Panasonic sells its $3.6B Tesla stake | Hacker News Reader

Panasonic sells its $3.6B Tesla stake

finbold.com

112 pointssammyaxe174 comments

So...Panasonic - which probably wants to be an electronics company, not an investment fund - booked a huge profit by selling off something which started out as a little demonstration of financial & moral support for a little customer. But which had grown to be ~13% of Panasonic's own market cap - possibly interesting financial regulators, or causing electronics-focused talent there to feel some concern for their career paths. And they did so gradually and quietly, when the no-longer-little customer had long outgrown any need for Panasonic's show of financial & moral support.

I understand why this pushes a lot of peoples' buttons. But objectively, my reaction is "Zzzzz".

It seems like a smart decision once you look at car companies' market caps:

Tesla: $651 B

Toyota: $288 B

Volkswagen: $152 B

Daimler / Mercedes: $99 B

Ford: $60 B

People said this 3 years ago too, arguing Tesla was too big. guess what: it got way bigger. Tesla is forcing other brands to have to adapt or die. They are way behind Tesla in technology, infrastructure, and marketshare for electric vehicle and battery tech.

Don’t forget customer satisfaction.

Maybe market share, but I can't see how the argument goes for technology or infrastructure.

As of now, none of the auto-driving tech is acceptable to go hands free, people have tried it and paid with their lives. The only difference between Tesla and traditional companies is that Tesla didn't seem to mind people testing unproven techs with their lives while the other manufacturers are more restrictive.

Take a long distance road trip with an EV without Supercharger access. Report back.

Superchargers are better on average.

But the US Electric Canonball run record is NOT held by a Tesla. It's getting there.

Kyle Connor, from the Out of Spec Motoring YouTube Channel, took a Porsche Taycan across the country on December 31 and set a new electric Cannonball record with a time of 44:26. This beats the previous record set by Connor and his team in a Tesla Model 3 by almost an hour.

https://cleantechnica.com/2021/01/12/porsche-taycan-beats-te...

I mean, just 3-4 years back I'd agree with you. Nowadays at least here in UK you're getting 100-150kW chargers being built literally everywhere. I'd have no problem owning and driving cross-country in a non-Tesla EV nowadays. That equation will only be getting worse and worse for Tesla - they are adding more Superchargers but nowhere near the rate of non-Superchargers. Yes, Superchargers are better technically(especially if you have the latest Model 3 and can tap into the 250kW charge), but it's no longer the argument to buy a Tesla - charging a normal EV is less and less of a problem, even on long journeys, even without having access to the Supercharger network.

Their charging infrastructure is by far the best out there, even if it is a proprietary standard.

> proprietary standard

???

Teslas don't use NEMA chargers in the US.

Your comment reminds of me of this. If in the future medicines/technologies are invented to get rid of people's impulses to hurt one another (as in Stanislaw Lem's Return from the Stars), but in doing so, people also lost the impulse to take risks, would you be for or against such technology? Neither side is wrong.

Anyhow, I think it's a well-known fact that Tesla's rise is due to their innovation in both hardware and software (Technology). Their Supercharger network (Infrastructure) surely is also ahead of their competitors by a wide margin.

Taking risks on impulse is just gambling. Taking risks after considering all of the known factors and estimating the unknown is logic.

> it got way bigger.

It's still unclear whether this is due to fundamentals like the ones you mention, or just an irrational stock market.

Now that more and more companies are coming out with their EVs, the truth might become clearer.

It's pretty clear to me...

Can you enlighten us?

Tesla's stock performance doesn't justify the price unless they pivot hard into other markets.

As a recent owner of a model 3, I've been blown away by the charging infrastructure advantage.

The non-Tesla chargers near me in Colorado are just plain garbage. Sometimes, they work great, but other days I go back and the terminal won't function. And currently, these chargers are all the owners of non-Tesla EVs have.

I'm actually surprised there isn't a legal push by Congress to force Tesla to open up their charging infrastructure to others.

I own both a Audi e-Tron and Tesla Model Y (well, it’s the wife’s but you get the idea.) Taking a road trip in the Audi is all but out of the question because of how awful the charging infrastructure is. That is not say nothing in regards to the litany of design flaws, poor consumption, and miserable dealer support with the Audi.

Tesla is easily 10-15 years ahead of all other manufacturers.

> Tesla is easily 10-15 years ahead of all other manufacturers.

Well the majority view is that the Porsche Tycan is a better car, but at a different price point - considering the (im)maturity of the market 10-15 years seems a stretch, particularly considering there are some great cars coming out like the mini electric.

Depends on how ‘better’ is being judged. Premium fit/finish, interior quality, handling, etc. - i.e. the things that the legacy Porsche business was already good at, Taycan is better.

Battery tech, motor tech, vertical integration, and (arguably most importantly) overall efficiency, Tesla is ahead, and probably by many years.

Tesla also far ahead in effort/time out into developing self-driving, though the jury is obviously still out on how meaningful their approach finally turns out to be.

> (arguably most importantly) overall efficiency

Sorry but pretty much no one cares about efficiency after you break 300-400km range

I considered the Taycan as a replacement for the e-tron but it has all the same problems as the e-tron. The interior finish and handling dynamics are nicer than Tesla for sure but literally everything else they get wrong. Like I said, they are at least 10 years behind.

Here is an example: recently the Audi app which you use to control the car from your phone was down for two weeks for server upgrades. I have worked in IT and software for almost 20 years now and a 2 week outage is unimaginable.

I'll agree a 2 week outage is insane, but that's hardly an example of the tech being behind. Shitty process sure and lazy software development too.

How about the charge range or stability control? Any idea about the battery's expected life span? What technology do you think Audi is behind on?

My impression has been that Tesla nailed the charging network, charge range and raw straight line performance. Everything else they half-assed, i.e. the stuff I care about on a daily basis feels cheap.

Things you'll care about on a daily basis:

* Rear hatch will occasionally just open by itself. There was a TSB from the dealer to resolve this where they reprogram your keys and adjust the sensitivity of the kick sensor but I'm still skeptical. The audi app should alert me if the hatch has been left open for more than X minutes with the car off.

* Audi App in general is very slow and unresponsive. Sometimes I'll try to precondition the car and the app just spins for minutes and then silently fails.

* The onboard charger can run with either 50% of 100% of a circuit, nothing else. If you are at a shared 240 or 120v system where there is a lot of load (RV camp ground for example) your car simply won't charge.

* Electrify America is a mess. You can google this and see thousands of examples.

* There is no regen or one pedal driving. You can manually activate regen by pulling the levers on the steering wheel but the behavior isn't consistent and the regen isn't strong.

* There is no way to enable "creep" mode like how a traditional automatic ICE car behaves.

* There is a feature to schedule charging for those who have off-peak rates. You have to set this every single time you use the car.

* The virtual cockpit and 360 camera occasionally fail to initialize so you just have blank screens.

* Consumption is extremely high. For reference for Tesla people a good day in an etron is 400wh/mi.

* Vehicle nav map shows me gas stations, no way to search for charge stations.

* Vehicle still has ICE based service reminders built in.

---

Now for things that are going to get someone killed:

* The vehicle rolls backwards on hills. This + lack of creep means that you have to feather the gas. There is a "hill hold assist" which will randomly kick on but it's not reliable. Stop and go traffic in a hilly area is very annoying.

* When parking the vehicle will roll backwards or forwards for about a foot until the brake catches. This could easily entrap someone in an enclosed space.

* If the vehicle is "on" or "off" isn't completely clear as a user. If you put it into accessory mode it looks exactly the same as the vehicle being on sans one small green line. I've accidentally put the vehicle into neutral with the vehicle in accessory mode while parked on an incline and it began rapidly rolling away (the thing weighs almost 7000lbs) while I tried to pump the non operational brakes.

* Vehicle automatically shuts off climate control after 30 minutes of idle. I'm glad I learned about this while waiting for someone instead of when I had left my dog in the car.

* Getting out of the driver seat shuts off the car completely when in park. See prior points about climate control and rollback.

I could go on. This is just what came to me off the top of my head.

> 400wh/mi.

That's INSANE. No wonder why they need chunky batteries!

Our Model 3 cruises at around 200 Wh/mi.

Also, the Model 3's climate control times out after four hours. But you'll get a notification when that happens and can re-enable climate immediately thereafter.

It's unfortunate that VAG took shortcuts

With the exception of the efficiency numbers, none of these seem like problems that would take 10 years to resolve, even at the glacial pace of most automakers. Many of them even seem like software issues that would be resolvable via firmware updates.

400wh/mi though, oof. That would be about as expensive to operate as my current gas-powered vehicle (both around 10c/mi).

Yes but it’s the mindset of the VAG software engineering staff that created these problems. I didn’t go into the extremely confusing MMI, lack of OTA updates, etc. There is no way to escalate issues to VAG corporate. Even if they pressed reset on their software engineering team tomorrow it’d take a few years to ramp up to catch Tesla.

Two weeks?! Not even FCA's UConnect infra was down that long!

100k car is better then 40k in a few metrics. Wow what an achievement.

Model 3 Performance can keep up with 120K+ Tycan.

And Model S leaves a Taycan behind it like a the Taycan was a Ford Focus.

> particularly considering there are some great cars

People made the same argument in 2014 and all those cars came out. People made the same argument in 2018 and all those cars came out.

And non of that changed Tesla growth or margin (other then to the positive).

Well the statement “nobody makes a better car at that specific price point” is a bit less bold than the original claim that every other car company is “easily 10-15 years behind”.

I mean it’s obviously an absurd claim anyway, Tesla is less than 15 years old and clearly the other car companies aren’t starting from scratch.

Besides, the Taycan now starts at $79k, not $120k. You are comparing the cheapest Tesla against a higher range Porsche. It’s pretty much cost competitive with the Tesla Model S. Not everything is about performance anyway, I doubt I need more power than either car - a comfortable driving experience and build quality would be more important to me if I was in the market for one of these cars (which are all more than I would want to pay for a car).

> Tesla is easily 10-15 years ahead of all other manufacturers.

The Mercedes EQS is getting pretty good reviews and the specs look good, so I'm not sure about that. It looks like a direct competitor to the Model S.

> I'm actually surprised there isn't a legal push by Congress to force Tesla to open up their charging infrastructure to others.

There is in some other countries. IMO the supercharger network is a short-term competitive advantage but probably not a sustainable one as other companies move in.

They are opening up in Norway, presumably due to local laws.

Can you point to a source?

All I can find are articles such as this one https://www.tu.no/artikler/apner-tesla-offentlige-ladestasjo... that talk about Tesla bidding for contracts to install charging stations and that the conditions of the contracts require the stations to be open to other brands of car.

The article points out that Tesla can do this by dedicating part of the station to third party chargers.

So it isn't because they are being forced to do it nor is it necessarily the case that Tesla's own network would be involved.

> I’m actually surprised there isn't a legal push by Congress to force Tesla to open up their charging infrastructure to others.

Why does this surprise you?

> I'm actually surprised there isn't a legal push by Congress to force Tesla to open up their charging infrastructure to others.

I honestly don't understand this sentiment.

Tesla invested many many years creating a charging network in a competitive environment that actively resisted it. So now that Tesla is super successful in part because of this long-term investment, how is it fair that Tesla _must_ open it up to the _same_ people that resisted them earlier?

That's like Apple being forced to give up their Lightning specs to third-parties because they invested years of R&D into creating a fast plug-and-play standard before USB-C gained a foothold.

Because sometimes the government can use its powers for the good of the general public, even if it negatively effects business. How negatively Tesla would be impacted is debatable - I don't think anyone would expect them to be forced to let people use their chargers for free.

I dont think people would put up with a gas station that only fueled Toyotas, or a parking lot that only allowed Fords. This doesnt strike me as being terribly different.

Why would a government not consider it monopolistic to own both the charging infrastructure and the vehicles themselves?

No reason it can't be both. Obviously Elon memes helped a lot, but they are making very real and significant progress.

Their product is so popular production of their Model Y is essentially sold out for the 3rd quarter with 2 weeks to go in the second quarter. They are in a business that has massive efficiency advantages as it scales. There is a good chance Tesla will be the largest company in the world in 10 years. It isn’t a coincidence that you hear all these rumors about Apple trying to get into the automotive business.

There is something between 'fundamentals' and 'irrationality' here. This kind of market cap results from a bet by buyers that, if given access to capital (by inflating the value of Tesla or Elon's holdings of Tesla shares, or its ability to issue more) Tesla will realize the value that the market cap is bid up to. But of course, it's circular - if Tesla's stock wasn't bid up that high, it wouldn't have the capital to realize that value. That doesn't mean it's irrational, but it's not the same as a cold evaluation that a business is already clearly going to be worth than much.

I think you have to ask whether Tesla would have the same or similar valuation in any of the following circumstances:

- If literally anyone else were CEO.

- If Musk hadn’t used twitter to gather a cult-like following of people who idolize him, think the tech is cool, and can’t afford a Tesla but can afford a few shares of the stock.

- If Musk hadn’t repeatedly inserted himself into the WSB “meme stock” & crypto counter-culture to cultivate fans within that group of risk-taking investors who are known for ignoring fundamentals and buying stock on their intuition (or even the internet’s intuition!) alone.

I’m not saying Tesla is worthless and I even have to give Musk credit for creating an internet persona where he’s helping middle class millennials “stick it to the man” while _being_ the billionaire man. But IMO its very obvious that at least some substantial portion of Tesla’s valuation comes from Musk and his internet antics/persona and is completely detached from the underlying value of Tesla itself.

You’re not entirely wrong, but Tesla (and a small SpaceX investment via funds) is the closest most people can come to investing in Musk personally. Wouldn’t you invest in someone who is obsessed and will strive at all costs to succeed? And how is this any different than accelerators like YC investing in founders vs business ideas? The “eccentricity” for lack of a better word is the symptom of his underlying drive, so if you want the returns you take the good with the crazy.

I wouldn’t work for Musk (to protect quality of life and mental health), but absolutely would sink all of my high risk allocated capital directly into him as a person. Obsessed people get shit done.

> And how is this any different than accelerators like YC investing in founders vs business ideas?

VC funds are (1) diversified, so it’s less risky — their success or failure isn’t tied to any one persona or even any one company, (2) fund investors have a lot of money so they can afford it if their entire investment goes to zero, and (3) the investors are well-versed in assessing the likelihood of that risk when they make the investment. The same cannot be said for the average Joe who’s a fan of Musk and has $2,500 in their Robinhood account.

Fair points. I'm unsure how to protect retail more without handicapping those who know what they're doing. Taking away exposure opportunity from retail isn't going to help, but neither does encouraging gambling (although that's what investments are, educated gambles). Musk is exploiting an edge case, but I'm unsure if I can blame him for it based on how it's turned out.

Don't invest (or gamble) what you can't afford to lose on high risk investments. Index funds are your friend.

Although I'm no fan of Musk he's a pretty smart guy and he's done a pretty good job so far of toeing the line. (Though I don't envy his lawyers because I suspect he toes the line a touch more than they'd prefer.) And, as the saying goes, winning fixes everything, so I think the fact that Tesla is "profitable" and has a promising technology at the core of the business helps, too. It's clear the stock price isn't entirely derived from the company's value but the company clearly isn't worthless, either.

All that is to say, I don't think there needs to be any additional restrictions or regulations on investors to deal with meme stocks because I think the problem will eventually be addressed via the existing system. Whether it's Musk or (more likely) some other enterprising social media personality I think we'll eventually see a meme stock that's so egregiously ridiculous and loses a lot of people a lot of money that the SEC, and perhaps the DOJ, will be forced take action. Maybe even multiple egregious meme stocks will be used in quick succession in order signal where the SEC's "hard line" will be.

And I eagerly await Matt Levin's "Memes are Securities Fraud" column when it happens!

> Don't invest (or gamble) what you can't afford to lose on high risk investments. Index funds are your friend.

100% truth, but many people don't listen to that. Too boring. I'd rather have Joe Robinhood Investor sink $2,500 into Musk and his mission with Tesla instead of sinking $2,500 into GME or casinos.

This obsession hasn't always been good, and often caused Elon Musk to make dishonest statements about the overall state of the business and its future. This should scare anyone who is attempting to value Elon Musk at a realistic level.

Toyota have been mass producing hybrid electric cars since 1997, and they practically invented the modern vehicle assembly line.

It's hard for me to accept as credible the assertion that they would be "way" behind Tesla in anything.

Toyota's reluctance to accept that battery EVs are the next big thing is so strong that it can negate all these advantages.

"The market can remain irrational longer than you can remain solvent."

And it will continue to go up until it doesn't. Maybe Tesla has a vault of unicorn blood and is just waiting for the perfect time to unveil it, but as a car company, their stock valuation makes absolutely no sense. It would take a miracle for Tesla to overtake more than all 3 top automakers combined. There is zero indication this has any possibility of becoming a reality.

Tesla's stock performance is in pure FOMO land now.

> until it doesn't.

That's not necessarily the case. Financials are irrelevant for stocks like Tesla, and it can continue to moon indefinitely if the market dictates it.

So I guess “stocks like Tesla” are really just tulip petals? What are people paying for?

It's a great question. Future potential, leadership, tech stack, manufacturing capacity, etc. There is a lot of "soft" aspects of running a company and valuation is one of the most difficult/error-prone things to do.

Damodaran's Google talk kind of does a good job describing valuation of high-growth companies (it is deceivingly simple): https://www.youtube.com/watch?v=Z5chrxMuBoo

> it can continue to moon indefinitely if the market dictates it

Not really. The higher the price gets, the more new money it takes to move the price higher. TSLA has done significantly worse than the overall US stock market this year.

I don't disagree with you, but the common retort I hear to this sentiment is that "they aren't a car company, they are a battery/energy storage company that currently sells cars".

What are your thoughts on that sentiment? Just curious to hear from rational investors on that specific item.

Which is a funny idea, since the batteries are coming from Panasonic.

Afaik only some of them are from Panasonic.

s/some/most

They're also building battery factories.

So are tons of other companies. The largest battery plant in the southeast just went up near me. It’s not built by Tesla.

Unicorn blood is way overrated. The effects don't last long.

Tesla is very different from other car companies.

- Tesla owns a large global infrastructure for charging that they produce themselves. And produce a lot of home and destination charges as well.

- Tesla has a very large expanding internal battery production and will be one of the bigger battery manufacturers in the world themselves.

- Other car companies down own their distribution channels and thus make lower margin per car

- Tesla is market leading in grid storage a gigantic market that is about to grow for the next 20 years straight

- Tesla is leading in home solar/storage market that will also be growing for then ext 20 years

- Tesla has the potential leading in self-driving (yes make your jokes now HN)

- Legacy car makers actually make a huge amount of their money from out of warranty part sales, a channel that Tesla has yet to take advantage of because most of the time they have far more new cars and service is still losing money for them. Steady state the huge service network they are building will be very profitable.

Tesla has the clear potential to continue growing 50%+ with improving margin (localization of production, vertical integration) just with production capacity that's already in production. While the other car makers are at series risk of having a huge amount of legacy infrastructure that is losing value while their still large ICE production could very well turn negative margin as volume decrease economics of scale.

You can still call it to high, but saying its made up nonsense is equally incorrect.

Go look at the Wallstreet models, the stock price is defensible even with not all that aggressive assumptions for the next 10 years. Far less aggressive then Tesla internal targets.

It all depends if you believe Tesla can continue to execute. And what position they will be in by 2030 and then what you believe the next 10 years will look like.

Tesla MARKET VALUATION has grown like crazy, but their sales and profits are lagging behind. And you're wrong: Tesla might have an advantage in infrastructure (Supercharges) but their technology is not far ahead of others, and their market share is falling down (at least in Europe).

Also: Tesla is planning to open up their chargers network to other cars [1]. So either they have a plan to ditch car manufacturing and focus on chargers network (and battery production), or they are digging their own grave.

[1] https://electrek.co/2021/06/24/tesla-confirms-plan-open-supe...

That article you linked to isn't saying what you think it is.

I specifically would like to see the superchargers opened up to all vehicles as well, but the details of the article state that they are only doing this in very select locations/markets, and primarily focused on those which were built with government subsidies.

We are not likely to see the vast majority of the Tesla charger locations opened up to other brands for a while, and that may come via regulation.

1. This is happening in Europe is, which is the place where they are already losing market share

2. If they agree to open their network in some markets, the rest of the world will soon demand the same.

The share is overvalued. Tesla is the leader in CPU, but only average in the rest of the manufacturing. And the main selling point for the CPU, autonomous driving, has been announced for years. In the meantime, there is only talk of the full potential for autonomous driving. In my opinion, it will still not be ready in 5 years.

Without climate crisis and emission scandal emobility still wouldn't be an issue.

Just look at Norway and the Netherlands which seem to have a 2-3 year lead on EV adoption. Volkswagen brands have already surpassed Tesla sales there. Tesla makes a terrific product and they single handedly provoked that change we are seeing now. However, the German and Korean brands make great cars too. Given the choice I would trade good build quality, some more physical buttons and a quiet cabin at highway speeds for Teslas ride and futuristic infotainment on most days.

They are catching up, but currently the VW and other EVs, with the exception of Porsche, are pretty inferior. (A notable exception is Hyundai's Ioniq5, which is very impressive).

My biggest concern with other auto manufacturers EV projects is how absolutely abysmal these companies are at building software. It's just not even close. And software makes a HUGE difference with EVs. My wife's Audi has absolute shit software.

It's not that it's some tall order to write good software, it's just that these massive corporations have no idea how to build good software teams, period.

I'll note that "inferior" to somebody on HN may not be very much like "inferior" in the judgment of a mainstream consumer. I agree with you that traditional car company software is terrible. But if there's one lesson I've had to learn over and over, it's that terrible software is not much of a barrier to market success.

> My biggest concern with other auto manufacturers EV projects is how absolutely abysmal these companies are at building software. It's just not even close. And software makes a HUGE difference with EVs. My wife's Audi has absolute shit software.

A few years ago I read some forum posts from someone who claimed to be an ex-Tesla engineer that basically said Tesla was pretty bad at building software too. They're probably just better at making the UI seem shiny.

Most companies struggle to build well understood products like apps and web sites. The leadership of most organizations is unable to organize the relevant work because they don't know anything about such products. If a company struggles to build an app, a product like an EV is a major undertaking.

Tesla has a lead now, but can it keep it?

Other car manufacturers are already catching up, so I guess we will see!

It just isn't true that other brands are lagging way behind Tesla in tech / infra / market share for electric vehicles.

The difference in the past 3-4 years has been huge and traditional car companies have really closed the gap. We're no longer in the days of only the Leaf and the Bolt being electric cars with reasonable range.

Most electric cars these days have enough range to be a daily driver. Most cars these days have driver assist and rear cameras, etc. Tesla's "fully autonomous" car is not here (despite being "2 years away" 6 years ago). Teslas have shockingly lower reliability than people expected when they first started being sold, and traditional cars have a leg up on them in this regard.

I'm not a Tesla downer, honestly I think they've done so much good for the world and the risks taken to make that company a success has accelerated progress in so many ways. All of that can be true, and it can also be true that other brands are catching up and already have attractive alternatives to Teslas out in the market now.

BMWs next electric cars will have batteries with zero (!) rare minerals, they are on the way to produce cars with renewable energy and they can recycle 96% of their batteries, just not the thermoplastic. There is much more they are doing. Where they forced to adapt? Yes, they weren't at the forefront. But they are taking huge leaps forward.

All that while providing, well, the quality of a german car. I drove a model 3 and a BMW and there is a massive difference in quality.

If there is a German car maker lagging behind I think it would be Daimler/Mercedes Benz. VW is somewhere in the middle I guess.

I think this point is key. Musk was fast out of the gate and did well out of it. Existing car companies are slower to adopt innovation, but they've been doing it for 100 years at this point. Musk is a darling of the early-adopter market, but that's a small percentage of the total market. The more established car companies have huge advantages there, and Tesla's going to have to work very hard to overcome them.

> while providing, well, the quality of a german car

So half the electronics will be broken in five years.

I would say VW AG is leading the charge among the germans, especially considering the volume of cars the group sells as a whole. The ID.4, the Buzz, the Audi E-tron lineup and the Porsche Taycan, just to start. VW group also has a long history of racing hybrid vehicles, and I'm looking forward to seeing more and more racing classes move to hybrids. But i digress.

Agreed that MB is the laggard and that Tesla quality is poor.

That doesn't prove much; it's been 3 years of a very bubbly market. The NASDAQ has gone up 2x over that period. As Warren Buffett said, "Only when the tide goes out do you discover who's been swimming naked."

I remember a lot of people in 1999 and 2000 pooh-poohing talk of a bubble with the exact same arguments. The technology is amazing! People predicted it was a bubble before and it's only gone up!

There's no denying Musk is a true master of hype. That has given him a ton of free advertising and a very low cost of capital. And he's gotten away with fantasies and lies for years, like promising 1 million robo-taxis on the road by the end of 2020. [1] But all bubbles pop eventually, and truth always wins over hype in the long run. It's only then we'll see whether Tesla's become truly a sustainable business, or whether Musk is still swimming naked.

[1] https://www.businessinsider.com/tesla-robo-taxis-elon-musk-p...

> They are way behind Tesla in technology

Electric cars are simpler then ICE cars... and Ford has the Mach-E SUV, VW has the ID.4, etc...

This market cap is assuming that Tesla captures the entire auto market at higher margins than any car company to exist ever. To which, I ask, have you seen the auto market? Do you think the Germans are just going to let BMW and Volkswagen die? These companies used to make tanks, and still could if you pressure them enough. Hyundai is 6% of the entire South Korean economy; do you think they are just going to let another company consume that? And as for China, the world's largest auto market, you are at the entire whims of the CCP, which could decide to kick you out in favor of their favorite local competitor at any time.

Can Tesla align body panels yet?

I want Tesla to succeed but I know of several horror stories with quality and getting any kind of support or repairs post-purchase. They have some work to do.

That makes sense in the restricted context of what traditional makers did. Tesla has a way of broadening their markets. e.g. batteries. electric power storage, electric chargers. This can continue so possibly cut into petrol or logistics companies. Hard to quantify a limit.

There are a few more in the pipes:

- Rivian (Private)

- Lucid (Private)

- Arrival (ARVL): $10B

- Nikola (NKLA): $7B

- Canoo (GOEV): $2B

- Lordstown Motors (RIDE): $2B

Although: > EV Startups Are in Trouble. Investors Don’t Care.

https://www.wsj.com/articles/ev-startups-are-in-trouble-inve...

Canoo is the manufacturer to watch. They have the bmw I vehicle team on staff and have been in talks with Apple.

Pretty much all of these have former legacy company teams working for them.

Lucid is mostly ex-Tesla and ex-Hyundai.

Lets add PE Ratios as of last Friday 24 June ....

Tesla: 674.98 ( !!!)

Volkswagen: 12.70

Daimler/Mercedes: 10.43

Ford: 15.52

PE Ratio is one of the dumbest most irrelevant ways to measure company. At one point Tesla had no PE, then it was 10k and one quarter later it was 1k.

Evaluating growth companies with PE is idiotic.

I did not claim this will be the single data point.Of course is not to be used without additional information. Warren Buffet also stated you should not rely solely on PE.

It is a starting point, and the difference is enough, to justify a statement that Tesla is overvalued.

Are you saying Tesla is not overvalued ?

comps are very simplistic way to value companies. in this case, your comparing apples to oranges. for starters, tesla is highly vertically integrated. so it doesn't really make sense. you would need to comp tesla to the auto supply chain. they make their own seats, speakers, driving assist programs, glass, they stamp their own metal, paint their own cars. They have their own chargers, service centers and do all their sales directly without a dealership network. All the companies you have listed outsource these tasks. Furthermore, they have an energy business, auto insurance, etc.

dcf models are the best way to think about valuing a company.

TSLA is a battery company. Autos are just the means to and end.

Their market cap represents how well they are positioned to capitalize on the end of Fossil Fuel Age.

Or is Tesla an integrated HW/SW company where batteries are just part of the physical implementation of transportation that be improved?

https://www.youtube.com/watch?v=YZTlaiu_vWE&t=100s

Isn't Panasonic the battery company?

As much as CATL. Or Tesla, soon.

Market cap isn't really a meaningful metric to compare across companies for most use cases. It certainly isn't a valuation metric.

I get what you're saying, and there's truth to it, but Tesla is also valued higher than all the major car companies. For that to make sense, it either needs to have a business well beyond cars (maybe batteries, maybe not; maybe solar) or a path to significantly better margins that competitors (unlikely).

The valuation right now is entirely a bet on Elon and being part of the story.

I won't dispute that Tesla's valuation is eye watering, but it isn't very meaningful to compare market caps. A generally superior comparison is between enterprise values. This is especially true for car companies which (with the exception of Tesla) are heavily debt financed.

By that metric, Tesla actually drops below 600Bn. Toyota moves to about 400bn. Ford goes to 170bn. VW is 350bn.

The other companies are valued so low because their ability to innovate is so low.

Tesla is a vertically integrated company, while the others are horizontally integrated. The combined proprietary technology of Tesla is greater than the combined proprietary technology of all the big auto manufacturers. A lot of those companies just buy technology from some other vendor, so while it looks like they are competing with Tesla, they aren't really.

The incumbents just know how to build a car, Tesla not only learned how to build a car, they built self-driving technology to compete with Google (Waymo), the built their own chips to compete with Nvidia, they built their own batteries to compete with Panasonic, and they built their own manufacturing technologies to compete with hundreds of long term industrial companies. Not a single one of those companies could design a GPU to save their life. Let alone in the time and quality that Tesla built it.

You can't just look at the surface and go "Toyota and Tesla sell cars, therefore I can compare companies apples to apples"

On the flip side it sounds like Tesla may be suffering from a Not Invented Here syndrome which would seriously hamper their ability to innovate quickly and inexpensively in the future.

"The Japanese firm paid $21.15 per share for around 1.4 million shares"

That is some decent profit

Is that 1.4 million shares before, or after, the 5:1 split?

>The move provides the Japanese firm with billions of cash to support new strategic initiatives, such as the $7.1 billion purchase of Blue Yonder

...what the hell is Blue Yonder, and why would Panasonic want it?

According to wikipedia: Blue Yonder (formerly JDA Software Group) is an American software and consultancy company (owned by New Mountain Capital, The Blackstone Group and Panasonic), providing supply chain management, manufacturing planning, retail planning, store operations and category management offerings[1] headquartered in Scottsdale, Arizona.

Sure, but why Panasonic, and why now?

They are primarily in supply chain management. Given the current issues worldwide with supply chain disruption, this seems like a prescient acquisition.

Reading between the lines, my guess is Panasonic is getting ready to work --and scale-up-- with lots of car manufacturers. Owning stock in any one company would create a conflict of interest. So, you either buy an equal amount (whatever "equal" means) in stock in every company you work with or you own no stock on any of them. The latter is the easiest path to eliminating any ethical questions.

Why would it be a conflict of interest or some vague ethical concern, instead of just expecting the TSLA valuation to drop as they expand their client list?

Clear conflict of interest prevents future sales contracts with other clients.

It's not the governments or Panasonic, it's their image to new clientele.

Let me reduce it to a simple example:

Two companies buy tires from the same tire manufacturer. The tire manufacturer owns a significant amount of stock in company A and none for company B. If company A does well, the stock value increases. This could be worth billions.

Company B has a legitimate concern here. Is company A getting any preferential treatment? Lower pricing? Preferential deliveries? Better access to resources? Etc.

While two companies can buy exactly the same product from a manufacturer, the nature of the relationship and the advantages one receives over the other can be massively different.

The easiest way to understand this, of course, would be volume. If a company buys a million units a year it will have preferential treatment and access over another only buying 10K/year.

My point is that owning billions of dollars of Tesla opens the door to a set of questions. This door is closed permanently the minute Panasonic got rid of all the stock.

The problem in your example isn't for Panasonic, it's for company B. I'm not sure why you think preferential treatment between companies is a bad thing. If you're Panasonic or Tesla you'd want to keep a good thing going and if Tesla wants to change battery design, Panasonic isn't going to cater to the car company buying a rounding error of what Tesla buys to keep some appearance of "fairness."

You make what your customers want, and you definitely favor making what your best customer wants.

Where did I say preferential treatment is bad?

I think you are missing my point.

Here's another quick take:

If I am going to enter into a non-trivial business relationship with a supplier and I have multiple equivalent options, I will avoid a supplier with potential conflicts of interest with competitors. If it is important enough for that supplier to get business from many potential large customers, they must avoid having conflict-of-interest issues.

I have a relevant example from a project we are working on right now. It's a specialized aircraft simulator.

We have about $250K in CNC laser tube cutting and welding work we need to outsource to a vendor with the right capabilities. We have been in conversations with about a dozen of them. One of them has a consulting relationship with a company that is a competitor to our client. Not a direct competitor (not the same product) but close enough to raise a question. We had to disqualify this vendor on that basis.

In fact, this sort of thing is so important in business that the vendor actually brought up the conflict of interest to us. We didn't know about it. They informed us that a potential conflict existed and suggested they should not be be considered for the contract.

That's what I think Panasonic is doing. If they want to go after relationships with direct Tesla competitors it is a lot easier to manage if there are no conflicts. Owning billions in stock on one company and none of the others is a clear conflict.

Remember that owning stock in a company means you are an owner of the company. It is YOUR company. Becoming a supplier to companies that compete with a company you own is a very clear conflict minefield.

.... making almost $3B in profit.

edit: in perpective - they owned about 0.55% of Tesla. Selling their share nets Panasonic a windfall thats worth about 10% of their own $27.7B market cap.

Yeah "dumping" a winning trade isn't dumping. It's taking profits to move onto other investments.

Why not? It’s still dumping. Saying that someone is only dumping if they lose, makes it too narrow.

Dumping lowere the price, the bigger the dump the lower the price. Selling slowly can be called gradually unloading.

"Panasonic realized exceptional gains on Tesla investment, continues successful partnership."

Edit: Money made is money made. Lots of wealthy folks who exited investments before they were done running.

Dumping is half of pump and dump. Which if you do it right is making a profit. (I don't think this trade is pump and dump, just arguing usage with a commonly used term)

Dumping a winning trade is still dumping.

It means you think you have won as much as there was to be won and you now have better uses for the money. This suggest you believe the stock is no longer as wortwhile as some alternative.

When Amazon sell you a printer or a book or a laptop, are they dumping it?

A seller could certainly dump unmoved inventory on any marketplace.

If they're selling me their entire inventory of one particular item, and do not intend to purchase more of it - maybe?

Yes?

If Amazon thought the items in its warehouse were appreciating, I fully believe they'd decline to sell at a lower price.

So selling = dumping?

Edit: ok so dumping=selling the whole lot

I guess that makes sense. I think this post explained it better https://news.ycombinator.com/item?id=27633163

No it is not. Stop trolling or go learn financial slang. It is not hard, you can google it.

I worked on an exchange and currently with trading systems for one of the largest banks in the world.

I mean, yeah, but at the same time, stocks are different from inventory because they (can) appreciate in value. Inventory in a store depreciates over time.

There are two and a half reasons to sell a stock: because you need the cash, or because you think the stock has stopped appreciating and will depreciate going forward.

Once a stock has become a depreciating asset it's really no different than the bedroom set that's been sitting in the corner of the showroom for too long, and before too long they'll be happy to take 50% or 40% or less of what they were originally asking just to get it off their hands, even if they end up selling at a nominal loss at the end.

So I'd argue that a stock being "dumped" really is no different than a printer being sold, but that that doesn't look any better for the stock than the negative term would suggest.

Just want to point out that you've got insider knowledge and if you want people to be better educated about distinctions and jargon you gotta educate them. Just referring people to the great oracle called Google leads to the bad old days of googling a question and only getting threads where frustrated specialists snarkily suggest googling instead of asking.

Really though, the hardest part of googling the answer to a question is knowing what to call things and how to phrase your own questions. Google "is amazon dumping printers", its about E-waste and recycling. Of course, you wouldn't do that because you know better, but thats sort of the point. You are the one who knows better, not the questant who is sort of confused definitionally.

> and if you want people to be better educated about distinctions and jargon you gotta educate them

I literally did that in parent post and another earlier response to the same person.

Your credentials aren't really relevant unless you're making an ad hominem argument to the effect that we should believe everything you say about finance because you're an authority.

Use of slang or jargon in a headline only subtracts points, in my gradebook. And if dumping is mostly just selling, why not say selling? Well the answer is "because clickbait." A devaluation, insult, or attack on Tesla generates more "engagement" than a sale of Tesla.

Besides which, dumping is an analogy. Nothing is literally being dumped, just like nothing ever gets literally pumped. Nor does anyone ever literally "take a bath" or "get taken to the cleaners." Nothing "crashes" and nothing "booms." And unless people start fucking cows or grabbing salmon out of rivers with their hands and biting their heads off, nobody is "bearish" or "bullish" either.

Dumping is slang financial word for selling your entire inventory of certain type of thing. Usually this has underpinning that the item is some kind of hot potato that they want to get rid of. That is because, usually, selling a huge amount of stock like that causes the price to drop while you are selling it so it means you are accepting some additional losses for selling everything quickly.

When Amazon sells me something they are not dumping it, because I buy just one item and it is not important for their financial situation.

Thanks, I did actually find that explanation useful

“Dumping” is kind of a provocative term, but when you cash out an investment that usually means you no longer expect the asset to continue appreciating. (Or at least that you expect a better return elsewhere)

Nobody would cash out a position if you expected further gains.

Many reasons to dump assets expecting further asset price appreciation: cost to maintain inventory no longer worthwhile, pivot, asset manager quits with no replacement, further gains expected but beta too high, conflict of interest, regulatory burden, etc...

Why would you completely exit a winning trade that you have more insight into than most people since you’re the sole supplier of the primary component in the thing if you thought it was going to have a higher ROI than other investments?

… you wouldn’t.

They see the writing on the wall. Big Auto is going to dominate electric vehicles. Take the Ford F-150 as one example.

https://www.ford.com/trucks/f150/f150-lightning/2022/

I don't think big cars are representative outside the US.

Eg. In Europe, you would have a lot of problems with parking it.

It's not about the size of the car.

GP's "Big Auto" isn't about large vehicles, but about the larger and more established auto industry (Ford, VW, etc.). The F-150 just happens to be a particularly notable and recent example of an electric vehicle that seems to be particularly competently done (versus earlier efforts) out of one of those Big Auto companies. A sign that they may have finally learned how to target that side of the market.

Unless you think investing in yourself is better than investing in other companies.

Yes, they may feel they need to fund more research to stay ahead of the competition and keep the contracts they are currently getting rather than lose them. Maybe the future profits from staying ahead of the pack (or close) are worth more than the expected future growth of their Tesla stock over the current value.

you should exit any trade, winning or loser, the instant you have a better plan for deploying the capital.

Or they take the $3b and plow it back into R&D and factories so they can serve as suppliers to the other Big Auto companies who are dying for battery suppliers.

Or the most likely case, they're tired of Elon's schtick and they can take their technology elsewhere.

I think this is the right move for shareholders if their stake becomes big enough and doesn't serve a strategic value.

If I own Panasonic stock - but 10% of the value is wrapped up in Tesla's value - what's the point? Its better for everyone if they sell and if I want I can then invest some of my own in Tesla. Unless we see Panasonic as Warren Buffet what's the point?

First rule of watching the stock markets: Sales mean little. Watch who buys things, because that indicates actual interest.

Sales might be liquidity questions, rebalancing, any number of issues.

So, what's Panasonic doing that indicates their interest? Turns out, they have a Toyota partnership. Panasonic is trying to get into the European market. Panasonic formed a partnership in Norway to build batteries.

So, most likely that sale is a signal that a) Panasonic is ready to get deeply into the battery business, and b) a signal to their other customers that they don't have conflicting interests.

(I mean, yes, Tesla is also a bad deal, but the market still disagrees)

At "Battery Day", Tesla alluded to their plans to make their organization more vertically integrated: Lithium mining, battery production, and new vehicle designs that incorporate their own cells directly into the vehicle structure [1].

It has been reported in the press that Tesla will (likely) move away from Panasonic as a vendor [2]. Panasonic probably sees this as a good reason to divest and focus on future customers. From [2]:

> Tesla will continue buying batteries from longtime Japanese supplier Panasonic until at least 2022 despite the U.S. electric vehicle maker's plans to produce its own cheaper alternative.

[1] https://www.youtube.com/watch?v=l6T9xIeZTds

[2] https://asia.nikkei.com/Business/Technology/Tesla-strikes-ne...

You would if you cared about diversification at all. That is, if Tesla has problems, the stock you hold goes down, and your sales go down. Even if you think Tesla's going to do well, if you're not certain, you're wise to spread the risk.

It's the same logic as saying that an individual shouldn't invest all their money in the stock of their employer. If the employer as trouble, the individual can be laid off at the same time that the stock crashes.

Because regardless of how much that stock is worth, you can't pay your bills with it until you sell it.

also, panasonic may have an opportunity to put that capital else where which is better for the long term health of the company.

This isn't a retail investor situation

Yep the title is clickbaity, 'exiting their position' would be more apt as the reason isn't known to be a negative outlook.

> Panasonic’s share price increased 4.53% in the morning session after Nikkei reported the stock sale.

Not as dramatic as it sounds:

"Panasonic sold its entire share in their important battery client Tesla, in the last fiscal year"

A more appropriate headline would be: Panasonic uses gains from stock investment (TSLA) to expand car battery operations.

Even more appropriate: Over the course of the last year Panasonic has divested from TSLA and used the gains to expand car battery operations.

The currently headline makes it sound like it just click sell on $3.6B shares, the article makes clear that they have been selling over the year and this is just the final report that they are fully divested.

That's the story people might tell, but it's untrue. Interest rates are low. Panasonic has a medium investment-grade credit rating. Yields those bonds would be something like 3.5%. Panasonic would rather sell Tesla shares to fund a project than pay 3.5% interest.

Question to anyone more knowledgeable than I am in fiscal or business matters: why did Panasonic invest in a large client? Wasn't it risky? If 2020 had not been kind to Tesla, Panasonic would've been hit twice.

I think it has to do with a battery tech/manufacturing agreement between tesla and Panasonic.

Panasonic made their investment back in 2010. Investing in a (at the time) much smaller partner as part of a business deal is a semi-common thing to do because the smaller company needs more runway to be able to get to the point where they can actually start buying from you.

sounds like people figured how to scam the US

pump and dump their stocks

Just... no. That's now what happened here at all. Panasonic invested very early in Tesla, as a way to help give them more runway and just generally be a good partner to a buyer of their batteries. The price of Tesla stock has nothing to do with anything Panasonic did to "pump it up". They probably are just as astounded as the rest of the world by how the Tesla stock is, and decided to cash it out rather than let a meme stock own a huge chunk of their balance sheet, all while making a 9-figure profit.

Can anyone explain how Tesla can be valued so high?

They're valued twice as high as Toyota at around 1/12 the profits of Toyota. P/E is almost 600 so they'd have to overtake Toyota's profits by a significant margin to justify their valuation.

So far this looks like pure hype.

However... they are way ahead in terms of technology in a number of areas and I guess they could also make money from things like their super charger network and batteries?

So maybe they're better positioned for the future / more diversified than Toyota and therefore have greater potential?

Two thoughts: 1) the stock market is irrational and FOMO bubbles go to the moon 2) the market is perfectly rational and perfectly prices in future considerations; Tesla isn't an automaker, they're an energy company with tons of upside ahead.

¯\_(ツ)_/¯

The valuation reflects the idea that they eventually will overtake Toyota's profits significantly.

Toyota continues to focus on hybrids rather than EV. A questionable gamble.

> So far this looks like pure hype.

So far, the last 5 years?

> better positioned for the future

Yes, they are a battery company. Positioned to capitalize on the end of the Fossil Fuel age.

Yeah, valuations also bake in expectations of future earnings. Beyond normal expectations, growth stocks like this and tech companies get big multiples. My theory is that retail investors behavior is more like angel investors with tech companies now. My guess on the valuation right now is that a huge amount of people think Tesla becomes the worlds largest car company and redefines the industry. I mean, they kind of already have redefined the industry, the only question left is how much of the change do they capture as value.

I don't really believe in Musk and Tesla, but I'm not a bear (I have no idea what direction retail investors will take it), and I respect Tesla for proving that lithium ion batteries are viable for powering cars. The rest of what Tesla does is over-promise, under-deliver, sloppy manufacturing, dangerous, experimental products, and a dream.

Tesla's primary product is Elon Musk, and people want to be a part of that story.

https://news.ycombinator.com/item?id=27634348

Yet the stock is still going up.

because $3 billion is tiny compared to Tesla's size

Would you like to elaborate?

Total market valuation of Tesla is over $600B, so $3.6B is 0.6% of it.

Buried beneath the sensational headline is the fact that Panasonic has been slowly divesting over the past year. They did not just "dump" the stock today, they simply reported that they had finished selling all their shares today.

Reply on news.ycombinator.com