Comment by rubyn00bie | Hacker News Reader

Comment by rubyn00bie | Hacker News Reader

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I'm not one to typically paraphrase billionaires, or think they're too connected to reality... but something I heard Mark Cuban say the other day was kind of "oh, shit that's true" moment for me. It was something to the affect of (I can't find the clip at the moment), "Back in 2010 we never thought we'd see a company hit $1 trillion. We never thought Apple or Amazon (et. al) would be able to continue their growth year after year to even be those $2 trillion dollar companies..." All I could think was "oh shit, yeah, I never thought I'd see it either."

Ten years ago, Apple was worth $297 billion dollars, today it's worth $2.1 trillion dollars. I think Tesla stands a good a chance to be worth these seemingly absurd valuations. The market price isn't solely defined by the current value. With tech companies especially, it reflects expected value, and Tesla still has a lot of room to grow. I'd be more skeptical but EVs are eventually going to cost way less to make than typical ICE (internal combustion engine) cars, and per unit that savings translates into a lot of fucking profit. Not to mention the additional profit they're raking in thanks to the public's image of Tesla's and the experience generally being "magical" (even if gimmicky). Also, a "green crypto" if a Tesla branded play (I feel musk is bringing this soon) will cause a pretty gigantic boost to the company's bottom line.

For at least the next 2-5 years Tesla is gonna be pretty safe, and I'd guess that 2-5 will buy it like 3-5 more years just being the incumbent... I don't think Burry is going to be to happy on this one. Mark Spiegel has already fallen to the beast, and I suspect Burry is likely going to as well.

shrug just my two cents.

"Tech" companies here encompasses quite a broad list of markets. Just because Apple and Amazon managed to upend expectations doesn't mean that Tesla will. Most of these gigantic technology companies are software companies that have incredible profit margins and really hard to disrupt market positions. Apple is unique in that it manages to sell a premium product with premium pricing without it affecting overall demand with the best-in-class product differentiation that the Apple brand is known for.

Yes, Tesla's managed to do something somewhat similar, but will that continue to hold? Even as automobile competitors finally wake up and start competing on electric cars? Will they become the largest automaker in the world? Tough questions to answer.

FWIW, the context of that was him defending wallstreetbets putting money into gamestop. His argument was that for most investors stocks just represent a store of value and little else - not some bullshit "owning part of a company" or even "fundamentals".

Part of his argument was that even companies like Apple have gone way beyond any valuation anyone would have thought reasonable as little as 10 years ago.

> I'd be more skeptical but EVs are eventually going to cost way less to make than typical ICE (internal combustion engine) cars, and per unit that savings translates into a lot of fucking profit.

What's the basis for this? Battery tech evolution and ICE cars have no more (safe) optimizations to make to get costs down?

This is also predicated on the idea that every part of Tesla's operations are substantially better than existing automakers.

Do people really believe that Tesla is literally run 10x better than Toyota, Volkswagen, Daimler, BMW or Honda? I don't think so.

Then there's the nightmare of trying to appeal to two wildly different consumer groups.

At the low end: does Tesla have a meaningful reliability advantage versus Honda and Toyota? From what I have seen, it appears not. This matters less when you're dealing with premium buyers, but will not work with the mass market. Fans will put up with hassle (I own an AMG... I'm more than aware of the extra expense I am constantly paying for - and that's a trade-off I'm happy to make in return for a powerful v8).

Secondly from a clout point of view: why would anyone buy a Tesla over a comparatively priced Audi, Porsche, Mercedes or BMW. The people who talk about their Model 3 with a burning passion aren't trading in a 911, or an E Class or a Q7. They're excited to upgrade from a 2015 Camry. Massive expectation gap.

Plus, all of these companies are valued far more realistically. Tesla being worth more than every other automaker or whatever gives them very little room to breathe. If Tesla is ever valued as the hardware manufacturer with relatively low margins (when compared to say a tech stock like Facebook or Salesforce).. is the day that we will see an enormous valuation haircut.

I wonder if it's as simple as the market confusing all new technology companies with software companies, which have incredible distributional advantages and the ability to grow revenues from optimizations.

> why would anyone buy a Tesla over a comparatively priced Audi, Porsche, Mercedes or BMW

Because you want to drive far?

Tesla model 3 range: 354 - 504 km

Porsche Taycan range: 333 - 463 km

(and most certainly not comparatively priced)

If you are buying a Taycan you would not even consider the Model 3 and if you want to drive far you buy an ICE.

Realism is the problem. BMW and Volkswagen are boring. Not much to hype. They just sell cars not tech nerd dreams.

The company valuation of BMW and VW isn’t the problem- it’s a problem for Tesla. There aren’t enough nerds in the world to justify it’s insane stock price.

I won't speak to profit, but battery performance per dollar has been improving at a fast exponential clip for the past couple decades, which is one of the largest costs of an EV.

An EV drivetrain is also far, far simpler. Fewer parts, and less complexity in those parts. No clutch, gearbox, carburetor, differential, starter, pumps, exhaust…

A modern ICE car is an absolutely unbelievable engineering marvel, but unless battery progress unexpectedly stalls there's just no way they can keep up in price or reliability with EVs.

Amazon and Apple are WAY WAY WAY different companies than Tesla.

Apple has dominated high-end smartphones for over a decade. Amazon has dominated eCommerce for that time and longer.

Tesla dominates EV, which is a tiny portion of all auto sales. There is about to be huge competition in the EV space from legacy auto manufacturers and a car is not the same as a phone.

There are plenty of cars with a WAY better driving experience than a Toyota Camry but it's still the best selling sedan on the road. So really hard to believe Tesla can win by offering "premium" driving experience.

Sounds like a two pronged question. Will EVs dominate auto sales? And will Tesla dominate the EV market.

EVs will dominate the market at some point in the next 15-25 years or so.

Tesla is priced as if it's going to absolutely dominate the automotive market. And there's no reason to believe that's true.

Automotive is currently a super fragmented market with many players, why will that change in a couple decades when it has been true for the past century or so?

There will be at least 3-4 major players in NA just as there are now, maybe more.

The question imo is if time benefits the incumbents (due to monopoly / network consolidation) or if time benefits the disruptors (due to the commoditization of growth/scale, the shrinking of the distance between 0-$1B, and tech monopolies being based on 90s web tech which is stretched to breaking point). How will climate disruption fit into this, who benefits as the world starts to break faster and faster.

> EVs are eventually going to cost way less to make than typical ICE (internal combustion engine) cars, and per unit that savings translates into a lot of fucking profit

Not in a competitive market which is where Tesla may be in 10 or 15 years, especially if everyone commutes by robo-taxi.

When Berkshire Hathaway was still a textile company the operating manager excitedly told Warren Buffett about a new loom machine being developed which was far more efficient. Buffett's responded that if the report was true he would likely close the business, because he cost savings would flow to the customer and the long-term return on the new capital investment would be low.

Sorry, but "cost way less to make" does not equal "a lot of fucking profit".

It's likely margins remain the same and prices fall substantially. That's what competition does, and the auto world is full of it.

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