magic Leap here:
Some of this is from the simple fact they are first and their offerings are very unlike traditional manufacturers. Most competing offerings are forever denoted with the asterisk of coming in 2022 or later. There should be more offerings this year to include Ford's Mach E but the real test here isn't that the public wants it, the real test is will Ford increase supply if demand is there. I don't feel like Chevrolet/GM has done that. VW is the real contender if they hold to their statements of how many cars they intend to push
Still Tesla needs to get their act together. Customer service is a sore spot and getting in contact with levels higher than local service centers is far too difficult. They also have reduced content in the 3 and Y instead of increasing it; no default homelink and remove auto dimming mirrors. They seem to was to pass off games and features while parked as more content instead of what improves QOL of living with a vehicle.
Long term we need Tesla so that manufacturers don't try to force us into settling for ranges of 250miles/400km which a lot of future offerings are. Just like they would not make EVs over 100/160 until Tesla forced their hand they won't be pushing 300/500 unless pushed.
Is Tesla just a car company? No.
Does Tesla still have an exponential growth outlook? Yes.
Has Tesla been able to meet their stated goals in the 1st 10 years? Yes.
Do you think Tesla will meet their stated goals for the next 10 years? Probably
This is why Tesla market cap is nearly 200 billion.
Where is the full self driving car? They are selling a feature that most likely will never exist.
Tesla has built their own chip optimized fully for self-driving.
all-in on vision based full self-driving, which seems to be the only way to solve all the edge cases. Even if google accomplishes self driving with lidar, lidar will never be able to compensate for all edge cases. Human vision already compensates for all edge cases, thus the case for vision based self driving.
For starters, Tesla still seems to have this annoying habit of not detecting large, white trucks that are stopped in the middle of the highway, and will happily drive into them at full speed. This isn't exactly an "edge case" issue here.
<joke>To be fair, it was an edge case until Tesla started selling cars.</joke>
The "real-world driving data" is what I'm calling the "raw data" here, as it's the raw data from the standpoint of the (perceived) AI algorithms driving self-driving cars.
> Tesla is the only one going all-in on vision based self driving. That's the key thing that's going to get us to full self driving.
Why is it the key thing? Why should worsening the quality of your input data improve the results?
Our eyes get worse data than lidar, yet our brains are able to process this data more effectively.
Also, lidar is super expensive. It will take much longer to get affordable lidar into everyday vehicles.
Running with a more responsible hardware stack means the software has to be more cleverly designed, and that design is mostly not in the just-throw-data-at-a-neural-net stage. Building your visible-light-only driving system is going to cause you to struggle a lot harder at getting a good subroutine for "how far away is that object?" while providing you no benefit to solving the harder problem of "what will that object react to my coming nearer to it?"
Another way of asking this question: how many "millions" of miles is sufficient, and at what point are there diminishing returns?
The problem is slogging threw millions and millions of corner cases in the real world. A trillion miles on the highway are quite pointless, a trillion miles in one Arizona city will also not get you there.
You need millions of miles in all driving conditions and train the car to always figure out 100s of details. Look at the Tesla presentation where just recognizing a 'Stop' is incredibly difficult. Working threw all these problems requires having 10000s of cars with real sensors sourcing data from you.
The advantage Tesla has is that they can do this with zero capital, while Waymo needs to have a expensive cars (100 to 1000s) with a payed driver, go threw every location and create a HD maps.
If Tesla has every one of their cars feeding their models more data, it does feel like a natural conclusion that they will be able to overtake waymo.
*Disclaimer: I'm not an expert in ML
This means that anyone doing self-driving needs to be a manufacturer in order to avoid getting squeezed on terms and profitability. And vice versa. A partnership won’t cut it; one company of the partnership will get screwed and the thing will go nowhere.
That’s why having both is critical, and I think this point is not fullt appreaciated.
Waymo is the strong party in a negotation with any manufacturer, and the manufacturers know this.
https://www.tesla.com/blog/secret-tesla-motors-master-plan-j...