>I'm tired of fake Economics where the value of a company or the product is not made from the real value of it
I still don't understand how Tesla is valued so high when they're still figuring out panel gaps.
I still don't understand how Tesla is valued so high when they're still figuring out panel gaps.
I work in the industry. There are less people to do this than you think. Talk to anyone at GM and there is a good chance they at some point in their career worked for Ford or Chrysler or Toyota or Diamler or Tada or Fiat etc. There is a lot of employee and information exchange that goes one. Tesla is very small and outside of MI/IL/OH and miss a bit of this. Plus I suspect that Tesla wants their own way of doing things and “the guy that handled fog lights” from Ford Trucks for 15 years only knows TeamCenter and CATIA and that might not fit well at Tesla (I have no idea really, just assuming Tesla doesn’t use the same systems as legacy mfgs).
I think the biggest issue most people overlook is that “it’s hard to build cars”. That there is a ridiculous amount of “boring” engineering in boring cars to make sure they wont be service costs until the warranty is up. Tesla came in building an electrical system that had seats and a steering wheel, so they are just getting around to doing those little mundane things like fundamentals of modern vehicle body assembly.
Although there are way more horror stories in dealing with service than there should be. They are really hard to contact and communicate with.
If you interacted with a vast majority (including the majority that doesn't post on internet forums) of Tesla owners, this extrapolation might be valid. But I really feel like it's safe to assume that you don't.
(I am ambivalent towards Tesla.)
I've seen Tesla chargers at more than nine gas stations here on the east coast. I drive a lot of highways. Sometimes it's just one or two, sometimes it's a row of several. It certainly does seem like there are hundreds of Supercharger stations in the US.
This comment reads like "I don't understand Apple is valued so high when they still have the exact same basic bugs in production for over 10 years".
And they do! Some bugs are just never going to get fixed in a system of that size and scale.
The overvaluation of tesla is just an extreme example of the overvaluation of the whole market. Every stock has a decade or two of growth baked into the current price instead of people paying what it is worth today. Tesla probably will be worth its stock price in less than 20 years, but why are we paying for future gains? What happened to the time value of money?
Anecdotal - my neighbour has a 2019 Model X with some shenanigans going on with a sensor in the driver's side door. It has been going on more or less since the car was new, but parts are in short supply as it is (understandably, as long as the market lets them get away with it) more profitable to put the part in a new car than it is to perform a warranty repair.
On my 20-year old Land Cruiser, I recently had to replace the multi-function switch for adjusting the power mirrors. My local Toyota garage (on a small island off the Norwegian coast) didn't have it in stock, but next morning at 0851 a SMS ticked in, stating the part was ready for pickup - at a cost of less than $100 for the complete unit.
That kind of logistics organization is what Tesla will need in the long run. Building it is going to be very, very costly.
That effect is amplified in countries that have import tariffs on automobiles, because the secondary market is large.
Not everyone in the world buys cars to pleasure themselves. For most people, automobiles are a tool and their dependability is more important than their excitement factor.
Also, anyone who buys a Tesla because they like SpaceX rockets is an absolute dunce. That's like subscribing to the Washington Post because you like the navel oranges that Amazon Fresh delivers.
You're not getting it. Musk is running Tesla as a tech company, NOT a "car" company. That's why he's been able to build the company through years and years of unprofitability, as Bezos did with Amazon.
You're also not understanding the stock market (which is timely). Once that stock is sold to the market, the stock price only affects people's bonuses. It doesn't have any impact on the company's production or revenue.
People buy (or sell) stock based on whether they think the price is going to go up or down. It's that simple. Tesla doesn't pay a dividend, and doesn't confer any meaningful voting rights (as Musk has secured a supermajority). There is LITERALLY no other reason to hold Tesla stock than to think it will go up. There's no other value to it.
Why would it go up? Because of good press. Good press comes from a lot of events. The company doing well, financially, is great news! But rockets and satellites are just as good, if not better, than reports of high-quality automobiles.
There's a very, very thin relationship between non-voting, non-dividend-paying stock, and a company's fundamentals. It's mostly a shared illusion that it's based on financials which makes the stock market work at all.
>That effect is amplified in countries that have import tariffs on automobiles, because the secondary market is large.
This is the exact same naive logic people use to justify Tesla's valuating.
On one hand you have yuppie fanboys bindly harping on about Tesla's magical engineering in the face of an Impala interior topped with a big tablet and panel gaps from the 80s.
On the other hand there is another yuppie fanboy harping about "muh hilix" despite the fact that Toyota has lied through its teeth about rust in North America for ~30yr, the Hilux/LC aren't outstandingly (in the literal sense) popular in Asia and people in Africa/ME will bolt a machine gun to anything that runs regardless of brand.
Camrys and Priuses are popular in the 3rd world because they are popular among moneyed people (i.e. the people who trade in 10yo cars instead of selling private party) in the first world and because of how the used car export market works (basically vaccuming up "nice" trade-ins that are too old for first world lenders to finance) they wind up popular in the 3rd world. People act like this is special about Toyota but it's not. The 3rd world is chock full of examples of other cars those same demographics buy. Chile practically runs on the 2nd-4th Gen Honda CRV and the GMT900 Chevy Suburban may as well be the official vehicle of Mexico (these are but two examples).
My point is both brands have the same moat of moneyed first world delusion surrounding their stock. Toyota just isn't a meme-stock popular with retail investors.
> Toyota makes fairly boring products of the last century.
Toyota sells around 10mm cars a year. Only about a fifth of those sales take place in Canada, US, and Mexico. The demand picture for EVs and vehicles in general is not uniform across geography. Some places like small cars, others big; some places like EVs, others have no chargers; some places buy new cars, others can't afford it.
BTW Mexico has a different mix of vehicles because much of the first-world production happens within the country. And Chile has the highest median income of all Latin America. Extrapolating from some perception about the Chilean or Mexican auto market is a poor way to characterize LatAm in general.
> On the other hand there is another yuppie fanboy harping about "muh hilix" despite the fact that Toyota has lied through its teeth about rust in North America for ~30yr, the Hilux/LC aren't outstandingly (in the literal sense) popular in Asia and people in Africa/ME will bolt a machine gun to anything that runs regardless of brand.
OK so this is a bit more on topic. The Hilux is a great truck (even ISIS likes it) but I'm not talking about the Hilux and yuppies. I'm telling you that there are people who make $400/mo who are proud to buy a 10yo Toyota. They don't approach vehicle purchases the same way that an American would. The concept that a car is "last century" is absolutely ridiculous to that segment of the auto market. Those people don't buy these vehicles because of status, they buy them because the local mechanic tells them that the motors don't need to be rebuilt so often.
Case study: Ecuador. Import tariffs make autos cost approximately double what they cost in the US, perhaps more. A Ford Raptor costs US$150k. Income disparity means there isn't a vibrant middle class. Fuel is subsidized; the country produces a half-million barrels of oil daily and has three refineries. Much of the transit (including in the Quito metropolitan area) occurs through mountains where roads are poor quality. Road closures due to landslides are common. A used Suzuki Grand Vitara that costs $700 in the US might go for $4,000 in Ecuador.
You have this concept that people in the third world model their choices on the preferences of rich people. I don't believe that's true. Income disparity is so broad, and the middle class so narrow, that most non-rich people in LatAm just make do and try to survive.
The availability of vehicles in the 3rd world is determined in large part by the used car market in the first world (with south America depending more to north America and Africa/ME depending more on Europe) Exporters buy from auctions just like the rest of the used car dealers. Everybody steers clear of vehicles that have been used hard. The used car dealers steer clear of cars too old for prospective buyers to get a car loan on. The lower down the economic ladder you go the harder people are on vehicles and the more likely they are to keep them until they are totally clapped our and the more likely they are to sell private party. This means that the cars the dealers and the exporters want to buy are the upper middle class trade ins that were never smoked in that were kept clean and maintained, etc with the importers erring toward 10yo+ ones that the dealers don't want as badly.
The net result is that the vehicles of the upper middle class are over-represented in the set of vehicles that exporters steer themselves towards.
If every dumb yuppie in the US and Europe woke up tomorrow and decided they would only commute in blue cars from now on then in 10yr we'd have morons on the internet making up reasons that blue cars are more reliable and using their prevalence in the 3rd world as evidence.
Of course there's market specific models and locally made stuff available too but I'm not talking about those and that's not the avenue from which cars that have a 20k+ MSRP appear in those markets.
It's also home to Toyota forklifts (TIEM), and, of course, lots of people at that company drive one.
Me? I own 4 Hondas. ;-)
Toyota, GM, VW, Ford, etc have spent most of the past 10 years telling us that EVs are a joke. Why would you want to invest in management that missed such a pivotal industry turning point?
They weren't just slow to move to EVs, they mocked them.
People have been saying for years that these companies can pivot, but it turns out to sell EVs you also need to invest in infrastructure and right now that infra (at least in the US) is a shambles.
So right as we're on the elbow of the adoption hockey stick, Tesla is the only company really positioned to capture that growth well.
Institutional investors bet against TSLA and TSLA retail stock holders kicked them back.
Tesla, on the other hand, are growing >50% each year, and it's going to continue for at least a couple more.
Toyota Tsusho has engaged in the renewable energy business for more than 30 years, from development to operation of power stations, with a focus on wind power and solar power generation. The company plans to make use of its expertise in management of such business in this project in order to foster the transition to a low-carbon society.
The point isn't the press release, it's that Toyota has spent decades doing what you say they don't do.
I'm not fully convinced that this is true unless it's true in the same fashion as "everyone wants to buy a Ferrari".
Most people I've come across just want to buy a cheap car that gets them from place to place.
There are a lot of gas car manufacturers who make something that lots want to buy, but in 5 years people won't want those products. And it is unclear whether they will successfully make the transition to what is coming. (Based on the history of disruptive innovation, they mostly won't. No matter the public pronouncements to the contrary.)
I'm not saying that there's definitely something nefarious there, just that there were some perverse incentives that make the situation feel a little bit suspicious.
But Tesla was also another "meme stock" that /WSB has loved to promote.
#1 Driving is a big part of the culture and big cities are often pretty far apart.
#2 The electric charging infrastructure sucks. Tesla is seemingly the only network where you can drive 500 miles and be confident when you stop that a charge will actually take 20 minutes.
#3 Americans like big ass cars because ???
Most of the EV competitors here in the US are small cars and most have ranges which are far lower than Tesla's. Even though most people rarely drive more than 50 miles a day, a lot of people are sketchy about getting into a car with 150 mile (320km) range. There are newer cars which are coming out that are closer, but many are either more expensive than the Teslas, have shorter range, or both.
And I expect a lot of people are going to buy those non-Tesla options for $60-80,000+, and have a really unpleasant road trip the first time they get out and can't find a decent charging station.
The result is the Tesla is pretty dominant here for EVs and frankly I don't see that changing for some time unless the charging situation changes.
My point is, "the short sellers are all fucked if we keep buying this and we will make money" and "Tesla is run by a godbrain and can't fail" are the same thing: speculations, not spreadsheets.
Yes, it's absolutely (informed) speculation.
This is how the stock market works. Amazon, Apple, Microsoft before them, Google... people said exactly what you are saying about how they were valued at some point in time.
Every single stock is valued based on how stocks will perform in the future. Last year's performance is only interesting for informing investors of what the next 10 years will bring.
I do think Tesla is a risky stock to own (I do own some shares), but it always has been. Likewise Apple was. And Amazon. If you want big returns you often hang on to the riskier stocks for longer than you are comfortable. (Not always and you cash out)
Your first post was trying to differentiate GameStop from Tesla. Neither have assets that support their price or that there is something inherent in the company to support that value. They don't. They have projections(Tesla) or excitement(GS).
Throwing up a bunch of survivor-biased stocks to prove that sometimes people make winning bets (or rather, that some best win) doesn't mean anything. Amazon, Apple, MS all eventually moved past speculative and most people in the market would assume that they're pretty stable blue chips (in fact, that's why we have terms like "blue chip" in the first place) with assists that support the price.
I'm not talking about how to make big money on stocks, I'm talking about the idea of inherent vs projected value. You said you think Tesla is risky, and that's my point. It seems much more likely that someone (car companies, energy cos, the government) would come in and kick the legs out from under Tesla than any FAANG company at this point (except maybe FB but I might just be projecting there)
Stocks are not valued based on what they earned last year. They are valued based on whether people think owning them will earn them a profit in the future.
You can certainly wait until a company has proven itself to invest in them. The problem with that is you will never get more than marginal returns. If you waited until Amazon was fairly valued, you'd probably still be sitting on the sidelines. Likewise with Apple.
If you want guaranteed returns, you buy boring things like utility stocks and accept your 4% dividend and 5-10% growth. If you want bigger returns, you absolutely have to invest in things which some people consider over-valued. There is no other way. You just have to be good at picking which companies are going to be successful.
Tesla, the jury is still out. I'm playing with the house's money at this point though. I am confident they aren't going to crash and burn entirely though.
Comparing them to Gamestop doesn't make sense. Outside Reddit, there is no story with Gamestop. Tesla has products and growth, it's just a matter of finding where that growth ends.
These short-sellers that Reddit is going after, would swamp the media with FUD articles to drive Tesla stock down. They bet on Tesla to lose, and when Tesla didn't lose, they tried to drive them out of business by manipulating the media.
The media coverage (I don't want to use the pejorative word "manipulation" and I have no reason to believe the coverage was intentionally biased) largely favored Musk and his companies, at that time and in the present day.
1- Oil companies pressured the industry/government to keep supporting their platform 2- Most car companies didn't consider themselves battery companies, which Tesla obviously is. They sell the product "cars" not so much the underlying technologies that make them function. Thinking of Tesla as a car company and not a battery/energy company is a misunderstanding of where they spend their energy. It's like thinking Google is a search engine and not an adverting/information brokerage company.
They matter much more when consumers choose between different EVs from competing marques.
It would be like me saying to another automaker, how can I trust your brakes when the entertainment computer routinely crashes? Or how can I trust your suspension when your CVTs don't last as long as they should?
These things don't correlate that way.
Except one of those solved problems very clearly isn't "solved." This is something that stops assembly lines in other manufacturers. That it doesn't with Tesla signals that other assembly-line-stopping issues may also be ignored.
What if "panel gaps" weren't the most notable thing about Tesla's accomplishment, impact and opportunity?
I'm planning to get short TSLA delta later this year. I think their build quality issues are going to become more relevant as traditional automakers get involved in the space. I also think their ZEV credit profits will disintegrate when traditional automakers no longer need to buy them because they make their own EVs.
I don't really have an opinion on it, but that's the case.
It's overpriced, unquestionably. But the bull case is Amazon.
This is what people who don’t get OTAs don’t understand about OTAs. The car gets better every month. Literally faster acceleration, longer range, quicker braking, tighter suspension, fuller featured, more useful and overall more fun. Every month, just like magic.
Versus tradition auto which forgets you exist as soon as you make the down payment, and if you want something better you have to buy the latest model.
Free upgrades to your car and always having the latest model features is actually really freaking cool. Then they go further an even support 1st party hardware upgrades for late model vehicles to get the newest MCU or AP hardware, which is also unheard of in the industry.