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You make good points, but I still wouldn't take that side of the bet. TSLA price has been divorced from reality for years and it's entirely unpredictable when and how that will end.

There's a bit divorced from reality, and there's implausible.

Amazon was a bit divorced from reality as well for most of its history. They had extraordinary continued sales growth to fuel that divorce, to underpin those high expectations, along with a quasi segment monopoly. That held up for a time. However it began to stall as online retail growth rates began to falter (look at Amazon's stock from 2011-2015, nice but nothing crazy while still carrying a ridiculous multiple; that's the result of retail profit & margin reality setting in). And then they started publishing AWS results and its software-like margins, and eventually the hyper margin ad business; kaboom goes the stock, due to that earnings growth and its forward expectations.

What's the Tesla AWS / Ad explosion? There isn't one. They don't have a business like that, where they'll get to print monopoly-like software profits. Amazon blazed a new path with AWS that they got to own as they went. Tesla has to take auto share from companies like BMW, Toyota, Honda, Hyundai, Daimler, VW, Ford, GM, etc. as they go (to say nothing of the Chinese EV makers that will eventually dominate that domestic market and gradually push outward globally). Entirely different context.

Tesla is an increasingly boring automaker, nothing more. EVs are just vehicles, they don't come with 4x or 6x the margins of ICE vehicles that Mercedes or BMW produce. The best case scenario, realistically, is that Tesla becomes Toyota or Daimler. That will be an astounding outcome, to get there and then hold that ground against that much competition. There's no AWS business coming to save their valuation. Batteries are not a stellar business, the solar business sucks big time (just look at the solar companies, their earnings and their market values), and the big rig business is also not at all spectacular.

Tesla also is not going to own the luxury market, they're horrible at making luxury vehicles. Daimler & Co will continue to dominate luxury vehicles. Tesla had its shot, a huge headstart, at conquering luxury EVs and entirely failed to put a big enough stake into the ground, they're out of time (look at what their high-end segment of sales is worth today or yesterday, it's a pittance despite the huge headstart; they've done a terrible job there).

The Cybertruck isn't going to take over the truck market.

What's left? The Model 3 has to conquer planet Earth in four to five years. Everyone has to buy one. It's not going to happen.

I defended Tesla for most of a decade on this forum. When a lot of people here said Tesla would never produce the Model 3 at scale, I argued against that skepticism across numerous threads over and over again; it was obvious it could be done. There's a difference between recognizing Tesla wasn't going to go bankrupt a few years ago for example (an easy argument I took up across numerous threads), and buying into really really crazy forecasts that are well outside of the realm of believable. There's being objective about what's actually likely, plausible, and just frothing at the mouth on bubble kool-aid.

I think the people who value Tesla at these rates don't believe Tesla will continue just selling cars. They believe the cars are just the first step in a range of products and services that will make Tesla a trillion dollar company. Just like Amazon, obviously a book store wouldn't be as valuable as Amazon is now, and it was hard to see this 15 years ago.

Anyway, definitely agree with you on the valuation. Even if you believe there's a chance it's going the Amazon route and we'll all be driving Tesla autopilot cabs in 5 years, it's priced as if that's a certainty.

I agree with most points made here. However, I wonder if it's as easy to predict the new high-growth/high-margin units as you suggest that Tesla has none.

Were most people in 2011-2015 aware of the "AWS / Ad explosion" that was about to come? Or did we know ex ante that Amazon was willing to shift their focus towards these units? Likely not, but the high multiples (despite the retail margins dragging down the gross margins) suggest that a large portion of investors were willing to bet that better units with protective moats (i.e. AWS) were coming soon.

I don't follow Tesla as much, but it seems difficult to dismiss that some of their business units won't follow high-growth/high-margin paths. What if their FSD software is licensed out? What if the supercharger network is shared with other EVs for a per-charge fee? Given Musk's personality, I can see investors taking on risk and betting that he'll be bringing something better than just selling cough regulatory credits cough cars. It makes me wonder if Tesla losing market share in the EV market will be the ultimate catalyst for this shift.

That being said, I agree with you that the market has "priced in" all these what-ifs for Tesla with extremely high expectations of success -- which did not seem to be case for Amazon. A slip or trip in car sales these days doesn't seem to move $TSLA much - investors that are long seem to be betting on other stuff and we'll see how patient they are in times to come.

>If Tesla owned the entire auto market globally in five years, it wouldn't be worth half that $4.3t forecast. That's every car, truck and big rig sold everywhere on earth. Add up the value of all other automakers, now or five years ago, or ten years ago. The fantasy projection dissolves instantly when you shine light on it. It'll be a small miracle if Tesla is able to maintain their present valuation while pushing earnings up to $20b in five years, that will require extraordinary market-conquering continued growth across all product lines. They have to become akin to another Toyota in five years just to do that.

Do you realize that Tesla might not sell cars but rides in the medium term? And if their fleet drives more than 2% of the time (current usage of privately owned cars), they'll generate many, many time the profit the industry have been getting from car sales? And I'm not talking about energy generation, grid services and charging (the oil and gas of the auto industry)...

But you're forgetting their solar roof industry! As they improve, the number of roof fires they cause are sure to decrease. If they don't, Tesla could instead turn a profit here by selling fire insurance. /s

You think you know so much and still think the Model 3 is the star. Not a single mention of Model Y… the only ridiculous thing here is your arrogance.

Let’s pick some easy numbers to get a feel for sizes

Let’s say 70million cars are sold in 2021. And that they sell for 30k each. So that’s 2100 billion.

Say a 6% profit, we get 126 billion a year on global sales.

Say you expect a mature company to eventually coast along at 20x price/earnings

So a company with 100% market share (and you can’t really price in growth as it’s 100%) should be worth 2500 billion.

I’m no economist, and I may have made a math error somewhere, but I feel this puts a rough upper bound on the valuation

> The Cybertruck is going to flop, after it initially sells well. Ford and the other traditional truck manufacturers will dominate electric trucks, because they're going to sell their customers the trucks those customers actually want to buy, not impractical gimmicks.

Complete nonsense. Ford or GM do not have supply of batteries to produce all those trucks you believe they will make. Specially not when also attempting to ramp many of their normal cars.

The claim that Tesla vehicles will drop of in sales after early adopters has been wrong every single time. Cyblertruck has more pre-orders then any vehicle ever. Every single analysis on interest in the truck show gigantic interest.

> Musk already knows it's going to ultimately flop, he has begun preparing the market for that outcome.

This statement is literally wrong. Musk actually did the exact opposite. Musk says its the best product they have ever designed. And they are building a gigantic factory specifically for that product, a factory that cost billions.

Solar, EV, Battery, Grid Battery, Semis are all in exponential growth. Saying 'look at the currently biggest battery company' is an dumb measure. That like saying 'look at what the largest airplane company is worth in 1920, therefore no large airplane company in 1940 can that big'.

I haven't look at that specific forecast, it might well be optimistic. But there is no question that all of those markets are gone grow exponentially and its no question that Tesla is incredibly well placed to take advantage of those growth curves.

> Solar, EV, Battery, Grid Battery, Semis are all in exponential growth.

Solar is a modest growth business, you can see that represented in the sales growth of all the largest solar companies. Annual sales growth in the industry is not expanding as you're implying.

The big rig / semi market is the exact opposite of experiencing exponential growth, it's largely a slow growth replacement market.

EV sales are overwhelmingly replacement sales, largely taking up the sales from the ICE vehicle market. Which goes back to Tesla's competition problem, they have to forever take market share from Daimler, BMW, Toyota, et al.; to become a giant, they have to eat one of the giants. The global auto market is not a high growth market, it's a slow growth market, which creates a ceiling growth problem for Tesla; the overall industry is growing slow, and they have to kill the other giant competitors to keep growing, which is a very difficult and expensive thing to accomplish. The masses of people in the developed world are not going to suddenly wake up and decide they should needlessly add an extra car to the family vehicle lineup; they're going to do gradual replacement purchases over time. And over that time, the competition is going to get a lot worse for Tesla in EVs, not easier.

What's Panasonic's entire battery business worth today? Now increase that 5x or 10x. What would that be worth? How much is Tesla worth today in comparison? How does that battery growth forecast then stack up to the $4.3 trillion in the forecast in question?

And besides that, even with the battery business and assuming an extraordinary outcome, Tesla is selling cars for $45,000+ and the battery packs are a modest fraction of that value. You think Tesla is going to validate $4 trillion in market value by selling $20-$30 billion in batteries on the side every year at 15% end profit margins? It doesn't get them anywhere remotely close and that's the optimistic outcome.

And we're specifically talking about what Tesla can do between now and 2026, not 2050. Five years. That's the $4 trillion forecast timeline in question that is the root of this discussion and that's what I focused on. How many vehicles Tesla can sell in that time, how their other segments might contribute, how much growth they can generate overall in that time, what their profit could be, and how that might translate to their market cap circa 2026.

> This statement is literally wrong. Musk actually did the exact opposite.

Nope. Musk has been trying to guide the market expectations and the high risk of the Cybertruck being a flop. He knows the damage a flop could cause to the stock.

July 16, Barrons: "Elon Musk Admits Tesla’s Cybertruck Might ‘Flop’ Because It’s so Different"

https://www.barrons.com/articles/elon-musk-admits-teslas-cyb...

> Complete nonsense. Ford or GM do not have supply of batteries to produce all those trucks you believe they will make. Specially not when also attempting to ramp many of their normal cars.

Tesla is still at an inferior position to both Ford and GM when it comes to industrial scale (to say nothing of political connections). There's no reason to believe Ford and GM will be incapable of securing the necessary resources to scale their EV businesses in the coming years. GM has an exceptional partnership history in China for one thing, if they need to produce huge volumes of batteries. What Tesla has done in making battery factories for their demand isn't a unique value proposition, it's going to be easily endlessly replicated by their competition.

Tesla represents a very small share of the auto industry globally. The majors all have more total resources, more political connections (which is very important for securing natural resources and manufacturing), and greater industrial scale. And they are bringing all of that to the field; not tomorrow, but right now. Tesla needs all the headstart they can get. The past decade was the easy part for Tesla, not the hard part.

> The big rig / semi market is the exact opposite of experiencing exponential growth

Non of those are EV now.

> EV sales are overwhelmingly replacement sales, largely taking up the sales from the ICE vehicle market.

All those need to be replaced by EVs. Tesla has no ICE vehicles so for them its simply growth.

Tesla can scale EV faster and they can reach better margin then current companies. Currently these manufactures can subsidies their EV with ICE sales, but their ICE infrastructure will turn into a liability soon.

At the same time they build out global charging infrastructure to fuel all those cars giving them a long term income at great margin.

> What's Panasonic's entire battery business worth today? Now increase that 5x or 10x.

We are only just at 2% EV in the market and Panasonic is only a part of that market. Add grid and home storage, industrial vehicles and so on. And eventually also planes.

> Tesla is still at an inferior position to both Ford and GM when it comes to industrial scale

Who wouldn't want all those distributed factories with union workers demonstrating while giving most of the profits to the dealers and suppliers.

> (to say nothing of political connections).

Yeah California and Texas where Tesla produces all the jobs are politically so weak. Elon Musk is also not on of the most famous people in the world and a twitter profile more powerful then GM/Ford marketing budget.

> Tesla represents a very small share of the auto industry globally.

Yes and they are already at industry leading operating margin while still being comparatively small and they continue to grow very fast.

> The past decade was the easy part for Tesla, not the hard part.

And just continuing to produce ICE vehicles and ignoring EV was the easy part for the competition. Repeatably in history we have seen how difficult massive technology transitions are and how established players ran into a lot of issues.

> And they are building a gigantic factory specifically for that product, a factory that cost billions.

Are you talking about Austin? Thats not specifically for Cybertruck, it is also building Model 3, Y, and the Semi according to wikipedia.

One side of the factory is for the Model Y. The other larger side is for the Cybertruck. That is a huge space.

Semi might be in Austin but likely not in the current building.