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Comment by Gustomaximus | Hacker News Reader

I assume the high value is more about Tesla being more than a car company.

1) If they win the self driving race that will be incredible value beyond just manufacturing cars.

2) Battery manufacturing in general is huge on its own.

3) The roof top combined with domestic battery side is potentially significant in replacing (full or part?) domestic power companies

4) Insurance - Musk said this could grow into 30-40% of their business

5) Super charger network gives them a first advantage to replace petrol stations to a degree.

6) Elon factor of what's next.

And dont get me wrong, I do feel its gone beyond reasonable value, but there is more than a car company there.

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While this sounds good as an hypothesis - the ground reality is far from this, Tesla build quality is below average at best w QA being non-existent. Tesla Insurance is an unproven entity and horribly mismanaged. Eg: https://teslamotorsclub.com/tmc/threads/tesla-insurance-clai...

Many potential Tesla solar customers (that I know of) have ended up using other solutions as Tesla simply didn’t have stock availability - it’s a novelty product line.

Many “investors” do not know the ground reality and base their decisions on the Twitter feed of an individual.

> Many potential Tesla solar customers (that I know of) have ended up using other solutions as Tesla simply didn’t have stock availability - it’s a novelty product line.

I order a system from Tesla on Sept 30th, it was installed Nov 3rd, and I received permission to operate on Nov 23rd.

Other quotes I received were targeting installation Jan or Feb 2021.

I believe the previous article is talking about the first generation solar shingles which Tesla never really got off the ground.

It may have taken Tesla longer to bring the solar roof to market than originally planned but it’s been available since early this year. I’ve seen several Tesla roofs in person, and they seem to be a great choice if you need a new roof and can afford it.

Maybe availability has improved now. As the child suggests it was about the Tesla shingles.

It’s the same argument as ‘they’re so busy nobody goes there anymore’ anyway.

I think you misunderstand what the market is. It isn't some reality driven by known data you have available. It's a popularity market that must judge the future as well as the now.

Unproven insurance model with a 40% potential.

Insane demand causing shortages in solar panels is a great company to give money to.

Remember the goal of investing in the market is to know where the market is going and to get there quickier. You are saying the market is wrong on valuation.. you can't really bet on that only market players reactions.

I actually assume Tesla's valuation has very little to do with any quaint notion of discounted value related to future cash flows.

There is just a ton of money looking for a place to invest, and Tesla is certainly telling a higher growth story than any of the existing car companies.

A lot of people feel like cash is a depreciating asset. Real Estate and High growth companies are the best hedge against that. There are certainly plenty of complaints you can make against Musk or TSLA, but you cannot stay that TSLA hasn't been growing and isn't on a path of growth.

It's not a story.

Tesla has been growing revenues 50% on average for the past 10 years.

Most other car makers are roughly flat. This year ICE cars, globally, are in decline.

Tesla will grow 50% on average for at least next 5 years.

Also, there has been a ton of money looking for a place to invest for the past 20 years. And there are plenty companies that are investable. Just recently we had monster IPOs from DoorDash, AirBnb, Snowflake and others.

At the same time there are many more companies that one could invest in but doesn't so it's lazy to attribute "lost of money available" to outsized successes like Tesla or Snowflake.

fwiw even if tesla increases their revenue by 50% cagr, for the next 5 years, they will still have a -lot- less revenue than the large ice car vendors.

Tesla from Sept. 20, 2019 to Sept. 20, 2020 revenue is $28.17 B. Ford revenue in the same period was $130.9 B and GM was $115.8 B. 28.17 * 1.5^5 = 213.9. That doesn't even include the inevitable decrease in sales for F and GM if Tesla grows that much.

Why didn't you pick (2019 numbers)

- Toyota, $272 billion

- Volkswagen Group, $282 billion

And yes, even compared to Ford, Daimler etc. Tesla's revenues are quite small.

It’s Profit that matters, not Revenue.

Stock price is usually factored as a PE ratio - Price to Earnings.

Price to Sales also exists, but usually only for emerging companies that have just gone public and are growing rapidly.

Considering the debt load of GM and Ford the valuation of Tesla is no where near the risk as both those two are both past the hundred billion mark. While both are far more established than Tesla they are also more at risk because of how much debt they carry.

This gave me chills.

If I understand this correctly, they'll be able to write their own checks because they will essentially...

1) Own self-driving and thus, most personal transportation

3) Own / replace a large segment of public utility / power companies

4) Own / replace a large segment of insurance

5) Own / replace transportation power network

Right now, it's silly to think of Tesla as some kind of mega-monopoly across industries. So we invest in them betting on them becoming that. Is that what we want?

My counter-argument is that one of the bigger markets for automobiles, the U.S., is designed around personal choice, personal autonomy, etc. Many people just want a working car to give them freedom, and will buy whatever popular, trusted brand is available. The rest want one of the smaller brands, something that seems different from the mainstream (even if it's really barely skin deep). That has kept quite a few big players in the automotive marketplace, and despite consolidation over time, there's still variety, which buyers want. This argument really only addresses them as a car maker, though... and not at all for their spread across industry lines.

Something will stop them. They're not expanding into a vacuum: they're expanding into well-established markets full of billion dollar companies run by people just as driven and talented as they are - not to mention other forces like governments, supply and demand etc. Look at someone who eats 5,000 calories a day and gains 3 lbs a week. "My god, in 10 years they'll weigh 10,000 lbs!"

People said the same thing about Apple, and watched while it eventually decimated Nokia, Blackberry etc. Both Tesla and Apple have that premium brand reputation, and older brands are perceived as legacy. Doesn't mean that the car brands will fall to a similar fate, but they have an uphill battle to fight and need to pull a rabbit out of their hats.

> they have an uphill battle to fight and need to pull a rabbit out of their hats

The Renault Zoe is the best selling electric car in Europe in 2020.

It's not like car manufacturers are standing still. They'll be pumping out electric cars year after year. When there's so much choice of EV, what's the reason to choose a Tesla? Europe is choosing the Zoe ahead of all other models right now.

Not all major car makers will fall into the "legacy/old and busted" category - I think the ones with a long-time reputation for quality/dependability will be able to make a strong splash in the EV market once they've got a comparable product.

For example, if Honda or Toyota makes any of their mainline models with the simplified/basic interior but just with a well-made EV drivetrain compatible with the Tesla charger network, I'm probably buying instantly.

If you look at Norway where EV's account for close to 50% of new car sales you'll find that Tesla is not outselling anyone. Most sold EV this year was the Audi e-tron, followed by VW e-golf. Tesla M3 on 5th place. Tesla has the best range, but it's not that far ahead of the competition and it is generally more expensive than the competition.

Tesla still has a 10% tariff there, which is fairly significant.

Source? AFAIK EV's are exempt from all tax. If there is a 10% tariff, then it must be the same for all other manufacturers as well. Anyway, my point was that in a mature EV market Tesla is not the only player.

Yeah, I'm totally wrong. I had assumed the EU tariffs were shared by other nations in the EEA, but it's not true from what I can see. Importing an EU vehicle and US vehicle are the same (except for shipping costs).

Although EU nations, until GF Berlin, aren't quite apples to apples in that regard. But my understanding is that they did final assembly of the S and X in Europe to avoid the tariff, it's only the 3 that suffers.

The issue will be battery supply chain. It’s the new ice engine in the supply chain

But being a "premium" or lifestyle brand is a lot less useful if you're competing in the insurance or utility markets.

Is Tesla considered a premium brand? Most of the cars they currently sell are pretty basic.

They're pretty basic in terms of finish and equipment, but premium in terms of price.

The most sold cars in Europe are models that start around 15~20k€. The cheapest Tesla starts at 51k€; that's about 3 times the price. Even if you only look at electric cars, the best selling one is the Zoe which starts at about half the price of the cheapest Tesla.

Yes, or at least they are a fashion statement to many. They aren't all that premium on paper

So they are the Prius of recent years?

In Europe Tesla's are much more expensive relative to their competition compared to the US.

Premium refers to the price.

As far as I understand Nokia was doing fine and was even ready to launch its own smartphone OS before it got subverted by a Microsoft manager that brought Windows Mobile and killed any chance it had to compete.

> Both Tesla and Apple have that premium brand reputation, and older brands are perceived as legacy.

In other words: overpriced crap vs. tried and tested.

That's a bit of a generous assessment. They had an OS that was launched on one premium phone, well behind iOS, Android and Windows phone. A company like Nokia would struggle to turn their Symbian dumb phone market share into something that could win against Android.

> They had an OS that was launched on one premium phone, well behind iOS, Android and Windows phone.

Nokia had Maemo since 2005 and tried to move to MeeGo in 2010. IOS was 2007, Android happened 2008 and Microsoft had almost no success with Windows Mobile, only launching Windows Phone near the end of 2010. Weird definition of well behind.

You're right. I completely messed up the timings in my memory.

That said, Windows Phone was widely available in 2010. Whereas Nokia hadn't widely rolled out either Maemo or MeeGo.

The board hired him specifically to try and sell the company to Microsoft.

I have invested (read: gambled!) on and off in Tesla. The Elon factor concerns me as a long term investment. Do people think the company will continue to grow at the rate they are if something happens to him? Worries me to put so much faith in one guy, despite his insane accomplishments.

I don't think Elon will stick around long term at Tesla.

The goal for Tesla is to accelerate transition to electric vehicles. Once that is completed Elon will move on to another project similarly to when he transitioned from X.com/Paypal to something else.

> The goal for Tesla is to accelerate transition to electric vehicles.

If that were true then Tesla would open its chargers for use by all brands of EV.

Teslas can charge on all other charging networks. When will Tesla reciprocate?

I know what you're saying, but the fact they don't do this doesn't make the statement untrue.

Tesla's mission is (from their website): "Tesla’s mission is to accelerate the world’s transition to sustainable energy."

You mean that's the mission the want to sell. I mean, can you tell me of even one company that states their mission is 'increase the share value'? Or even something close to that?

All signs point to SpaceX and his mission to Mars.

Luckily, it seems like he's mostly abandoned the spectacularly stupid hyperloop idea.

More tunnels would be cool, but I find it hard to believe there's really that much room for improvement over established companies.

Don't you the boring company?

I think the hyperloop is even more ludicrous given the technological problems involved in vacuum tubes. But I think Elon realises that which is why all he did is write a memo on it rather than create a company around it.

Yeah, I was referring to the hyperloop and the boring company as separate things.

I feel like the Boring company is what he settled on once it was made clear to him how monumentally stupid hundreds or thousands of miles of near vacuum tube would be in practice. Even if you could actually build a working prototype, it's hyper fragile and will just never be economically viable compared to other solutions.

I suspect a lot of Elon's companies would start to do better without him, TBH.

The first mover advantage is real, but I can’t quite understand why it is thought to be a check-mate.

Ford had an oh-my-God enormous first mover advantage with the production line. Japanese car companies started literally from nowhere, in an economy shattered by war. VW was literally kickstarted quite late into the game.

I don’t think it is right to assume that, even if Tesla makes the first affordable, good range electric cars, then the rest of the market can just fold. Especially since electric cars are simpler than ICEs so surely it’s easier to catch up.

I don't see how #1 is possible. Tesla is on record as having driven driven a total of 12.2 autonomous miles, vs 1.45 million for Waymo[1]. If they were actually serious about building a self driving car in the near future they would be taking steps now to get regulatory approval, and to the best of my knowledge they have not. Meanwhile Waymo has taxis on the road without human drivers and Cruise has a pilot program.

The only pro Tesla argument that I hear is that they are gathering more data. This is entirely fallacious because there are no meaningful milestones for data gathered, and it's not true. Google has orders of magnitude more of driving data from Android, Maps, and Waze.

[1] https://www.washingtonpost.com/technology/2020/10/21/tesla-s...

Tesla has been shipping cars with integrated self-driving hardware for years. Every car is transmitting data back to Tesla. They have been turning on additional self-driving features every few months for years.

Tesla is doing a limited beta of full self driving now which will be widely expanded in just a few months. I don’t understand how anybody but Tesla is poised to have self driving cars in the near future.

Waymo currently has self driving cars on public roads today, with actual paying customers: https://arstechnica.com/cars/2020/10/waymo-finally-launches-...

Meanwhile Tesla has taken no steps to get approval from regulators (feel free to prove me wrong). Until they start to do so, their self driving program is pure vaporware.

Also, to date they have shipped no features that they are legally allowed to call "self driving" or "autonomous".

Waymo has self driving cars with a tiny amount of paying customers in a tiny are losing 10s of millions of dollars every year.

Tesla on the other-hand is MAKING money with self driving technology already.

What something is called doesn't really matter, I bet on the company that has 100ks to millions of cars with advanced self-driving computers and hardware on the road in daily use over a company that has a couple 100 cars in Arizona any day.

The complexity of self driving is in the complexity of the road network in the real world. The only way to solve it is to have millions of cars learning all the complexity and finding the corner cases.

The real money in self driving is not offering ride-share in small geo-locked areas.

Tesla does not have any self-driving cars on the road today:

"Yes. Autopilot is a hands-on driver assistance system that is intended to be used only with a fully attentive driver. It does not turn a Tesla into a self-driving car nor does it make a car autonomous."

https://www.tesla.com/support/autopilot

I never claimed they have. I said they are making money with the technology, those are different things.

And you fail to respond to my actual point.

They are making money with a technology that is neither self driving nor autonomous. It's driver-assist, which places it in the same category as navigation or cruise control.

If you compare Tesla to the other companies working on self driving, the only meaningful milestone where Tesla leads is the number of fatalities. The reason why Cruise and Waymo have not been as aggressive as Tesla in rolling out features to the general public is caution.

When it comes to gauging self-driving progress the most meaningful metric to look at is progress towards regulatory approval in more markets. It doesn't matter how _capable_ they are, if they can't demonstrate to regulators that they're able to safely operate then they won't be in the market. Tesla needs to step up and start making progress towards legally operating actual self-driving vehicles.

The point is that Tesla is making money, with the people they have heir to do the work and have a path towards self-driving that is not inherently money losing.

Saying that having a single car that is approved for self driving in a single geographic are is far more advanced then millions of cars that can drive with incredibly advanced driver assists literally all over the world is just an incredibly terrible way to measure progress towards the eventual full solution.

Its simply not a way of measuring progress that I is reasonable.

> aggressive as Tesla in rolling out features to the general public is caution

Its because they have a technology platform that simply can't be sold commercially as they are specialized vehicles. Plus these are not system that have been developed to work with a driver, its simply a totally different process of development.

I think the position is then;

- Waymo seems to be ahead in some targeted ring fenced areas given active service.

- Tesla seems to be more ready for nationwide rollout due to already collecting nationwide driver data + cars.

The question is which one is more likely to result in a broad scale market first, or other significant market revenue generating position.

It seems likely Tesla could roll out taxis to a ringfenced area in Phoenix (or similar ideal area) relatively easily. While Waymo is a long way from offering a nationwide service compared to Tesla. This in my mind puts Tesla ahead but there probably a bunch of other factors known and unknown too.

"It seems likely Tesla could roll out taxis to a ringfenced area in Phoenix (or similar ideal area) relatively easily"

Not legally.

Tesla 'self-driving' (even 'full self driving') is a rebranded driver assist (although an advanced one). Not only is Tesla behind the others, they're basically in completely different worlds. No-one I've talked to in the self-driving car industry considers their approach to have merit if you're looking for an actually autonomous car. This is an excellent example of how marketing can decieve.

You are right, we all assume Tesla is much more than a car company. BUT - to justify its current value, Tesla must monopolize all the sectors you have mentioned.

Nobody takes this into account. They just claim: "Tesla has this and that potential", "this and that market could be huge". Okay, this should give the stock price a significant boost, but not 10x. It's a bit like crypto speculation.

7) Robinhood making TSLA a meme stock.

Market capitalization is based purely on the value of the stock itself and doesn't take into account any other factors such as projections, profitability or debt. It's an odd way to value a company in my opinion and just leads to inevitable debacles like WeWork.

https://www.investopedia.com/terms/m/marketcapitalization.as...

> Market capitalization is based purely on the value of the stock itself

> doesn't take into account any other factors such as projections, profitability or debt

You seem to confuse a few things here.

Explain how Amazon could ever be worth more than zero for most of its existence, then?

Price of stock is largely dependent on people willing to buy it and sell it. When more people want to buy it, the stock price generally goes up.

Why do people want to buy more than sell? Generally, it's when they think the future price will be higher. Projections, sort of.

I think more than being a car company, Tesla is a software/hardware/battery company that also created a series of cars to sell those.

Similar to how Apple thinks of itself as a hardware company, but also created iOS/macOS to sell those hardware.

They may also buy SpaceX

I don't think Tesla is a car company, they are a sustainable energy company. That was their plan all along, as I understand their Secret Plan Part Deux.

https://www.tesla.com/blog/master-plan-part-deux

This is the same BS that Uber said about themselves. Only in the last few months have you found themselves dismantling everything except ridesharing and food delivery.

And also admitting the margin on those items is not great and they're not much more than a taxi company with a fancy app and the admitted blessing of being able to outsource fleet management to their drivers.

There is a herculean effort by every car manufacturer in the world to compete for Tesla's electric car market share.

In the coming years there will be so much competition in this space.

And then you have Elon snubbing California, one of the largest consumer markets in the space.

I'd short.

Elon Musk will love this: Tesla short sellers lost more than the US airline industry this year

https://www.cnn.com/2020/12/04/investing/tesla-short-sellers...

To be fair, all of the Enron shorts lost their shirts until they didn't. I'm not saying that TSLA is an Enron, but using performance thus far as an indicator of likely performance into the future is a famously poor idea.

TSLA has famously bad QA issues, etc etc I don't need to go on. Few (including some of those who are holding TSLA stock right now) would say that there is meaningful justification for the current valuation.

A more recent example is WeWork.

No one got a chance to short WeWork since the IPO never happened.

> And then you have Elon snubbing California, one of the largest consumer markets in the space.

And then you look at them as one of the few American brands absolutely killing it in China right now. Not as simple as it seems.

> I'd short.

Everyone who has done this so far as lost their shirt.

The impression that other car manufacturers make right now is that they're playing catch-up while Tesla has been getting the electric part of the car right for years (while having issues with the rest of the car, as expected).

There's a good chance that "old" manufacturers with decades-old processes will have a harder time adjusting to an electric world than the hard time Tesla will have figuring out the rest.

Also, Tesla isn't just a car company, they're also a energy storage company. Which I suspect is a massive market too.

Many of these companies have been making cars for generations.

Toyota for example is set to introduce prototypes with solid state batteries in 2021.

Most consumers will opt for their familiar and reliable Camry that happens to run on batteries.

Tesla will need something new to entice consumers. But, I just don't see much more innovation outside battery tech happening.

> I just don't see much more innovation outside battery tech happening.

This is where I feel the self driving part will come in.

1) First to market and length of lag for other manufactures there.

Imagine there 2 car companies with working self-driving 10+ years before others can catch-up. That will shift the market for domestic and commercial.

2) Self-driving safety stats - this is going to become huge when there are self driving choices.

If one company can say 'we are half as likely to have an accident' type marketing, this is going to become a new and significant factor in vehicle purchase, more so than safety rating are today (I believe anyway) as we are taking out the 'Im in control of my experience' factor.

3) Self driving will flow to other innovation. Cars will no-longer need to be 4 seats facing forward. Huge opportunity to re-think transport once you dont need a driver seat.

Somehow it's going on the S&P.

¯\_(ツ)_/¯

This is why I bought post split. I expect it to go higher once added because the institutions have to buy.

> There is a herculean effort by every car manufacturer in the world to compete for Tesla's electric car market share.

Can you link to some sources, please?

The only one that actually seems like it might be going into Volume production is the VW ID.3. There are plenty of articles from 2019 talking about how they'll be building TONS in 2020... but there are no articles in 2020 talking about how many they've built.

No other auto maker has any EV on the books they plan to actually mass produce, they're all just "limited volume".

Are there really no articles, or do HN news crowd simply don't read them? Doesn't fit the "Musk is taking us to Mars" narrative present on this site these past 5 years.

Volkswagen’s ID.3 Leapfrogs Tesla, Renault In October European EV Sales Charts

https://www.forbes.com/sites/michaeltaylor/2020/11/26/volksw...

That is them selling the backlog of vehicles that was left lying around after they hadn't finished the software.

How many are they now building per month? - find my an article that answers that question please.

The Renault Zoe, Nissan Leaf, and BMW i3 have been in heavy production for years for example. And in many countries (especially Europe) they outsold Tesla.

If these companies could make an electric car that looks remotely good looking, I'd have hope for them (only a matter of time, really).

> 3) The roof top combined with domestic battery side is potentially significant in replacing (full or part?) domestic power companies

A model s has a footprint of about 4m^2. In ideal conditions that would net you maybe 800W during daylight hours... 6.4kWh over the day. That would give you around 30 miles of driving range. Solar on personal vehicles will never be anything more than a gimmick.

I think he is referring to solar roofs on houses not on cars: https://www.tesla.com/solarroof

I believe he was referring to Tesla solar roof for houses.

https://www.tesla.com/solarroof

It's about solar on the roof of your house, not the roof of a Tesla car.

Believe they are referring to Solar roof, solar panels on houses

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