Rivian valued at over $100B after biggest IPO of 2021 | Hacker News Reader

Rivian valued at over $100B after biggest IPO of 2021

reuters.com

208 pointsneogodless395 comments

The only explanation for this valuation is that Rivian is pretty much exactly what people wanted in a Tesla pickup.

Rivian managed to build a car that people actually want. Their car is a really great pickup truck with all the stuff that people want in a utility vehicle (flexible storage space! air compressor! power outlets! easy to build out!)

And the Rivian looks close enough to a normal pickup that people aren't going to feel stupid driving them.

Nobody who wants a work / camping / towing truck is going to buy a Cybertruck. A cybertuck is a car for programmers who make too much money and want to feel like Robocop.

I think Rivians high valuation just shows that they managed to nail a market segment that Tesla floundered.

The Rivian is not a work pickup though, it has a tiny bed.

I've seen smaller trucks at work. The bed size doesnt matter as much as towing capacity.

I think it’s worth keeping in mind that a large number (perhaps a majority?) of people buying high-end “work trucks” use little to none of the work capacity of those trucks.

They still want it to fit the two by four they buy once every four years

Doesn't that prove parent's point though? Effectively those aren't work trucks. Because of this widespread trend, most new models have dual cab and it is now hard to find "real" work trucks so the old, 2-seats-only models are highly sought after in the used market, at least based on what my farmer friends tell me

> 2-seats-only models are highly sought after in the used market, at least based on what my farmer friends tell me

When I lived an an apartment, one of my neighbors had a 2 door Silverado as his daily. He was a 'car guy' and had an Ion Red-line I once asked about buying. He was actually -surprised- I asked about that and not the Silverado, because he had a lot of folks offer to buy it apparently.

I had a controversial thought about this, especially after the impending total-death of the American Car;

What if -only- trucks with 2 doors, or a 4-door truck with a full bed got the 'light truck' EPA special treatment? When we look at the chart of target MPGs by size/class[0] you can see there's a pretty big disparity in what Trucks vs cars have to get.

It's interesting to think about all of this in the face of the automakers' recent actions; EV/Hybrid trucks help the CAFE ratings, and part of me is asking whether the Explorer going back to Body-on-Frame was to keep it from being classified as a Car. None of this would be new, of course; the PT Cruiser and Chevy HHR's existence were in some ways prolonged, if not a result of the fact they counted as Trucks for Fuel Economy.

I think in the face of all the talk we have about climate change, it's worth looking at what we can do as individuals to reduce footprint. That's part of why I'm switching my daily to the Maverick Hybrid (if it ever shows up, lol)

[0] - https://en.wikipedia.org/wiki/Corporate_average_fuel_economy...

Most other trucks these days have tiny beds, too, because of the crew cabs.

Not all work involves 8 foot sheet goods. A whole lot of it involves hauling around a small amount of equipment. If more is needed most are better off with an enclosed walk-in utility truck or a trailer. Long bed pickups are really quite rare, and almost never have a crew cab… and they are a real hassle to drive and park.

I feel like F150 lightning will be more popular due to name recognition. Ford has gotten some pretty solid reviews on their electric cars.

I have high hopes for the electric F150. But we're still talking about a traditional automaker here. They always find a way to screw things up when it comes to EVs.

IDK, the Mach E was their first effort and is actually doing really well. I would expect their second product to be even better.

Ford made electric Rangers when GM was making the EV-1, so not entirely their first effort.

The screw up will be scale. Securing enough batteries and producing them in volume is not something they have (publicly) announced.

Making 50k a year would barely dent their annual truck sales of 1mil.

At least we know how Ford can screw things. With Rivian we don't know even that. Yet, Rivian's valuation is higher than Ford's capitalization despite many unknowns and far far smaller production rate.

Tesla, on the other hand, screws things up in novel and exciting ways.

I would buy a car from a traditional automaker every single time when given the option between the two.

I'm really excited to see how Rivian, Canoo, Lucid, and the like handle thousands of vehicles being reworked from their first year or so of shoddy production.

There are pros and cons to each. I've got a couple of BMWs, but when buying an EV, going Tesla was a no-brainer. The other mfgrs just felt like a slap-dash job of bolting an electric motor to a traditional car, whereas Tesla was a slap-dash way of rethinking the entire car! :)

Seriously, I was years into Tesla ownership when I saw BMW ads showing people dancing around, taking their phones out of their pocket, and holding it to the door handle to unlock the car, like this was some high tech innovation. [1] Are you joking?

There are MANY things established automakers do, but innovation is not typically one of those things.

1. https://www.bmw.com/en/innovation/bmw-digital-key-iphone-as-...

yeah I think a lot of traditional automakers were slow to get rolling on electrics.

Feels like Ford is taking the electric f150 seriously and I think their future kinda rides on them nailing this so I hope they do.

The numbers of electric F-150 planned is pretty pitiful. Even if they take it seriously, they don't have the battery supply to truly scale it anywhere close to where they need.

I feel like it's been at least 5 years of people saying "Real automakers are going to eat Tesla's lunch as soon as they start delivery cars next year".. and it just keeps not happening. To be fair, it's legitimately getting closer.

I have absolutely no interest in the Cybertruck, the Rivian and the F-150 lightning are equally appealing to me for different reasons. Although I don't need a truck!

The nice thing about the traditional automakers’ shortcomings is they are visible before you buy the car. I prefer knowing what the trade offs are.

With Tesla, I feel like an Elon edict could pull all spare parts from repair stations in order to hit new order goals. Or some other nonsense; it would be impactful and unexpected.

There is still uncertainty even with a major auto mfg, but I expect their institutional knowledge to be better and less subject to the whims of Mr. Musk.

Fair. I've had no such issues in the 3.5 years with the car, but certainly "will they still be in business in 6 months" was a real concern leading up to the purchase.

Assuming you looked at or seriously considered the i3 - in what way(s) was it 'not good enough' for you to stick to your favorite brand?

I'm not a big BMW person but I always liked the i3. I never got that close to buying one so I'm open to the idea there's some big catch or drawback I just didn't look closely enough to see.

Great question! I actually test drove one on a lark ~2 years before buying the Model 3. At the time, Model S aside, I basically pictured electric cars as economy cars. As in, why on earth would you pay $40-$45k for a BMW commuter appliance EV instead of $30k (or whatever) for a Leaf? Once I drove it, I got it. It was a legitimately nice car inside; it clicked. "Right, for the same reason people pay more for premium cars that are powered by internal combustion motors!"

I had to take it seriously because around the time we got the 3, PG&E was offering something like $10k in rebates on the i3 on top of state+federal credits. I never got serious about pricing, but to me that suggested that I could have a new i3 for $22.5k, or less than half the price of of a Model 3!

The reality is that the i3 serves an entirely different market. Yes, our Tesla sees 99% commuting miles, but when buying a "nice, new" car (which is novel to me), it kind of needs to be able to do it all. I found the Range Extender solution on the i3 to be pretty janky, and I don't remotely trust DCFC networks that are not-Tesla. This might be FUD; after all, non-Tesla DCFC was probably better in 2018 when I bought my car than Superchargers were in (say) 2015, but it's useful FUD. The range on the i3 is simply too short. You can't really take it anywhere, and I want my nice new car to be able to take me to the mountains, to see my family 500 miles away, etc.

Now, of course, for the money savings, there's the usual "well, rent a car for the 2 times a year you take a long roadtrip", and that's probably the rational solution, but I don't really feel that buying a car is entirely rational; I think it's largely emotional, and people construct post-hoc justifications for why buying the car they WANTED was the CORRECT choice.

I ended up selling a nice roadtrippable car for about $30k when we bought the Tesla, which means if we had bought the i3 I'd have kept the other car, and it would have been a more expensive proposition overall, to own a less capable EV.

Then, later, I bought a diesel SUV that's very nice for roadtrips so I guess the Tesla doesn't have to do it all, but, hey, like I said, it's not all rational.

Oh, and the i3-- it drove REALLY well. I was super impressed by the power and handling. I couldn't believe the grip on such narrow tires. I loved the interior, although the exterior was a bit of a mixed bag for me. We'd have to charge it every single night for commuting, where we charge the Tesla every 3 days or so, but honestly that's not such a drag, it would be more of an issue on days where you want to cover a lot of miles in one day. (lots of errands on a weekend day for example).

I would get a Lightning if it came in a 2 door option. I know they didn't offer one to streamline the build process, but it shorter cars have their benefits when you live in/near a city.

They will probably sell a ranger EV in the near future

I know it will never happen, but I would love an electric Ranger if it were the 2011 size.

An EV Maverick would be excellent, despite the short bed.

An EV Maverick would be excellent, because of the short bed.

There are a lot of us city-folk that love the Maverick because it is a truck for people who occasionally go to the home-goods store/dump/buy a large TV/etc, and nothing more (e.g. weak towing capacity, no room for tools AND a sheet of plywood in the bed). But price matters, the Maverick doesn't work as a $40K vehicle even as EV.

It may not have the modern amenities you're looking for (nor the range), but: https://en.wikipedia.org/wiki/Ford_Ranger_EV

I wish they weren't so hard to come by.

+1 +1 +1. People look down their noses at the old Ranger, but it’s about the perfect utility truck if you don’t need to tow anything.

I am much more interested in the R1T than the F150 Lightning, as the former is smaller. It is pretty hard to use contemporary trucks as trucks, with how oversized they are. They’ve become minivans for overcompensaters.

Also due to the fact that the F150 Lightning is in the most popular form factor. America's truck market really likes larger trucks.

Does the Rivian <-> Ford deal mean the F150 use Rivian's platform?

It’s likely to be more popular based on price point alone…

This is exactly why I canceled my Cybertruck reservation for an R1T. Tesla was the only company offering a realistic path toward an electric outdoor vehicle, but I immediately canceled when I read about the R1T because it is actually seems to be designed with outdoor users in mind, while still being functional as a daily vehicle.

Their customer service is also pretty stellar - they even gave me the dimensions of the truck bed ahead of time, so I can build out a camper top in CAD and have it ready before my upcoming delivery.

Personally the Cybertruck seems to fit my needs a lot better for hauling large objects due to the larger truck bed size.

We'll see how Rivian does once they actually ship something, I have nothing to go on with them.

For Tesla I know the software, charging networks, and current tech is pretty stellar. No clue about Rivian.

Rivian is a new automaker. It took Tesla a decade to build up service centers everywhere.

Lets see how well their costumer service does when need to repair it.

> A cybertuck is a car for programmers who make too much money and want to feel like Robocop.

And Rivian trucks are for folks who want to feel like Bomberman.

Yeah I agree, I feel the Cybertruck design was primarily to get their cost down to $39k (Which with the pricing of the M3 now starting at $45k, there is no way the CT will hit that.) But what people really want is just a normal truck, but electric. That is why Tesla is at the top of the electric car market, nobody was making a "normal" looking electric car. Both Ford and Rivian took up that segment for pickup trucks, so it'll be interesting to see how this affects Tesla.

It has zero affect. They will sell every single vehicle they can make for a decade. If by then, people think the design is weird they will build a traditional truck.

The hard part is scaling battery cell production. The shell of the vehicle is easy to change out if people are not buying it.

"The only explanation for this valuation is that"

There is an abundance of cheap money courtesy of the FED that is finding it's way into the market. It isn't Joe6pack buying Rivian.

"Rivian managed to build a car that people actually want."

Didn't FORD do this with the F150? I don't know of one contractor that is going to buy a Rivian. Most drive beat up F250's/RAM 2500/etc.

"I think Rivians high valuation just shows that they managed to nail a market segment that Tesla floundered."

>as of Sept. 30, it had roughly 48,390 orders for its truck and S.U.V. in the United States and Canada from customers who each had paid a refundable deposit of $1,000.

https://www.nytimes.com/2021/10/01/business/rivian-ipo.html

Here are Fords numbers.

https://fordauthority.com/fmc/ford-motor-company-sales-numbe...

So far this year approx 500k F150's and that's during a chip shortage.

Anyway, I hope they're successful but there is a lot of future growth and profit priced in and time will tell.

>I don't know of one contractor that is going to buy a Rivian. Most drive beat up F250's/RAM 2500/etc.

the vast majority of trucks are not owned by people using them for work. Rivian seems to have completely ignored the pro market, which is exactly how the pro market seems to be treating the F150. At the moment, electric trucks are still toys for rich people, and Rivian is leaning into that.

I am pretty certain to replace my 25 year old Chevy 2500 with an electric truck over the next few years and am not really even considering the Rivian. The small bed is not really appealing at all compared to the F150 and it's not that interesting compared to the Cybertruck.

I'm pretty skeptical that Tesla can pull off the Cybertruck for the prices they initially announced, but if they do, that's going to be a big advantage.

Their SUV does look pretty interesting though. The Model Y is too small for what a lot of families now expect from an SUV and the Model X is very expensive.

I’m on the list for a cybertruck and I have basically no confidence that they will come in anywhere near their originally stated prices. I’m a big fan of the audacity of the design (but let’s face it, it looks silly. I just don’t care that it looks silly), and I like that cost savings is a big factor that influenced it, not merely looking silly for its own sake. I plan to wait until it’s actually available and I can see the real price and then decide whether I want it or the F150. The F150 is my safe, perfectly fine backup. The CT is the interesting choice. I’m not even considering the Rivian despite the fact that it looks awesome simply because I think the starting price is nuts.

starting price is nuts, also whats not being said is reliability is an uncertain. Given barely any Rivians are out there, I know the rock climber Alex Honnold was given one, who can say that they are not buying a very expensive problem.

I think the valuation is driven by the delivery vans rather than the R1T.

The world desperately needs electric delivery vans. Rivian already has Amazon as a customer and as an investor. That's an outstanding combination.

The R1T is a super heavy, niche pickup truck for wealthy American households (DINK?) who like camping in style. It's not a truck for the industry, and it will not come close to the F150 in utility.

I totally agree the Cybertruck is a design from a comic book and I have no idea how it would pass pedestrian safety regulations. But the Cybertruck being a bizarre vehicle doesn't imply there's a big market for the R1T.

I think you both are right. You assume that people make investment decisions based on pure data. It's the delivery vans for Amazon and the Ford deal that's going to drive profits and numbers. But please don't underestimate the value of being visible. Rivian's truck looks really good and being recognizable will definitely drive share price as well.

Both the delivery van and truck/suv will be production constrained by battery supply for many years to come. Honestly they should just build whatever has a better margin with the battery supply they have until they are not cell constrained anymore.

In the US there are no pedestrian safety regulations.

In Australia at least they have already said it would not be street legal:

https://www.news.com.au/technology/innovation/motoring/motor...

And hints of the same coming out of UK and EU.

Isn't the whole reason manufacturer make SUVs, that legislators realized way back, that it would be unreasonable to apply regular pedestrians safety standards to off-road vehicles, which were a small niche back then? Then subsequently manufacturers exploited that loophole with SUVs, saying that their huge and tall gas-guzzers, which are sure to murder any pedestrian who dares to wander in front of it, are made made for 'offroading'. I think the Cybertruck is the logical extreme of that line of thinking, where they dropped all pretense of pedestrian safety.

Yes, which is largely why I like the cybertruck. I live where people almost exclusively drive huge vehicles like the biggest SUVs or trucks. The cybertruck is the nearest to driving one of them that I’d want to go if only for the sake of my safety.

From a personal point of view I understand your reasoning, but people in sedans are safe when everyone else is in a sedan - likewise they are safe in a regular SUV, when others are in regular SUV. I don't think this vehicle toughness arms race is to the benefit of the customer.

I've always felt like the Cybertruck was just a gimmick and never intended to sell massively like the 3 or Y. It's up there with the eHummer in my mind.

I feel like the Cybertruck is for the same folks that drove Hummer H2's back in the early-2000s, the "look at me" crowd. Elon is going after the "coal rolling" market. LOL

> A cybertuck is a car for programmers who make too much money and want to feel like Robocop.

I thought the cartels and war lords were the target market?

battery cars are traceable, remotely deactivated, limited range, dependent on electic network etc. how are they practical for narcos etc?

Maybe because of the semi-bullet proof windows and tough exterior?

The real explanation for this evaluation is that the investor class has decided to offer stock on the public market only in a way that there is basically almost no upside potential left for the retail investor, only downside. This is basically an attempt to make cash while transferring most of the risk to retail investors.

I am 100% convinced that this will end like the .COM bubble.

Right, most car startups fail. Odds are against some of these…

I don't see how the market can value Rivian as the fifth most valuable car company IN THE WORLD - behind Tesla, Toyota, VW and BYD. Ford ships 900K F-150's annually and their market cap is ~ $80 billion.... HW doesn't scale like SW yet the market seems to think (hope?) otherwise....

Ive run into two people this week with deposits on cyber trucks. I don’t meet many people!

> Rivian looks close enough to a normal pickup that people aren't going to feel stupid driving them

Someone said that the R1T looks both 50 years old and from the future at the same time & that is emphasized every time I see one on the road.

From my close group, the biggest interest in it has come from ski-heads for a zero maintenance Aspen/Tahoe car that will be ready to run when they head in & the bed is big enough for most snow gear (does the gear tunnel fit a short ski?).

This comment is not supported by the facts. Tesla has more orders for Cybertruck than Rivian has for their truck or Ford has for their truck. Regardless, none of these companies will be able to build enough for several years to come, maybe even a decade. Each year there are millions of trucks sold just in the United States. Initial volumes for these EV trucks are only projected to be ~50,000/yr.

So your comment is actually moot since all EV truck companies will sell as many as they can produce, the styling does not matter at all.

> the styling does not matter at all.

Supply may be fully consumed, but demand may not be equal, allowing for one company to demand a higher premium on their product over another. Fantastic example of this is AMD slashing the price of the 5800x in response to Intel 12th gen. It's not like there isn't a chip shortage and supply isn't fully saturated.

Pickups are #1, #2, #3 selling in the US [1]. There is room for both Tesla and Rivian. Just make them!

I bet the valuations of companies selling horseshoe, saddle, horses, stables, stagecoach, etc was high when Ford started out. Most people at that time may not have understood why Ford is valued so high when good money can be made selling saddles.

Technology evolves. Ford and GM are now the companies making horseshoes and saddles. This is reflected in the insane valuations of pure EV companies. Rooting for both Tesla and Rivian to be successful!

[1] https://www.caranddriver.com/news/g36005989/best-selling-car...

The interesting thing will be the intersection of people who love trucks and also are willing to go electric. Most of my truck loving friends are in my home town where there is quite literally no teslas and nobody wants anything to do with electric vehicles.

Soon they won’t have a choice

Yes eventually, but the key question here is timing. There choice needs to be removed within a window that enables Rivian to own the market. If we are talking 10+ years out (which I think is likely) then Rivian will be dead and EV will be a commodity feature in all other cars.

It is surprising that this is not reflected in valuation of companies making hybrid vehicles

re: top selling vehicles being pick ups -- there's a big asterisk there: A significant portion of those vehicles are barebones, super low-cost work trucks, and on top of that Ford (the top seller) lumps literally all of their F-series together, without breaking them down into F-150, F-250, etc. some of which there will not be an electric replacement for many years.

Every other vehicle on the road here is a new pickup. Most seem to have been bought for waxing, blinding other drivers and that's about it.

I think the high valuation is indicative of a bubble. When companies that haven't delivered a product in an ultra competitive market can be valued at such an absurdly high level the alarm bells are ringing. We've seen this before in markets going back hundreds of years, it's not different this time, it never is.

Well you could argue that there has been a lot of money pumping done by the Fed so this time might be different :)

They said the same thing about Tesla and it’s been working out quite well for them. I definitely favor the theory that it’s a bubble but even if it’s true “the market can remain irrational longer than you can remain solvent”

Is it different this time?

The only explanation?? What is this rubbish??

How about people seeing them being the next Tesla and wanting to get in early?? And a dozen other reasons.

i guess this is ironic?

> Nobody who wants a work / camping / towing truck is going to buy a Cybertruck

Yeah, and 1M+ "nobodies" have already put in pre-orders sight unseen, including me. /s

Personally I think Rivian occupies a rather uncomfortable middle ground between a "traditional" truck, a market which will be dominated by Ford, and a "reimagined" truck, a market which will be dominated by Tesla.

I'm sure they'll do reasonably well - rising tide lifts all boats, but perhaps not as well as the established players, unless they have some tricks up their sleeve that we don't know about.

Doesn't the Cybertruck beat the R1T on like every conceivable metric? https://insideevs.com/features/434634/tesla-cybertruck-rivia...

Not only are most of the specs better, the price is better for the lower end versions, and get unique features like steel and armor glass. There was a toddler killed by a stray bullet on I-880 last weekend, I'm thinking he might have survived in a Cybertruck.

Of course the downside is maybe gangs will start buying Cybertrucks and use them for drive bys.

"This article comes to us courtesy of EVANNEX, which makes and sells aftermarket Tesla accessories." ... so appears to be a bit biased towards Tesla?

How about Kelly Blue Book? https://www.kbb.com/comparison/tesla-cybertruck-vs-rivian-r1...

I mean, the stats on HP, range, towing capacity, etc are all publicly available.

Are you saying they falsified the specs given to them by the manufacturer?

Or may be it is overvalued due to cheap money. Investors have valued the company at revenue that they might achieve after about 30 years in the business.

The only justification for this valuation is the EV bubble. People are desperately looking for Tesla-like gains and they'll sink money into anything that'll get them there, so companies are using the opportunity to IPO at insane valuations. There is no other sane justification for this insane valuation for an auto-maker that makes 2 cars a day.

> Nobody who wants a work / camping / towing truck is going to buy a Cybertruck.

That people confidently say nonsense like this is just mind blowing. How the fuck do you know that?

Do you think the almost a million preorders are all by programers?

For a work truck you car about cost and performance, and Cybertruck beats the riven easily. The Rivian isn't close to being a work truck, they don't even advertise it as such.

And to get that kind of valuation you need much more then a prototype, you need to produce 500k and even then the valuation is not justified.

What is amazing that apparently investors are fine with having no say how the company is run:

"Scaringe will hold all outstanding Class B common shares after the IPO and get 10 votes per share,"

The new normal (see Google, Facebook, Zynga, etc). You can own 6% of the company but retain full control.

You get to have your cake and eat it too if you are a founder.

As an investor in these modern Class A "shares" you are just playing the game of musical chairs.

Where is the fundamental value in Class A ?

It used to be that if you did not care for control, you either bought bonds or preferred shares.

Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued based on their future and projected growth, not how much they are worth today.

Much has been made about Tesla being worth more than all other automakers combined, but let's look at the growth.

Tesla Q3 Revenue: 13.76B, Year over year growth: 56%

Tesla Q3 Net Income: 1.6B, Year over year growth: 388%

GM Q3 Revenue: 26.78B, Year over year growth: -24%

GM Q3 Net Income: 2.42B, Year over year growth: -40%

Tesla is growing like bonkers, wildly more profitable, and has a much brighter future than GM given these trajectories. It's almost like either GM is severely overvalued at 90B market cap or Tesla is undervalued at 1T.

Tesla has also proven that traditional automakers really struggle to keep up with the electric car race - from software to supply chain. Rivian, like Tesla, is built top to bottom to play in this market, with the added backing of Amazon and products tailor made for enterprise scale needs that companies like Amazon need.

Of course Rivian is a risky investment today - their stock is priced for perfection. We saw what happened last quarter when stocks priced for perfection fall short (take a look at Snapchat). But plenty of these arguments "Rivian is only selling 1000 cars!" also applied to Tesla about 10 years ago.

A business is valued based on its future prospects. Growth companies are risky.

Edit to add Ford numbers:

Ford Q3 Revenue: 35.68B , Year over year growth: -4%

Ford Q3 Net income: 1.8B, Year over year growth: -23%

Also want to point out - all automakers are operating in the same pandemic - Ford, GM, and Tesla are all dealing with supply chain issues and chip shortages.

> Tesla is growing like bonkers, wildly more profitable, and has a much brighter future than GM given these trajectories.

This seems to assume that the pandemic economic situation is permanent.

I think also it doesn't really explain Ford vs Tesla.

>Tesla has also proven that traditional automakers really struggle to keep up with the electric car race - from software to supply chain.

Hardly, Tesla has proven that they were right betting on electric being the future. SuperCruise by most accounts is ahead of "FSD" in real-world driving. GM has pivoted in less than 5 years to what it took Tesla 18 years to build.

5 years from now we can have a conversation about whether GM/Ford/Stellantis can compete or not. Saying that Tesla has some unsurmountable lead when the big 3 have literally just started releasing their first round of EVs is silly. Having test driven a Mach-E and a Model-Y, I would wager the non-tesla fanboy will choose the Mach-E every time. Nicer interior, similar enough performance, and a manufacturer that has a history of actually having parts to fix cars when something breaks. The horror stories of cars sitting for months waiting on basic parts from Tesla is enough to make me think twice about ever owning one.

It’s never a single winner in the market. Sure, Tesla may be superior in some regards(battery tech, better motors) that are critical to an EV, but other car makers bring something else to the table while being reasonably close on range. I for one don’t like the Tesla “All in a single touch screen” interface. Neither do I want my car to constantly update its firmware automatically(chasing a wild auto driving fantasy and SV dreams). I just want my car as an effective tool and be open. I’d love to use CarPlay like on other cars… Tesla?

Not to say that other car makers are perfect. Competition is always good for the consumer.

> I’d love to use CarPlay like on other cars… Tesla?

Wow, I didn't know Tesla didn't support CarPlay. That + Android Auto seems like table stakes in a 2021 luxury (or even mid-range) sedan.

It would be worse than built in nav. No super charger knowledge.

Nothing wrong with having their kid-ass nav system with supercharger routing. Why not _also_ develop CarPlay and Android Auto apps for it and let users use CarPlay and Android Auto like other car manufacturers?

Other car makers don't already have a functional UI.

I have used all three, and much prefer the tesla UI.

First, you mean Autopilot vs SuperCruise. FSD is only available to a few thousand people in a closed beta and it can do things (drive around a city, or parking lot) that SC cannot attempt (it is geofenced to highways)

Second, legacy OEMs have been releasing their "first EV" for 5 years now. The Bolt beat the Model 3 to market and was hailed (as all these were) as Tesla Killer. Sounds funny today, but people took it seriously in 2017. After that it was supposed to be the eTron, the new Leaf, the EQC, Taycan, ID3 etc etc. Ford is physically incapable of making more than 50k MachE-s this year, meanwhile Tesla makes 220K 3+Y per quarter.

FSD is widely available

“If you have not already purchased FSD capability and your vehicle has FSD computer 3.0 or above, you can subscribe to FSD capability from the Tesla app or your Tesla Account.”

https://www.tesla.com/support/full-self-driving-subscription...

Tesla offers two things called FSD: first, there's the "FSD Beta" which can navigate on city streets (with careful supervision).

Second is FSD, which is the list of features here: https://www.tesla.com/support/autopilot#usingautopilot

Effectively, that second FSD gives you a grab bag of features like "lane change" and "summon", but doesn't give you what people think of with FSD (navigate on city streets).

You can still pay $10k to get FSD, but you only get the second thing by default. The first thing, what people think of as FSD, FSD beta, is limited to a small pool of beta testers.

I would not call that widely available. The FSD that is comparable to super cruise is still in a beta, and it's just awful naming of things which lets that page you link say that anyone can buy FSD.

>First, you mean Autopilot vs SuperCruise. FSD is only available to a few thousand people in a closed beta and it can do things (drive around a city, or parking lot) that SC cannot attempt (it is geofenced to highways)

No, I don't mean autopilot, I mean FSD vs. SuperCruise on the highway.

>Second, legacy OEMs have been releasing their "first EV" for 5 years now. The Bolt beat the Model 3 to market and was hailed (as all these were) as Tesla Killer. Sounds funny today, but people took it seriously in 2017. After that it was supposed to be the eTron, the new Leaf, the EQC, Taycan, ID3 etc etc. Ford is physically incapable of making more than 50k MachE-s this year, meanwhile Tesla makes 220K 3+Y per quarter.

I don't follow your point. Tesla started 18 years ago, the major automakers started 5 years ago and are already producing comparable vehicles. Your argument is: they haven't switched the entirety of their production from ICE to Electric and that's somehow going to mean they won't be able to eventually surpass Tesla?

I have faith that GM or Ford can ramp up production of EVs far, far faster than Tesla can figure out quality control and how to build an interior that's something other than spartan.

When is the last time GM did something like just remove automatic passenger seat adjustment from a car without telling anyone? That's just busch league.

> I have faith that GM or Ford can ramp up production of EVs far, far faster than Tesla can figure out quality control and how to build an interior that's something other than spartan.

Even if GM or Ford hit their own targets (and historically they haven't) they are not close to overtaking Tesla.

And Tesla quality is actually fine. In terms of recalls and major issues Tesla had very few. In terms of fit and finish maybe there is a difference to your BMW, but compared to GM/Ford vehicles at the price the difference is not that big.

In terms of battery and drive train Tesla has performed way better then the others. Ford had massive issues with their PHEV for example. GM just recalled every Bolt and stopped production. The list goes on.

Tesla has managed to scale 50% almost every year for a decade, what exactly could they do to prove this to you other then doing it? They have 2 new factory that are opened shortly, do you believe somehow they managed to get the China factory producing at 500k run rate but other factories they wont be able to do it?

> That's just busch league.

Go look threw the history of GM recalls if you want to see real busch league kind of stuff.

Mach-E is a substantially larger car than a Y, you need to compare to S.

> meanwhile Tesla makes 220K 3+Y per quarter.

Ford sells and delivers about 900,000 F-150s a year.

Have you driven an electric made my GM?

Why do you ask? Because your comment sounds like it's setting up for an episode of Mr. Gotcha.

SuperCruise by most accounts is ahead of "FSD" in real-world driving.

Source? SuperCruise is geofenced to highways, so it can't even drive in areas that FSD can so I'm not sure this is the right comparison.

what areas can FSD drive in?

Apples don't have orange skin.

I don't even have the FSD beta but my autopilot can turn on anywhere there's lane lines basically.

Yeah, this is a meme that circulates in the $TSLAQ world, often appearing alongside shrieks of "Panel Gaps!". There really isn't a source, Super Cruise just isn't very available in public yet (just a tiny handful of cars have it, with probably less than 20k users).

The core of the point is generally that Tesla AP is deployed as a hands-on solution, requiring regular steering wheel input (just twisting the wheel a bit), where GM ships this in cars with cameras pointed at the driver (Tesla has them too now, though the wheel nags still exist) that take the entire monitoring load. That makes it "hands free", and therefore better. This is often combined with a conflation of "hands free" with SAE L3 Autonomy (which isn't correct) to try to emphasize the point, skipping the fact that the hands-free areas are limited just just a few hand-vetted highways. All Tesla would need to do to compete with that feature would be to implement the same geofencing, basically. But that's not where they're aiming.

I mean, in the real world, AP is pretty amazing and SC is mostly vaporware. My car took me 429 miles last Thursday and the only input required beyond wheel nags was some editorial differences I had with it about proper lane selection (and even then, I was only right about 60% of the time).

Not sure if it will play out the same way but I remember the arrival of the iPhone. Lots of people defended Nokia and RIM (Blackberry) and a few years later they were completely decimated.

I’d be curious why or why not it would play out the same way.

Apple took a commodity item and built network effects (iMessage) and lock in (the app store is both a moat and a ball and chain keeping people inside the Apple ecosystem). Tesla don't have the equivalent.

The Tesla Superchargers network is the network effect.

Government just passed $7.5 billion for charging network. There's probably more to come. SUperchargers are definitely an advantage, but how long until electric charging stations are everywhere?

How so? It becomes less valuable the more people who use it. And it doesn't work like a platform. That would be like Apple trying to build every possible app themselves.

You have the option to choose any of the other EV makers, but this one EV maker has very fast charging stations worldwide in strategic locations, with lounges and predictable charging rates.

Of the 3 EVs that I drive, only the Tesla I would take outside the city. Even if the others had a much bigger range (they don't) I would not be comfortable outside of the Tesla supercharging network because I've encountered many difficulties with ChargePoint, evGO, etc: stations not working, backed up, slow charging, high cost, etc.

The ecosystem is its charging network because it's very reliable and eliminates range anxiety.

Having driven a Polestar 2 (by Volvo) and a tesla I have to agree. The Polestar was miles (heh) ahead in terms of build quality, interior and polish. The only reason I did not buy the Polestar outright is their still low range. I see that gap closing very quick in the next 3-5 years.

You should drive Lucid Air

That's hypothetical though. If I needed to replace my car with an electric today, the only game in town is Tesla and even that would be a painful slowdown for my semi-regular roadtrip (13h according to Google Maps + 2h40m of charging according to Tesla's trip planner).

BTW: That trip planner is showing me some serious money savings on fuel... Ah, that's because they assume that charging costs $0/kWh and fuel costs $4/l ($15 per gallon).

Use ABRP, a better route planner. Free and has both better time and money estimates.

What if instead of looking at company performance or stock value - we actually look at the VALUE That top execs in a company actually provide?

What dept is that DIRECTOR of a company in charge of and how did they actually perform.... etc...

>>>Tesla has proven that they were right betting on electric being the future.

This should be the premise to literally take every single oil executive to task.

---

I have a close family friend who is effectively an oil tycoon for shell oil. one of the worst companies on the planet.

They shared over dinner at a really nice restauarant in Silicon Valley, pics of them hunting 'big game' in africa and the typical pics of 'here is the kill i had while on 'safari' in africa'

yeah if you work in big oil, go fuck yourself.

chill out dude

Thank god you and most people on HN and everywhere else are doing god’s work for their jobs while also helping make sure no one is homeless and given opportunities to work.

> Hardly, Tesla has proven that they were right betting on electric being the future. SuperCruise by most accounts is ahead of "FSD" in real-world driving. GM has pivoted in less than 5 years to what it took Tesla 18 years to build.

I let AP with Auto lane change run with confirmationless on during a busy time at night going around I-495 and it handled it flawlessly.

Supercruise literally doesn't even have the features required to do that. This wasn't some beta, this is the thing that's been shipping for a few years now.

Supercruise has one little trick of letting you be handsfree, but that is its only advantage.

Bookmarking for Nov 2026 — my prediction: GM and Ford go the same way as Volvo (sold to another manufacture) or have gone bankrupt and sold just for the name.

It's kinda shocking how poorly traditional auto manufacturers are failing at keeping pace with Tesla, but I think that's not going to last forever. Many have already committed to ending their production of gasoline vehicles in very short order.

I think a good example to look at is how the hybrid market has shifted since the Prius. Toyota blew everyone out of the water for years, but sales have plummeted in recent years as competition has caught up. Rivian has even less of cushion since the electric F-150 is due to hit dealerships next year.

Tesla sales process features up to 95% less slimy car salespeople. I’d pay a premium to not have to deal with the local Ford/GM/etc dealership, who are all about scamming me into overpriced financing deals.

Traditional auto manufacturers need to bring the buying process to this century, but that would sour their existing sales pipeline. I believe this conondrum is called ”local optimum”

>t scamming me into overpriced financing deals.

Um, you are admitting that you can be scammed. If you don't understand loans, yes, you can be scammed. Don't admit that.

The last new car I bought: I walked into the lot, said I want that one, and took the lowest interest loan for 48 months. I didn't want a 72 month loan. I didn't want an extended warranty. I was done with the sales person in 15 minutes, and done with the finance department in 45 minutes.

It's all in how you manage the situation. If you waffle and flake and can't decide, or don't understand loans or pointless "extras", then you're toast.

I just bought a car. I wanted to pay cash, and made it clear I would come back with the a cashier check the next day when my bank open. They said in order to “lock” the car in for me overnight, that I’d have to sign up for a loan (that I could just pay off immediately). It took a bunch of back and forth to make it clear I just wanted to pay cash and I’d be back tomorrow with a check. They finally relented and said ok we’ll put a complimentary hold on the car and accepted the fact I was paying cash. Then of course after finalizing that they pushed a bunch of vastly overpriced maintenance programs and severely misrepresented the expected costs of said maintenance if I didn’t purchase the plan. At least they had the courtesy to give me the time to quickly run the numbers in order to verify it was a terrible deal for me.

The whole point is that buying a Tesla doesn’t involve this pointless, anti-consumer, borderline lying, slimey process. People shouldn’t have to worry about being scammed when making one of the largest purchases in their life. The traditional dealership model is terrible for your average consumer. Why on earth are you defending that?

You could have just said, have a nice day, and left.

Were you that desperate for a car immediately?

I'm not defending slimy car salespeople, but I'm not siding with your wishy-washy behavior.

So I could go to another dealership and have the exact same experience?

This is such a weird hill to die on.

Where would the person go? For most cars, you have to go to a cars salesperson

It is incredibly alarming to me that your message is "Don't let yourself get scammed" rather than "Yeah, car dealerships should stop trying to scam people."

It's both. You need to advocate for yourself and not just decide to be a victim, and the government needs to regulate many, many predatory industries because half the population is below average intelligence, and, well, I believe a government is supposed to lookout for its citizenry (including when I get too old to understand tech and people try to take advantage of me, which they will). Yeah, go ahead and call me a nanny-state liberal. I'm OK with that.

Needing to push through people who are trying to scam you is very unpleasant for many people. Others get a kick out of it, I get that, but it just not being a part of the process at all is a big win for me.

Allegedly slimy Tesla has been scamming people into paying thousands of dollars for a useless FSD package for years.

The coast-to-coast test drive of a fully self-driving Tesla is four years late and counting.

When you go to buy a Tesla the online order form will ask if you want FSD. You click "no". That's the extent of it. They don't try to push it on you, convince you it's a good deal, or call you a sucker for saying "no". It's just an option like any other.

You’re a sucker if you pass on this opportunity of making money!

When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination. You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.

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

And it is ONLY 2 years away!

I live in NYC. If I could tell me car "go find parking" it would be a miracle.

Yep, and most people don't buy it and recommend against it for others too.

Base AP is really good on its own anyway.

As a regular consumer, I am not sure what advantage electric cars provide that I should be champing at the bit to get one. If I had to get a new car today I’d get a gasoline engine. I think the automakers see this and aren’t worried about “keeping pace”; while I guess electric is probably the future for political and resource exhaustion reasons, it’s not the immediate future.

I would go with hybrid, probably not even plugin one. Was cheap when I got my current car, which with my current use should last decade. I really doubt we will actually hit the goals politicians are currently setting.

Have you driven an electric car? They're a much better driving experience. Silent, instant acceleration, never have to waste time at the gas station.

My car is already very quiet, and I have never in around 20 years of driving put the accelerator anywhere near the floor anyway. I guess it’s “nice” to have better acceleration and I appreciate people drive differently than I do, but doesn’t accelerating hard waste charge in an electric car too?

I visit a gas station about once a week for maybe five minutes, that’s another “I guess that would be nice”, but it doesn’t bother me and I would probably visit the convenience store part anyway, so it’s not worth any kind of electric car premium and I’m not sure about the downsides - what if I forget to charge at home overnight, getting a charger at home, what do I do when there’s a hurricane and no power for weeks, etc.

Also, this is not limited to electric cars, but I have one car with a bunch of controls moved to the touchscreen and I’m never doing it again.

The acceleration isn't about pedal to the metal, it's about the delay between pushing the gas and the car beginning to accelerate. Obviously none of these things are must haves, but imo and in the opinion of almost everyone I've asked, electric cars are more enjoyable to drive than ICE ones.

I think most people are pretty content to drive cars that are not "enjoyable" to drive. There are a lot of ICE cars out there much more fun to drive than the average commuter car. I don't think people other than car and maybe tech enthusiasts rate this factor very highly - which goes back to what I'm saying, I don't think the major car manufacturers are really losing out because they don't have a popular EV out right now.

Even when I do hear about Teslas (I do not see very many here), people seem much more excited about the "it drives itself!" (invariably all have been majorly oversold on the capabilites of autopilot) and almost never mention the EV part. I do think automatic cruise control and lanekeeping are nice features particularly on very long drives, but those two in particular are widely available now.

I'm not trying to say an EV will change anyone's life. It's just a little bit better than an ICE car in every way except road trips.

> what do I do when there’s a hurricane and no power for weeks

If I ever (can afford to) buy an electric car, this is actually the strongest selling point for me. It's enough of a reservoir to keep my most important electronics powered up for weeks.

My 'most important electronics' might be different than yours, they're my AC, well pump, and refrigerators/freezers. :) But yes, you can still run them for a while...as long as you're willing to make the tradeoff that you can't leave the house without losing power, and using the car as your home energy supply means trading transportation charge for power. That makes me uneasy.

And of course, where I might be able to get in the car or my old beater truck, drive 50 miles, and come back with 50 gallons of gas, generator running for my family all the while, I guess recharging the battery would be...a much more troublesome venture. If gas stations have trouble with capacity during those times, then the length of the charging time is going to have a massive disparate impact on the lines on charging stations. It's going to be nightmarish. And I also have to think about husbanding my car charge so there's enough to leave and get recharged...

I think the "car as backup generator" is a fantastic idea for those unpredictable short blackouts that happen once in a blue moon, just not for hurricanes. I probably would buy an electric car before I bought an automatic whole-home generator.

5 minutes at the gas station (10 minutes if Costco) every 400-600 miles is not too bad. How many charging sessions would that be, and how much time to plug and unplug? For my plugin hybrid, using gas is more time efficient (especially since I'd get a better electric rate if I charged at my outbuilding rather than my house, and that would add more walking time)

It takes me 5 seconds to plus in when I park in my garage. Gas stations are also much worse in cold climates, definitely wouldn't be as big of a deal if lived somewhere where it wasn't freezing in the winter.

if you have a garage there is the huge advantage of not having gas/oil fumes filling up your garage and seeping into your house. This was a big plus to me but I seem to be more sensitive to this then some people

I suppose if you aren't concerned with exhaust fumes, air quality or climate change.

I observe that the vast majority of people are not worried about these things. Some of them do talk about it, but do not make even simple changes to their lives that would reduce their impact. (Single most important impact anyone can make: stop buying stuff you don't actually need.)

In my area smog and air quality from exhaust is not a concern. I don't worry myself with climate change because it is not only inevitable, but an inevitable part of living on earth. We can try to shift and reduce our impacts, but we cannot eliminate them, and at any rate it's much too late for the CO2-caused climate change concerns. My buying one more ICE car does not matter. It doesn't affect my consumption behavior or that of most other people.

Traditional automakers move in 10 year cycles largely due to safety, support, and the huge volumes they will incur. TSLA can't touch the volume of the top 3. Funny how people forget that. I believe the top 3 are letting TSLA spend all the money and make all mistakes working on the infrastructure before they swoop in and make EVs a commodity instead of a luxury product.

TSLA absolutely deserves credit for making this happen, but like the namesake Nikolai Tesla did the hard work and Edison swooped in a took all the credit.

> TSLA can't touch the volume of the top 3

What an odd thing to say. They are at around 1 million cars/year versus Ford's 6 million/year, GM's 6-8 million/year, and Chrysler's 2 million/year.

So Tesla is in the same ballpark of volume as the US big 3 already.

Unless you mean the top 3 worldwide auto manufacturers Toyota, VW, and Hyundai, which aren't /that/ much higher in volume (10.4mio, 10.4mio, and 7.2mio respectively).

I think 7.2x-10.4x is the opposite of "not that much higher".

That's the difference between making $100,000 a year or $720,000 a year (or $1,040,000 a year).

Yeah, that's a big difference.

Tesla has not yet scaled to their volume but equally those manufactures are not even remotely close to producing the same amount of EV as Tesla does.

If you look at their timeline for EV scaling, its laughable.

And sooner or later the ICE market will collapse and expose the terrible economics on their EVs.

Turns out mass manufacturing ICE engines doesn't actually magically make you good at batteries.

Tesla growth will have them overtake companies like BMW and Geely within 2 years. 1-2 years after that they will overtake Ford and friends. By then GM might have lost another million of so in sales as well.

By 2025 Tesla will be one of the bigger car makers on the market and will be 100% electric with their own batteries, while most current EV makers will not even be at 40% electric sales.

You are totally misguided on how easy it is to make batteries and EV a commodity. And you assuming that other manufactures can magically do it better then Tesla despite a huge amount of evidence that they simply can't.

Yes and:

> will be 100% electric with their own batteries

And their own mines. From my casual reading, only the Chinese manufacturers will have comparable integration, economies of scale, efficiencies.

Even so, I think you are still understating Tesla's many competitive advantages.

The biggest one, IMHO, is Tesla insurance. As Warren Buffet has shown with Geico, this is among the lowest cost capital available. Meaning Tesla will have even better financials than their competitors.

It's such an obvious idea. It still baffles me why GM chose loans over insurance, GMAC, all those years ago.

Their lithium mine will take a couple years and it will never be the majority of their lithium supply.

But I agree, they have lots other potential income streams.

The numbers for GM are explained by the chip shortage and other supply chain issues, which Tesla is weathering better. Assuming these are transitory issues, I don't think the growth gap between telsa and GM is quite as large as you're indicating.

> Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued based on their future and projected growth, not how much they are worth today.

This is something which should be expanded upon:

Yes, people are behaving like that across the board, it is becoming a popularity contest...what matters is which company has the potential to achieve the biggest size, the biggest scope, the biggest footprint and nothing else.

It's fueling valuations.

BUT size, scope and footprint find their financial expression in REVENUES, not PROFITS.

So if you are trading be mindful that people are falling in love with revenues and not even considering cost of goods sold or profits, but historically the profit metric is undefeated.

We might as well be in a new paradigm, but all things considered it doesn't feel that bad to miss out on money because you missed a paradigm shift happening in the brains of millions of people who are not yourself.

I don’t understand why people think tesla will keep growing at this rate. To grow they’ll need to sell more cars, and for that they will need to sell cars that cost a lot less, something they are not geared to do. Tesla is not apple, they’re not good at making and maintaining products at low cost in massive volume, and they don’t really seem to be getting better at it. So why again is it reasonable to assume they’re going to keep growing like this for years to come?

Notoriously, Tesla has raised the price of the Model 3 by 23% this year: https://insideevs.com/news/545712/us-tesla-model3y-prices-up...

To hit their volume targets, either they'll need to cut prices again in the near future, or the price of all other cars in the market need to rise in lockstep.

So, they raised the prices, massively expanded production, and still have insane backlog and you think it's a bad thing?

Yes. Because rising prices means that it's easier for their competitors to eventually overtake them. Having a backlog makes that even worse.

I'm sure I don't understand your logic. They raised prices which improves their margins. They can use that money to build more factories (which they are already building) and pay down debt, putting them in a stronger position.

The backlog gets cleared by these new factories which can try to take up the excess demand.

What competitor is overtaking them? My understanding is that you can get any electric car you want, except a Tesla. That means people aren't buying the competitors vehicles. The competitors don't have demand, Tesla does. https://insideevs.com/news/530606/us-ford-mache-sales-august...

> What competitor is overtaking them? My understanding is that you can get any electric car you want, except a Tesla. That means people aren't buying the competitors vehicles. The competitors don't have demand

The company this story is about, Rivian, only started deliveries in the past few weeks and has delivered a negligible amount so far (a few hundred). They obviously intend to scale quickly, and they are hardly Tesla's only relatively new competition. It'll probably take a few years to see how the market shakes out.

If you look up global EV marketshare tesla doesn’t even have 20% of the market. They are the biggest EV maker yes, but they don’t even own that large of a chunk of the EV market, let alone the car market.

The way I see it people are buying the competitors vehicles but those competitors are better at manufacturing as well as each having a smaller chunk of the market and therefore can meet demand. Tesla can’t meet demand in part because they are not as good at manufacturing as they need to be.

If tesla was worth their valuation they would need to dominate the EV market with 80+% marketshare, because that way when the EV market grows they will dominate the overall car market. But they’re not that large of a chunk of the EV market and they can’t ramp up volume or drive down prices fast enough to be on a trajectory to own EV. When all is said and done they will be a single digit player in the total car market, mostly catering to the luxury segment, and they will not realize enough revenue to get the profits that the stock price assumes.

Which is not to say the stock will fall any time soon. As long as people believe Tesla can do it, it will stay high.

They raise prices before they can't meet demand, despite trying. If they were in a position where it would damage demand, they would lower them instead. They have enough margin and a lot of cash on hand to do that.

They can't meet demand. That's the key issue. If they could meet demand they would be in a better position. Their demand is only about 20% of total EV marketshare and dropping, if they can't even handle 20% with a first-mover advantage that puts them in a bad position.

Without selling cheaper cars, Tesla could also:

* Overcome their poor reputation for both interior & exterior quality. If the luxury car price starts coming with luxury car fit & finish they will widen their market

* Overcome people's concerns about electric car range, by expanding charging networks, increasing charging speeds, or making cars with greater range.

The primary problem Tesla faces isn't whether they can sell a lot of vehicles or sell a lot of nice vehicles (who knows if they'll ever get around to improving the quality problems).

It's that the global market for vehicles in the $30,000+ range is not rapidly expanding. It's never going to be rapidly expand. Tesla is taking market share from other auto makers to do what they're doing right now. They have to kill a BMW to become a BMW.

There's nothing particularly special about being an EV maker vs an ICE maker, when it comes to margins or total addressable market, such that they should be valued so differently. Tesla isn't going to magically produce $80 billion in operating income on $200 billion in sales, that margin doesn't exist in the EV market.

Tesla also isn't going to own the global auto market, which is what their present valuation suggests (it suggests they need to end up as equivalent to four Toyotas). If they're lucky they end up the size of one Toyota, that's just about the best case scenario. ~$30 billion in profit, if everything goes extraordinarily well for the next two decades.

Why should anyone pay 30-40 times for future earnings that are so far away? Obviously it's nothing more than speculation on the part of some investors, betting that TSLA will just go higher yet, it has little to do with being rational about the long-term. The future best-case outcome is already very far over-priced into Tesla's stock.

> I don’t understand why people think tesla will keep growing at this rate

They are young and blinded by the optimism which the cult leader...ehm the CEO feeds them.

If they studied history they'd know that even Microsoft, AKA the undefeated company in IT/SaaS (US Govt. defeated them but that's another story) had to surrender to the S-curve phenomenon.

Most of the really big scope vision that Microsoft outlined in the 80s and 90s actually became true in the 2000s.

The problem was that people were really in love with Microsoft's stock and everybody and their brother was betting that the vision would happen exactly as planned.

The best case scenario at that point was that the stock would stay flat . And flat it stayed, and those who bought at the peak of the bubble blamed Ballmer.

I can't imagine how would they react when the same happens to Tesla and the insults which would fly in Musk direction given that he has a history of not delivering , exxagerating and also his company is not exactly in IT/SaaS.

He is now in Ballmer's position, but Steve delivered on what was promised in the 80s and 90s , nevertheless he was insulted and belittled.

For Tesla to have a justified valuation of 1T you'd need it to be ubiquitous, literally not being able to turn your head without seeing a Tesla logo, as it happens with the legacy trillion dollar companies (the FAAMGs/MAAMGs/MAMAAs)

The Model S was a significantly higher volume and lower cost car than the Roadster that came before it.

The Model 3 was a significantly higher volume and lower cost car than the Model S that came before it.

Eventually they hit a wall in terms of the cost of the raw materials and labor to build the battery and drive train, but I'm not convinced they are there yet.

Also, TSLA could very well find a Tim Cook to Elon Musk's Steve Jobs: someone familiar with logistics to take over the vision and mass produce it.

Apple has value addition in brand. I doubt Tesla will really compete with all established players outside tech bubble... That is BMW, Mercedes-Benz, Porsche... And I can't believe Tesla can find someone who really can outcompete all the current manufacturers...

I bought TSLA stock back when the Model S was announced. At that time, people didn't know if TSLA would be able to make it.

Their market cap was less than $5 billion. There were less than 100 million shares outstanding. Buying some shares was a big risk - it was either going to 0 or going to the moon. But when you bought shares, you weren't super diluted. It seemed like a reasonable bet for a small amount of my portfolio.

At >$100B market cap, I am having a hard time making that same value judgement on Rivian. Their factory has a capacity of 150,000 vehicles; they say it can be increased to 200,000 and in less than 10 years they can be running at 1 million vehicles per year. If they make it, they will be a very valuable company!!! Is it worth taking that bet, right now? Wouldn't I be better off waiting for more confirmation?

Tesla under Musk has done an insanely good job at scaling, growing as fast as any manufacturing company ever has. They have made the right investment in driver assistance, batteries and advanced manufacturing.

They have a huge backlog on every vehicle and they have huge new factories including integrated comming online very soon.

They have further invested vertically integrating not just batteries but cathode and anode manufacturing as well.

What exactly is Musk doing wrong in terms of scaling and logistics?

The battery is still one of the more expensive components and it is only going to get cheaper.

Tesla are also vertically integrated - they are geared to catch more revenue than just the car sales. They're in a prime position to take the running costs - fuel cost (superchargers), insurance (software edge) and eventually repairs and finance.

Traditional companies have that too - VW have insurance, Volvo have finance and all dealers have repairs. However Tesla have a serious information edge in all of those areas, they look like a real next generation company there.

Considering that they can't repair cars now, and often deliver cars with defects that shouldn't have left the factory floor, I think you're being wildly optimistic.

> The battery is still one of the more expensive components and it is only going to get cheaper.

That's a forward looking statement. To make it even more interesting is that CPI just clocked in at the highest rate in 30 years. That's not to say that battery prices will correlate 1:1 with CPI, but accelerating CPI does not bode well for any supplies getting cheaper in the future.

Let's look at who is claiming Tesla will keep growing at this crazy rate:

1. Elon Musk

2. TSLA apes (people who use the term "Daddy Musk" on /r/wallstreebets)

3. CNBC, MSNBC, and other financial media outlets

Do we see more public, established investment firms parroting this? Not AFAIK.

I was investing during the Dot-Com boom. Same thing was happening. Some will try to argue that the dot-com boom was based on vaporware and Tesla makes cars. Well, to that I say, every company was overhyped during that boom, from IBM to Lucent to Intel to Pets.com. Just because TSLA sales are strong doesn't mean the stock isn't overhyped even looking ahead 5-10 years.

A lot of folks used the same argument against Amazon to explain why Wal-Mart was going to blow them away in ecommerce.

lol

You could be right.

However, in the history of modern corporate America going back a century, how many times has an upstart dominated a multi-decade established industry?

Give up?

Exactly once: Amazon disrupted publishing.

So TSLA could very well dominate the car industry in 5 years, but history is has much better odds. If you disagree, please provide some examples, I'd like to learn.

EDIT: WalMart has higher e-commerce revenues than Amazon according to this by almost 30%:

https://www.nasdaq.com/articles/amazon-vs.-walmart%3A-which-...

But again, help me out with some facts if I'm so wrong.

> WalMart has higher e-commerce revenues than Amazon according to this by almost 30%

What? Here's a quote from the same article:

> Our global eCommerce sales are on track to reach $75 billion by the end of the year.

This has to be the annual sales figure right? Amazon surpassed this number several years ago.

> EDIT: WalMart has higher e-commerce revenues than Amazon according to this by almost 30%:

That doesn't make sense. Without checking the link I'm sure you're looking at total commerce revenue, not only e-commerce.

Why don't you think they will eventually sell a more affordable car? The factories are all maxed out with higher margin cars today, but they are building more factories and on a path to reduce battery prices.

Tesla's margins keep getting better

> something they are not geared to do

Why? They are vertically integrating the manufacturing including batteries exactly because they are going higher volume lower price.

> Tesla is not apple, they’re not good at making and maintaining products at low cost in massive volume

They have been doing a great job scaling and driving margin for the last couple years and that trend looks to continue, not stopping.

Model Y will likely be the most sold car in the world within 2 years and it will have industry leading margins. Next generation manufacturing in Texan and Berlin will significantly improve margin over current generation.

> and they don’t really seem to be getting better at it

This is just flat out false.

Tesla is currently valued at about $1,000,000 per car to be delivered in 2021.

Comparing YoY quarters especially during a pandemic is not really a very good methodology for determining market trends. Even when you add a qualifier like "given these trajectories."

Also, I think you're underestimating Tesla's competition by focusing on GM. Ford is a much larger threat to Tesla than GM, and already has an EV that's roughly comparable in price/performance to the Model Y. The Mustang Mach-E should be evaluated by any prospective EV buyer, and the F-150 Lightning has the potential to leave the Cybertruck stillborn.

Rivian has none of the advantages of Tesla (name recognition, Supercharger network) nor none of the advantages of the traditional ICE manufacturers (volume, fit and finish, dealer network). Other than Amazon's backing, Rivian is one of the last companies I'd consider for buying an EV.

people - especially on tech forums - have a tendency to underestimate the value of accumulated business knowledge. I'm glad you mentioned Ford and their electric pickup truck. Ford make a series of some of the most durable and best-selling pickup trucks the world over.

Tesla, on the other hand, have zero experience building rugged vehicles and their teething troubles will be immense. Ford, meanwhile, have been building rugged vehicles for decades. I would argue Rivian's position is similar to Tesla's in that they don't have the level of know-how that Ford do.

Despite all the justifications, i cannot see how Tesla's model will scale beyond developed markets.

I agree with you generally, but take a look at all the tech that Rivian has had to invent to get offroading right in an EV. The mechanical aspects of the drivetrain and suspension are very different than a traditional offroad vehicle. I think Ford will have less of an advantage than you think.

You overestimate the difficulty. The real difficulty is not the individual unit, but the mass production.

Many small startups have produced low volume of cars that are competitive.

The truck itself is really not that magically complex as you assume. And Tesla has lots of experience with the most important parts like batteries and motors. Far more then Ford.

What people here underestimate is actually the supply chain, specially of batteries while overestimating how difficult it is to make any individual truck.

How many Ford sedans do you see on out there compared to Toyota/Subaru/Honda/etc? You know why? Shitty reputation. Transmission issues, class action lawsuits, etc. I'm looking to buy a car now and have a multiple friends who bought cars recently. None of use even looked at a Ford. We'll see if they can build their reputation in the EV space. (I assume they have a better reputation with pick up trucks)

Ford dominates in trucks. The F-150 has been one of the best selling vehicles in North America for decades. And yes, Ford sedans suck, which is why Ford is focusing on Mustang (both the EV and the ICE) and SUVs.

Ford until literally a few months ago believed that they could buy all required batteries on the open market. Literally their CEO was in 2020 claiming the market would just provide unlimited batteries.

Their new CEO came in and realized the insanity and they are now copying what Tesla did in 2014.

GM at least copied what Tesla did in 2014 in 2019 and they now have their own factory being finished right now.

You can't just make a bunch of cars and say 'this low volume car proves X/Y'. These cars need supply chains.

Ford own battery factories (with a partner) will not produce cells for multiple years and until then they have to buy very limited open supply that is heavily contested.

In comparison Tesla is building its own cells literally in the same building as the Cybertruck. They are vertically integrating into cathode and anode production as well.

> F-150 Lightning has the potential to leave the Cybertruck stillborn

Delusional. Look at their own projections for F-150 Lighting sales. Both Ford and Tesla will sell every truck they can produce, that is not really questionable.

There is LITERALLY 0 chance Ford can produce enough to cover demand.

Tesla will be in a position to produce far more Cybertrucks, they literally have battery production in the same building and they have been working on battery supply chain for a decade. They are by far the largest consumer of lithium batteries on the planet.

Cybertruck will outsell F-150 for a long time.

Since Tesla is now the elephant in the room - it's possible Tesla is distorting the entire auto industry.

Tesla was one of the 5 largest companies in the world - something an auto manufacturer hasn't been in almost 50 years.

Tesla had BY FAR the highest P/E ratio for any company of that market cap (as a percentage of global wealth) in history.

Tesla's revenue growth is not much bigger than Alphabet's or Apple's - and these are companies with orders of magnitude more revenue and profit.

For the last 50-ish years - outside of a few small companies (Ferrari, etc) - auto manufacturing has been a pretty terrible business.

Tesla people keep trying to say that Tesla is really an infrastructure play or an Internet company or a services companies or even a space company - but... currently it's not. And even if it became any of those things - even at it's current growth rate - its P/E to growth rate is still unbelievably high.

I don't really care if GM and Ford and Rivian are now overvalued - and compared to them Tesla is undervalued. Auto manufacturing is not suddenly going to become the most profitable business in the world. People aren't going to suddenly start paying more for cars than housing. People aren't going to suddenly own 30 cars a piece. Tesla is never going to grow enough to be worth it's current market cap. But the market can stay irrational longer than you can stay solvent - and I wouldn't take a bet that Tesla crashes if my life depended on it.

Tesla is not saying that it is a space or internet company, that is SpaceX.

> Tesla's revenue growth is not much bigger than Alphabet's or Apple's - and these are companies with orders of magnitude more revenue and profit.

I'm not that big of a Tesla bull, but you have to remember that stocks trade on forward expectations. The trillion $+ market cap companies basically have saturated their primary markets. Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows/Office suite anytime soon. By contrast, if you buy the Tesla story, they are really just getting started.

> Auto manufacturing is not suddenly going to become the most profitable business in the world.

I tend to agree with this. However, it's worth noting that Tesla's margin profile is significantly different than all legacy automakers. Their gross margin is ~30%, which is within striking distance of AMD's. And Tesla is still sub-scale for the auto industry. EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers.

> EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers.

Please explain. This runs counter to the common understanding that unless a manufacturer scales up their battery production significantly, their profit margins on EVs are lower due to the high cost of the batteries. The California compliance EVs were sold at a per-unit loss. Tesla shook this up by targeting and marketing to the luxury market, where they could charge a premium.

Many smaller scale non-luxury manufacturers have pretty lackluster EV offerings (looking at you, Subaru).

Margins will initially be better on EVs for all EV manufacturers.

Right now, where there's an electric and a gasoline powered version of a comparable model, the electric version seems to cost about US$10K more. See Ford F-150, Chevy Bolt, BMW iX.

That needs to stop.

> the electric version seems to cost about US$10K more

Disagree. F-150 Lightning XLT is ~$5k more than the ICE equivalent, which means it costs less after the tax credit. (I'm not sure the baseline model is the same as the baseline ICE F-150.)

The Bolt and iX are essentially compliance/concept vehicles that don't have ICE editions, so you can't say they cost more than their comparable models. Once those two get real EV strategies, we will be able to make direct comparisons between e.g. the Chevy Tahoe and the Chevy Tahoe EV.

They are consistently 10k more, see the id.4 or Mach E for better comparisons.

Neither of those have ICE versions (and did not have ICE versions in any recent years), so you can make up any number and say the EV versions are $X more expensive.

There may be some premium, but arguably some of that is the manufacturers targeting a consumer price net of tax subsidy ($7,500+).

EVs have fewer parts overall, and therefore should require fewer manufacturing hours, among other efficiencies. But more straightforwardly, look at Tesla's margins as an object proof. Their gross margin is 50% higher than Toyota's, and Tesla is still sub-scale for an auto manufacturer. I would expect any EVs shipped in any meaningful volume to realize similar margin gains versus ICE vehicles.

> The California compliance EVs were sold at a per-unit loss.

Those cars were never intended to be a real line of business. My measure of when a legacy automaker decides to make a "real" EV is when they attach their existing brand equity to an EV. The Chevy Bolt fails this test, as do the BMW EVs. I think this distinction is important because automakers have the capability to sell vehicles that they do not intend to be part of their strategy or scale to meet demand. The California compliance EVs also obviously fail this test.

The Ford F-150 Lightning is a real EV, as is the Mustang Mach-E and the Volvo XC40. I don't believe Subaru has even announced a real EV yet, as the Solterra does not count. We will know Subaru is serious when they deliver an Impreza EV; until then, I consider all their EV offerings as compliance vehicles.

> EVs have fewer parts overall, and therefore should require fewer manufacturing hours, among other efficiencies

I agree with all of this, but how can we be so sure that is the reason for:

> Their gross margin is 50% higher than Toyota's

vs Toyota being an older and larger company with far more overhead due to an older and larger workforce.

> Those cars were never intended to be a real line of business. My measure of when a legacy automaker decides to make a "real" EV

Agreed, and I think deciding to make a real EV comes down to investing in battery production at this point. Subaru in particular is really losing the crown in its key markets like CA and CO to the new AWD EVs entering the market.

> Their gross margin is 50% higher than Toyota's

> vs Toyota being an older and larger company with far more overhead due to an older and larger workforce.

Gross margin is net sales minus the cost of goods sold, hence doesn't include workforce cost.

Exactly. In fact, Toyota has better economies of scale on its side, so their raw materials costs will be lower than Tesla's all things being equal.

> Gross margin ... doesn't include workforce cost.

I don't think that's right. From https://www.investopedia.com/terms/g/grossmargin.asp

"The Formula for Gross Margin Is

Gross Margin=Net Sales−COGS where:

Net Sales=Equivalent to revenue, or the total amount of money generated from sales for the period...

COGS=Cost of goods sold. The direct costs associated with producing goods. Includes both direct labor costs, and any costs of materials used in producing or manufacturing a company’s products."

It wouldn't surprise me if a lot of Tesla employees are compensated in large part via equity, therefore lowering their apparent labor costs. Also, they probably have lower health insurance costs for their relatively young workforce (they are more like a young tech company in this way).

Of course, battery prices will continue to decline, so in the long run, yes, EVs will be cheaper to buy, but I'm not convinced we are there quite yet. They are already far cheaper to operate, though.

stocks like tesla trade on dealer gamma. fundamentals don't matter at all. if you're an investor, stay away. if you're a trader, go with the flow.

> Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows/Office suite anytime soon.

Which is why Microsoft pivoted to additional revenue streams years ago. XBox, Azure, GitHub, SQL Server, LinkedIn, the Surface line, and more.

What's great about this reply is that the pivot to (in particular) Azure is exactly what has changed the narrative and thereby driven the most recent growth in the stock.

MS valuation to some extent is basis their ability to sell more Azure. Cloud is still growing very very fast.

It is also noteworthy that MS is getting good growth in Windows license revenues too as they have opened up a subscription model, lot piracy in the consumer/SMB markets have reduced especially in developing economies. They are not getting billion new users, but a lot of newly paying users with consistent recurring subscription revenue stream they are now generating .

> but you have to remember that stock trade on forward expectations.

Great insight, except that you are just repeating the start of the whole discussion, literally from the first line of this thread:

> I want to point out that companies are valued based on their future and projected growth, not how much they are worth today.

What did you hope to add to the discussion with this comment?

> Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows/Office suite anytime soon.

Microsoft is already heavily diversified. Big difference.

Not material since they have saturated there initial markets, per the narrative. But sub in Apple of you prefer.

I mean the money Apple makes on wearables (AirPods + watch), iPads, and possibly growing Mac sales because of the M chip are all huge. Their services segment keeps growing at a massive pace too. Sure none of these are as big as the iPhone. But if Apple only did the iPhone as hardware, they would be no where close to their current valuation.

None of the big 5 tech companies are close to tapping out. Any or all of them could be worth another $1T in a couple years and it wouldn’t be that crazy.

I agree that none of the biggest tech companies are in danger of tapping out anytime soon. But in terms of narrative, Microsoft was the PC company and Apple is the iPhone company (it took years for them to shake off the funk of being the iPod company in the face of saturating that market) and so forth.

Narrative-wise the comparison looks like this: Apple gets >50% of its direct sales from the iPhone, and likely a meaningful percentage of its wearables and services revenue is levered to iPhone sales (AirPods and Fitness+ being examples). Probably 60%+ of Apple sales is tied to iPhone at this point. The mobile market is essentially saturated, so growth will taper there going forward. All the other products are nice, but they are a minority of revenue. To sustainably grow at 20%, Apple has to find a brand new category that is worth $40B, and they have to do that every year. (By way of comparison, that's about as big as Tesla. Apple needs to find a new Tesla worth of revenue every year.) So that's the narrative on Apple.

By comparison, the shift to EVs is at the very beginning of its ramp, with ~7% of global sales being EVs. So Tesla has many years to grow at very large rates (40%, 50%, etc.) before it arrives at saturation. They don't have to find any new categories (adding a truck doesn't count as a new category for narrative purposes), they can basically keep doing what they are doing and add SKUs in their existing line of business and grow along with the market, which is growing really fast. They don't have to find giant new categories every year, so in some ways the business problem in front of them is more straightforward. That's the Tesla narrative.

Tesla has a great narrative for the future, and that helps drive the stock price.

> So Tesla has many years to grow at very large rates (40%, 50%, etc.) before it arrives at saturation.

You missed the GP's point - even if they take 100% of the car market, it's not like the car market is growing exponentially. So this car market growth is "already priced in" and it's TAM is the combination of all of their car companies (even assuming they were to get 100% market share which is unrealistic), which Tesla is already valued at higher than all of those companies combined.

The narrative is that Tesla becomes a "battery company" (which is basically just their JV with Panasonic anyway). But they haven't proven anything in that market yet. So the point is this -> Microsoft may not just be a PC computing company anymore (selling Windows OS) but it already has proven cloud revenue for example, so you can speculate that those revenues will grow by X% with its own TAM.

I didn't miss the point, I promise! One narrative is indeed that their core market is EVs (or call it Auto 2.0 if you include software, advanced driver assist, etc.), and that this market is indeed growing rapidly. This part of the narrative assumes the legacy makers will not pivot fast enough, so the EV market will be divided among the newcomers. Under this view, Tesla is not competing against BMW any more than the iPhone was competing against the Nokia feature phones. Thus, the EV market is essentially a new market (goes the narrative). Investors clearly buy into this narrative at some level.

You do make a good point that Tesla has multiple narratives working in its favor. At one point, it was the self-driving company. When necessary, it can push the solar roofs angle. It has a couple of narratives it can use to goose the stock.

> Thus, the EV market is essentially a new market (goes the narrative). Investors clearly buy into this narrative at some level.

Huh? Again, you're missing the point - there is total addressable market of vehicles that all of the major automakers currently capture and have forward looking valuations based on future expectations. It doesn't matter whether that vehicle uses diesel, gasoline, electric, nuclear, hydrogen, whatever...

> Under this view, Tesla is not competing against BMW any more than the iPhone was competing against the Nokia feature phones.

Literally no. People aren't going to magically buy more vehicles because they run using a battery. A car gets you from point A to point B. A smartphone and dumbphone both make a call from point a to point B, but one also has an internet connect computer which opens thousands of new opportunities of communication (video, images, spreadsheets, word processing, etc.). Also iPhones cost substantially more than Nokias for a reason. This is a bad analogy.

There is a total amount of money every year the population is willing to pay for for transportation. Let's say that number is $1T (idk what is for sure, just using that as an example). Tesla is fighting to gain that market share of $1T - its zero sum (sans overall increases in demand for vehicles every year).

The only way this changes is if Tesla reaches level 5 autonomous navigation which is (1) not even built in the cars today and (2) Tesla still has Level 3~4 that is not fully productive. So this is like saying "yup but their dumbphone can access the internet...but only when they are in this one building in NYC...think of the future!"

I know you touch on it, but what if all the other manufacturers start using proprietary tesla things, such as batteries or the (arguably vaporware) self-driving algorithms?

Exactly this. While valueing companies on future growth makes sense, Tesla's current evaluation is bigger than the 10 largest car manufacturers by market cap after combined [1]. That kind of implies that people think Tesla alone will be as profitable as these other ten combined, which just seems like a totally crazy bet to take. Tesla would have to take over huge parts of their market share while keeping high margins on expensive cars. There isn't so much population that is able to spend 50k or 100k on a car.

[1] https://companiesmarketcap.com/automakers/largest-automakers...

Most of the people holding the stock at this valuation do not see Tesla as only a car company.

Their Powerwall is quickly becoming the leading home energy storage solution. It will be interesting to see if they can also deliver on solar roof, beat NVidia with project Dojo, beat Waymo with self-driving, and beat Panasonic with battery manufacturing.

> People aren't going to suddenly start paying more for cars than housing. People aren't going to suddenly own 30 cars a piece. Tesla is never going to grow enough to be worth it's current market cap.

There are around 290M cars on the road in the US, of which 1.3M are electric. Over the next 20 years, the majority of those 290M will get replaced by an electric vehicle. One of the major drivers of this will be cost: it will just be significantly cheaper from a TCO perspective to drive electric.

Electric is such a shift that traditional car purchasing forces like brand loyalty are disrupted, and there will be a land rush to claim new market share. Electric also presents heretofore prohibited avenues for vertical integration: Tesla wants to sell you the car, the home battery and the solar panels to go with it. Standard Oil was broken up for similar types of vertical integration.

Electric will also present opportunities for ongoing service revenue (value-added services such as in-car infotainment) that automakers have tried for years to break into (unsuccessfully)

If you’re the early leader with a promising track record, as Tesla is, a 1T valuation is not surprising.

>If you’re the early leader with a promising track record

I wouldn't trust Musk to take the Thanksgiving turkey out of the oven on time.

> Electric will also present opportunities for ongoing service revenue (value-added services such as in-car infotainment) that automakers have tried for years to break into (unsuccessfully)

And thank God for that! It's bad enough that automakers are trying to put third-party repair shops out of business.

Currently the cheapest new ICE cost 15-20k and the cheapest new long-range EV cost 30-35k (and a Tesla costs over 40k). If people are going to switch to EVs for lower TCO, the EVs will need to get a lot cheaper. I have no doubt this will occur eventually. And when they get a lot cheaper, how is Tesla going to earn a fat margin? I feel the “lower TCO” story is not that bullish for Tesla given the enormous profits that are required to justify Tesla’s current valuation.

> If people are going to switch to EVs for lower TCO, the EVs will need to get a lot cheaper.

Or gas will need to get a lot more expensive, which is what governments are planning to do.

The Average price paid for a new car in the US is ... $35k-$40k. Almost no one in the US buys $15K Mitsubishi Mirages and more reasonable cars that start at $20K are rarely actually sold bare bones for that much.

How about the average price for a new EV?

>Over the next 20 years, the majority of those 290M will get replaced by an electric vehicle.

Let's optimistically assume that Tesla will sell 100M of new cars in the US in the next 20 years at the average price of 50K per car and profitability 10%.

100M x $50K * 10% = 500 billion which is already less than Tesla's current 1 trillion valuation.

1. There are other countries

2. What if Tesla gets $1-2k ARR along with each sale for charging or other services?

That’s $25B profit per year excluding any other profit. That can actually justify a 1T market cap.

It's 2.5% ROI, on par with inflation and well below the market. It's hard to reasonably justify it. Unless you bet on a stock with an extremely high P/E to get a much higher P/E.

It’s more than just cars though. Just one example (of many) - do you pay Ford extra money when you go on a road trip, or does that money go to Exxon, etc? In my Tesla when I go on a road trip, I am giving them more money to charge on the road.

Also, when we switched from horses and carriages to automobiles, I’m sure being an auto manufacturer at that time was probably insanely profitable. Maybe not the most valuable kind of company in the world at the time (or maybe it was), but definitely up there. We’re now in another transition from ICE to electric vehicles. There’s going to be another period where EV manufacturing becomes extremely valuable as demand for EVs surges over the next couple decades. After that, as the EV market matures and the competitive landscape evens out, profits will come down again.

If Tesla can sell 4M cars at 10K profit every year, that's an annual profit of 40B dollars. 1T valuation will be justified.

Right now they are projected to sell more than 1M cars in 12 months.

No - they'd still need to get their profit margin to be ~25% instead of ~10%.

Tesla can definitely sell more vehicles OR increase margin - but it will be substantially more challenging to do both at the same time over a short horizon (10 years).

Tesla is operating at significantly over 10% per car profit as per estimates. A report earlier this year estimated almost 30%.

https://www.teslarati.com/tesla-record-q1-2021-gross-margin-...

>Right now they are projected to sell more than 1M cars in 12 months

So after converting from Musk time to human time, this means it'll take 5 years?

They sold more than 237K last quarter. Check their earnings report.

Yes, and?

One year is composed of 4 quarters. I will the rest of the math to you.

Did you read "if Tesla can sell 4M cars at 10K profit every year"?

Did you read "IF ... "

Musk also projected Tesla owning 1M robotaxis by 2020.

We are not talking about Elon time. They made 237k cars in Q3, and will most certainly close a year with 900k(+-50k) cars produced. With two new fabs coming online in 2022 and growing capacity on existing fabs they will comfortably close 2022 with over a million cars made, and I think the final amount will be just short of 2 millions.

4M type volumes are possible at only lower price points.

I am very skeptical that battery costs are going to drop that much that Tesla can make cars for say 15-20k and retail at 25-30k to make the 10k profit you propose.

Battery chemistry is rapidly evolving of course with lesser conflict resources / better performance etc, but raw material costs for basic ingredients are fairly expensive, that puts a hard floor under which it would be hard for Tesla to go below.

A 40K tesla car is very conservatively equivalent to a 30K gas car in terms of total cost of ownership. The 3 factors are

1. Significantly reduced energy costs

2. Significantly reduced maintenance, not even oil changes

3. Significantly longer car life, because of having barely any moving parts.

Most of the car parts that go bad in the 100K-300K mile range don't even exist in a Tesla.

Tesla is production limited, not demand limited in its sales. Just the model 3, model y and cybertruck will get them to 4M per annum - no problem.

But what if Tesla is the new BTC? It’s price solely due to stock demand and not fundamentals anymore.

> Auto manufacturing is not suddenly going to become the most profitable business in the world.

Tesla's mission statement has nothing to do with cars: "Tesla's mission is to accelerate the world's transition to sustainable energy". Transport just happens to be a very large segment that needs to be transformed to use sustainable energy so that's what they're focusing on.

Tesla has just become an energy supplier in Texas. That's another market that's been stagnant forever and is going to see a huge shakeup when tech such as virtual power plant become widespread. Tesla is already running some of the largest energy storage for the grid in the world.

Then there is AI. What other automotive manufacturer do you know that has 1000s of people working on AI, makes their own chips and has training data from millions of cars on the road? AI isn't just to make your car autonomous. There is the Robotaxi potential which in itself is an entire market. AI doesn't stop there: once Semi is out with autonomous driving, that will cut the cost of transporting goods by a large chunk - no more paying drivers and way less cost on fuel. That's another market entirely and will large fleet companies rushing to save cost by purchasing trucks from Tesla.

In case you missed it (which I believe you have), there is autonomy in general manufacturing which Tesla is planning to target. That's yet another completely different market with a huge potential.

Did you hear about the car insurance? Ye, that's another one which Tesla is targetting.

I'm pretty sure there is a bunch of things I forgot.

Tesla is not a car manufacturer. It's a behemoth in the making which will overtake Apple, Google, Meta, Fossil fuel and some more combined, times 10.

The other car companies were never vertically integrated. Huge parts of their profit went to dealerships and suppliers. The suppliers and dealers often have better market valuations comparatively.

Current manufactures make almost no margin on cars and make decent margin on supply of parts.

Tesla own that whole chain end to end. As they scale up and build up a huge fleet of cars that need service that is not covered this will become a hugely profitable business.

Other car companies are buying batteries and that is almost 1/3 of the cars price. Tesla will make their own batteries. Most other car companies will buy their driving assistant tech, Tesla has it in-house.

Solar and utility storage are small markets now, but they will continue to grow and no other car manufactures has anything in that range.

Maybe Tesla will not be worth what they are now, but they deserve to be way higher then GM/Ford and so on.

What year will Earth be fully converted to a giant ball of Tesla vehicles?

If Tesla sells this year 800,000 units of 2 tons each, and keep up 388% growth every year, then according to my calculations they will have depleted earths crust in a little over 19 years.

That's why there's SpaceX to mine asteroids! /s

By year 8, they'd be selling 2 cars per person on the planet - so any extrapolating that this growth rate can continue for even 4 years - must think we've reached the singularity and will soon be living in an alien world.

For context, by year 19, they'd be selling ~39M cars per person...

Today companies are valued by how much money investers think they can make from buying stock.

you should disclose how much of the net revenue comes from selling tax credits.

Telsa is not making money from vehicles yet from what I recall. Rivian will be a long way away from making money on tax credits.

> Telsa is not making money from vehicles yet from what I recall.

Are you a time traveler from 2015?

Tesla is having industry leading margins. They are currently at almost 30% automotive margin.

I was remembering an article like the one below [1] on profitability. Looked through Q3 '21 results and it seems they're at ~29% margin, excluding tax credits now

[1] https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental...

Rivian is investing aggressively to ramp up production to ~1M vehicles/year by 2030.

If average selling price per vehicle in 2030 is more or less similar to Tesla's today -- call it $50K/vehicle, to keep the arithmetic simple -- then a market cap of $100B today is equal to ~2x the annual revenue forecast for 1M vehicles in 2030, assuming everything goes well and there are no major hiccups along the way.

These figures strike me as as extremely over-optimistic, to say the least, but at least I can see how smart people might be rationalizing the purchase and ownership of Rivian stock at this valuation to themselves so they can sleep soundly at night.[a]

[a] I mean, it's not impossible: Tesla's run-rate production and sales now exceed 1M vehicles/year, and the new Tesla gigafactories already built or being developed are supposed to bring production to 4-5M Tesla vehicles/year well before the end of the decade.

They are playing in the 70-80k+ luxury truck/suv market. That type of market doesn't have the volume they are aiming.

They will have to build cars that compete with the mid tier (40k-50k) to be able to sell on those volumes. At that tier you are competing with every other manufactor, from kia, to ford, to VW, Audi, GM etc...

Their truck looks nice, but just not sure they can support their current evaluation with such a limited production.

I agree: they would have to move downmarket over time, following Tesla's playbook. That's why I guesstimated $50K/vehicle by 2030. It may be an extremely over-optimistic goal... but it's not impossible.

>>70-80k+ luxury truck/suv market.

Have you actually be shopping for a truck lately -- that ~70-80K 'luxury' truck makret is lit what every single truck manufacturer is playing in...

Its SICK..

Trucks should be FUCKING TRUCKS - machines used to haul shit you cant carry as a human - nothing else.

Not only are they extra expensive - they are 90% plastic!

Used fleet trucks can serve this market, but even they get snatched up for too much these days.

You can pry my old jeep cherokee out of my cold dead hands.

Among the last vestiges of a simple, rugged, affordable, vehicle that serves a purpose well without bells or whistles.

So I looked into used fleet trucks a tiny bit...

yeah some of the rental car companies inventory is no cheaper than any place else...

Those trucks may as well be sold at a brand new lot. $43,000 for a rental car fleet off-cast? No thanks.

Big part of the valuation is the partnership with Amazon for commercial vehicles which you don't seem to be considering. Those vehicles are in the 100k+ price bracket.

No, they aren’t. I unfortunately can’t tell you how I know due to contracts, but I am 100% sure you are wrong about the price and the implied assumption that Amazon will only buy from Rivian. Also, commercial van margins are nowhere near as good as pickup margins. The van is a cash flow generator, not a massive profit center.

unless you work at Rivian in finance I don't think so.

Maybe it's just my location (Europe), but I have never heard of Rivian. Not even once. The guys I work with are car enthusiasts, and I've never even heard them mention that name.

They are american, and their are playing to the truck/suv market, which is more USA thing.

I have seen their truck and SUV in person (NY auto-show), and it is indeed very nice inside. Feels like a Luxury Jeep done right, appart their front headlights, which are weirdly too close to each other (the only detail i really disliked).

Everything else is on point and feels almost Audi like quality.

I'm also in Europe, in a small Eastern European country and we definitely heard of them. My inner circle also heard of them - maybe you guys are just way into V8 or 3.0L V6 :) ?

its extremely "new", they only shipped a few cars yet. This video here is one of the first external reviews, i watched that to get an idea https://www.youtube.com/watch?v=tpBMld6U9B0

I'm from Europe and I sure did - its from the same country Geralt comes from!

They should do a Geralt driving a Rivian to slay some monsters ad.

I'm from Europe as well, and I've seen them prominently featured last year in the documentary series "Long Way Up" on Apple TV+. Nice series btw, if you like beautiful scenery.

I'm in the US and I haven't heard of them.

Rivian makes pickup trucks. Pickup trucks exclusively sell in North America.

The tech world has gotten used to insane margins and winner take all outcomes in sub-industries. The car industry is nothing like this. The margins are slim, and the total sales numbers across the world don't change as much for each price bracket.

Tesla is squarely coming for GM, Ford and Fiat-Chrysler's market, which have a collective networth of $200b. I can't for the love of me understand how Tesla is worth 5x that, even when their sales are about 10% of that. Even if Tesla fully replaces them by increasing their sales by 10x, surely they would have to deal with the same kind of low margin that all of these automakers are working with. Isn't the absolute dream-world case outcome for Tesla, still only 20% on its way to justifying the stock price ?

Now let's say Tesla is literally run by superhuman teams that let them take over any adjacent market. So, they push out CATL ($200b) from batteries, push out Uber from ride-sharing ($80b) and control the entire world robotics market ($20b). So 200+200+80+20 = $500b. That's still only 50% of the way to their current market cap.

What am I missing here ? Why is their market cap as big as MSFT/AAPL/GOOGL when Tesla is nothing more the most exciting car manufacturer in the world. It is a big, but the other trillion dollar companies literally intersect with every aspect of your life.

All my statements about Tesla apply to Rivian too.

> Pickup trucks exclusively sell in North America

The most popular vehicle in lots of countries is a pickup truck https://www.visualcapitalist.com/best-selling-vehicles-in-th...

Good catch. My bad.

I should have said American/Premium pickup trucks sell exclusively in the US & Anglophone countries.

In every other country, the most sold car is the affordable Toyota Tacoma/hilux, which is purchased by people who need to get work done, first and foremost. I see no indication that either Rivian or Tesla are anywhere close to or have any motivation to target the low margin/ high demands market of the Tacoma.

Also, Tesla started off by cannibalizing the market of premium sedans : BMW/Audi/Chrysler. This was arguably the weakest performing sector in the auto industry at that time. The pickup truck market & budget cars market is far more cut throat. I would not expect Ford/Toyota/Honda to get caught sleeping at the wheel when Tesla comes for their big money making cars.

Ford has already hit it out of the park with the F150 lightning. Toyota has a fully developed competitor in the Prius to hold the ground until they catch up, and Honda is quietly electrifying their entire lineup while making actual production cars like the cute little Honda E.

The F150 Lightning is ultimately going to eat Tesla alive. Give people what they already expect out of the best selling vehicle in history AND vastly more torque to boot?

Maybe that's because they never sold a car...

Rivian investors who bought in todays price are going to smoked by a truck in the not too distant future. I love what Rivian (& Tesla) are doing but these P/E ratios are from another planet and are feeding off the hype train.

Unless the world internalizes that P/E ratios have now permanently been reset at crazy high valuations it is not sustainable price wise.

With this valuation - the amount of execution risk and market penetration risk is formidable.

Robinhood literally pushed me a notification that their ipo was available. Never even looked up the company on the app or heard of it really before that notification. Smells like a pump, waiting for the dump now.

You sure they didn’t push the notifications because it’s the biggest stock news today?

They never push me other messages just for these meme stock IPOs I've never heard of.

P/E is a meaningful metric for established companies that have exited the hyper-growth phase and have reached some scale. Not so much for younger companies/startups because it completely ignores potential future growth. You can’t compare the P/E of coca cola with Rivian or Tesla

Actually you can compare the P/E to other growth companies and you can determine what size and scale a company needs to get to and how much revenue they need to get to justify the P/E. You can also determine how much hype is attached to a company.

Can someone smarter than me explain how this is happening? If it has this market cap, someone is buying at that valuation. Why? Greater fool theory?

“omg I wish I had bought Tesla early”

It's obvious. Nothing is more profitable than a new business in an extremely competitive and cutthroat industry with entrenched players, that also requires very high levels of annual CapEx spend simply to sustain production.

And one of those entrenched players (Ford) owns 13% of Rivian.

Oy, this market is going all topsie-turnie right now. Ford's singular, biggest asset is its stake in Rivian for crying out loud.

And with a Market cap of only 80 Billion or so, Ford is smaller than Rivian at these valuations.

perhaps its crazy - but, the money is flowing towards the future, not the past. Ford Motor Company has not been a winner in the last 20 years, while Tesla has attracted new money.

Ford is up this year more than Tesla is actually. I'm betting their partnership with Rivian is a big part of that.

EDIT: Year-to-date YTD at least. I thought F was up more than Tesla in 52-week but I was mistaken. Still though, you can see that the F ticker has skyrocketed with this strategy, despite the obvious headwinds of "Ford doesn't have enough chips to even make their allotted cars this year".

Like, I get it. Its a strategy for Ford / Amazon to be "hip" and "cool" by supporting Rivian and participating in this hype. Its stupid but it seems like its working, for F's stock to go up so much despite all of the manufacturing issues they had (idle factories / layoffs), is just how stupid this market is right now.

There's so much stupid in the market these days that its hard to keep up.

bought ford today, the cheapest way to own rivian.

But they are different types of companies, Rivian is a car company and Ford is a pension and healthcare company that also makes cars. Only half joking.

They managed to build an electric truck before anyone else. That’s pretty neat.

Not sure I'm smarter but my take is this. People look at Tesla and are looking for a 2nd that can get close to their valuation. Traditional companies are encumbered by contracts and the need to support existing infrastructure (garages, resellers etc.) all of that doesn't work well for electric.

These guys have very deep pockets, big contracts with Amazon etc. that can keep them pushing out cars for years and they don't have a history to encumber them. They can copy everything Tesla does and the market is big enough to support them. I think the valuation is wishful thinking and a lot still remains to be seen but who knows...

I think you nailed it with the greater fool theory. Everyone knows $100billion is nonsense, but this is a pure momentum play. This sector is red hot still.

I like the new Rivian truck, but they only have a few factories and sold a few cars. I just can't understand how its even 10% market value of Tesla.

agreed, and truck buyers are notoriously loyal to their brands especially in higher-priced segment.

I like their SUV https://rivian.com/r1s but it's $75k.

At least Tesla has other side businesses going for it, but I even question TSLA long term valuation. I guess investors are thinking they will gradually transition into IP and software technology company, like Android.

And let car mfrs fight over the hardware space.

>I like their SUV https://rivian.com/r1s but it's $75k.

$75k is $20k cheaper than the Model X, doesn't have the silly doors, and has a 3rd row option that adults can sit in. R1S will sell like hotcakes to eco-minded soccer moms. And, there is no competition in sight from any other manufacturer (electric hummer doesn't have the 3rd row option)

I can't understand how tesla is 10x the market value of ford. they build their cars in a tent. ford has manufacturing facilities across the globe.

Robinhood pushed me a notification that their ipo was available, so I wouldn't be surprised if this was fueled by meme stock folks who saw that notification, and just bought it because fomo. Dangerous imo that robinhood can push these pumps on people.

Greater fool theory for sure. Once they have dumped the stock on retail investors, who cares what happens? Tesla was lucky that they had a maniac like Musk who just willed the company to success but there are not many people like this.

I don't understand the valuation of these electric car companies. They are completely nuts. A good design doesn't make it valuable.

Take Rivian for example, the car is not out and we don't know if they can even deliver the vehicles as promised in Jan 2022. That means we have no idea how crappy or how good the vehicles will be. Even then a 100b valuation is just nuts. For an electric car the biggest parameter is the charging network. These guys have nothing. So all those adventure trucks are only useful around the city and nothing else. Why are people thinking this is 100b worth?

It’s what’s trendy to invest in. It makes as much sense as GME and NFTs.

Meanwhile, first vehicle shipments slipped from summer 2021 to spring 2022.

Am I the only one thinking that the Rivian truck headlights/front grill is one of the most unappealing things I have ever seen on a vehicle?

No, but they are like the iPhone notch. After you see them a few times, it won't look strange.

The cutout on the screen still looks out of place to me.

It’s a matter of taste. Some people like the Tesla frog face, some like Rivian. Rivian looks okay.

Telsa's time frames are never accurate either.

The point is that they went public before shipping a product.

I mean does that even matter anymore? We have company go public that are still losing billions of dollars a year and nowhere near being profitable. I do see your point but I think the world is way past caring about foundational basics anymore.

Sorry, you're on Hacker News, 90% of the people reading this comment get semis when they hear about an IPO before product release. The entire purpose of this site is to collect ideas and commercialize them.

I don't know who actually thought Rivian was going to ship in 2021. This video from a year ago was in a completely empty factory with a single pathfinder chassis

https://www.youtube.com/watch?v=cACYuJ0jK_M

They've done the easy part, hacked together some steel and motors, and shot a few videos. Now they are stuck ramping up production, and trying to hack themselves out of their self-created software hell.

Notice how Lucid has started delivering vehicles even though they started production at more or less the same date? Yeah that's because they are using standardized software and automotive manufacturing processes.

I read the S-1--it's one of the worst I've ever seen, to be honest. Rivian has no strategy whatsoever. Their FleetOS is 100% built to Amazon's spec. If Amazon were to withdraw support for any reason, they would have invested billions in the truck/software R&D only to have basically no one to sell to.

Why would Amazon crash a company that they own 20% of?

Rivian is basically Amazon's baby, roughly worth $20 Billion at this IPO price.

It really wouldn't be the first time that a company shuts down a 'baby'. 20% of 20 billion for Amazon is literally pocket change.

The 20% is (according to the IPO atleast) worth 20 billion dollars, not 20% of 20 billion dollars.

Rivian is right now worth $100+ Billion.

20% of which is $20 Billion, and is Amazon's stake.

I think 20 billion is still pocket change for a company with a 1.8T market cap. And if Amazon did want to divest, they would likely just sell instead of taking a full loss.

Market cap? No one uses market cap when talking about dollars in this manner. I'd argue shareholder equity is the more reasonable metric. Amazon has 320-Billion in assets and 100-billion in liabilities.

That means a CEO looks at Amazon and sees the $320 Billion it can use for operations (which includes all of Amazon's properties, warehouses, equipment, etc. etc.), and the $100 Billion Amazon owes other companies (ie: liabilities). So $220 Billion total equity.

That means that this Rivian stake is literally 10% of Amazon's equity. That's no small percent by any stretch of the imagination.

If this company is still worth that much in 2025, the year Amazon is expected to have received all the trucks, I will eat my hat.

Sure. But that doesn't change the fact that Amazon, as a company, clearly likes to vertically integrate and build its own stuff (be it servers, warehouses, or even its own distribution system).

Amazon used to rely upon USPS, FedEx, UPS. But what did it do? It built its own. Similarly, Amazon is now looking at the cars it bought for its delivery service, and clearly wants to vertically integrate, by help creating the Rivian company to make those new cars.

The valuation may be stupid, but the business plan is solid. Bow down before Amazon, build cars exactly to Amazon's specifications in a way other manufactures cannot... and get Amazon's money.

I don't think this business plan is worth $100 Billion, but it sounds like a fundamentally good business plan at its core.

It's crazy to me that such a large valuation was obtained by Rivian. I suppose having the backing of Amazon signals a certain level of success.

Looking forward to seeing more good-looking EVs enter the market, yet I'm hesitant due to the challenges they'll face ahead (charging, manufacturing, etc.)

> I suppose having the backing of Amazon signals a certain level of success.

Blue Origin seems like a bit of a pathetic failure though.

Has Amazon actually done anything to back or signal their favor towards BO? IIRC, Kuiper is actually planning on using other launch providers

That's because they have no choice if they want to launch before Starlink has dominated the market. New Glenn is sooooo far behind schedule.

Blue is run by Jeff directly, and has multiple internal cultural problems similar to Amazon, along with the fact that they just don't have the rocket tech that SpaceX has

Amazon is just an investor in Rivian, and I think based on how well the rivian prototypes held up in the show "long way up", they have a great shot at competing with Ford F150 lightning and the Tesla CyberTruck

> based on how well the rivian prototypes held up in the show "long way up"

You came away from that with a positive impression of the Rivians?

I guess we can say at least they didn't burst into flames...

But they did break, and one particular occasion stands out in my mind involving some inexplicably vulnerable low-hanging hydraulic reservoir striking a rock. For a truck it seemed like a pretty stupid red-flag design choice.

That sounds like a fixable problem that's not the core technology. Major legacy car makers have made mistakes thousands of times more stupid and dangerous.

That show made me swear off any Rivian in the future. They had the chance to cement themselves as cool pioneers, but looked like a jumbled mess that wasn't ready for primetime.

That was filmed over 2 years ago with prototype vehicles. Hard to expect the trucks didn't get incredibly better from the experience.

Calling private space company with a working rocket engine a failure is great sign of how far we've progressed in the last 2 decades.

Jeff just doesn't have the drive and in no rush, to him it is just a toy business, not a civilization advancing endeavor, so he is fine dealing with bridge-to-nowhere Boeing/Lockheed/etc.

That's literally the opposite of how Bezos has described the role of BO. He's said that BO is his most important work, more important than Amazon. The only reason he's dealing with the incumbents is because he's hired from them, and inherited their mgmt structure/methodology.

And how many of these "working rocket engines" has he shipped? Bueller?

why shipped? He flew his engines himself.

He flew on New Shepherd, which uses the BE-3 engines, which really isn't very suitable for orbital use. The BE-4 engine (roughly 4x more powerful) has been delayed for a long time.

Nonsense, in my opinion theatre doing very well for a later player on the stage. Compare this to rocketlabs or anyone else in the market and blue origin is already providing ARR generating services.

"a later player on the stage" - they were founded before SpaceX

> backing of Amazon

and Ford

I don't get the valuation. To me it seems like like Rivian is behind on their original product promise. The current models listed on the site have a range of only ~300 miles, while a lot of the original hype and excitement was around vehicles with ~400 miles of range. I wonder if this product really makes sense right now. If you're hauling people and gear, or going offroad, or towing, you will have even less efficiency. In a gas vehicle you can carry jerry cans and refill your tank. With an electric truck or SUV without a range extender or an option to carry an extra battery pack or whatever, you have no way to work around this. As such I can't see these really serving as a practical "adventure" vehicle even though that's what the marketing is.

Folks that buy trucks for utility will keep buying ICE trucks until the EVs solve that problem. For now, this EV truck is for folks in the city and suburbs - hardly any of them will see true off-roading.

Pickup trucks are no longer used for their original intended purpose. The vast majority of new trucks are simply masculine posturing driving an arms race that's literally killing people.

https://www.consumerreports.org/car-safety/the-hidden-danger...

https://www.bloomberg.com/news/articles/2021-03-11/the-dange...

This smells like a bubble.

I wonder if Evergrande will have a ripple effect and burst this bubble.

It won't be pretty when these companies come crashing down in valuation. Not that they won't survive, but to anyone it should be clear that market is entirely over heated...

Just have to see what is the actual trigger and how much bigger will it be pumped...

A company with almost zero vehicles on the road is worth more on paper than Ford and GM. Very concerning.

They will build/sell 1000 cars this year!

They should be doing that every day for this kind of evaluation. The truck is nice, but they are playing in the luxury market, which is more limited, and the haven't scaled yet to mass production, which is the hardest part. Right now, everything is build by few batches, and most given to employees.

Soo... I think this is a dicey evaluation (it is assuming things can't, wont go wrong). But this market is so crazy, so who knows.

Here are the potential pitfalls:

1. The company fails to scale, and has production issues

2. The truck's margin are not good, and operates on a loss for too long

3. The luxury truck market (70k+), which they are currently aiming is small and can't support a large evaluation

4. Competition from current automakers (F-150 Lightening), and GM trucks, which start at 45-60k well equipped, squeezes them from below).

Again, there are risks with this kind of evaluation, and while any one of the above risks it not a company killer by itself, two of them will kill this evaluation.

Wasn't Tesla in the same position 10 yrs ago ?

You're correct in your observation that $100B is overvalued, but a lot of people are betting big on EVs, no wonder tesla's valuation is much higher than other auto makers

Yes but TSLA's market cap 10 years ago was $3B.

TSLA didn't pass $100B til last year, when they produced ~510,000 cars.

That's a good point, could it be that in the last couple of years enthusiasm, and potential of EVs have grown so much that the market is okay with the large valuation of EV manufacturers ?

Plus we're witnessing more and more of the consequences of our carbon emissions that most people believe EVs are the future ?

On a side note, I think EVs are merely a small piece of the puzzle for solving the climate crisis, wholistic solutions must include public transport, walkable neighborhoods, mixed use zoning and a whole lot more, but that's neither here nor there.

If I were to guess, Rivian's valuation is in large part because of Tesla's success. Tesla proved the path is possible.

Right, but possible =/= probable.

Like just because Unity is doing well doesn't mean I should invest in every video game company on the stock market.

But I guess the market isn't rational.

Tesla is still in that position today though, when it comes to valuation?

They have a larger valuation than Toyota, even though Toyota has 10x higher revenue at similar profit margin. Toyota produces almost 3x as many cars as Tesla per employee.

Sure, they are still growing, but it's unclear how that growth will continue. Especially for Model S and X, there are objectively better options on the market today from the traditional manufacturers (BMW, Audi, Mercedes, Jaguar, Polestar/Volvo, Hyundai) and from new Chinese brands.

Just look at deliveries by model, Model S + Model X peaked at 30 k deliveries per quarter way back in 2018, and has been dropping since. They were the first mover, but apparently have not been able to capitalize on that.

Of course the stock market today has moved wholeheartedly to embrace the post-fact meme stocks like Gamestop and Tesla, so I'm not stupid enough to bet on the share price dropping.

> Especially for Model S and X, there are objectively better options

There are non technically better then the new S/X. S literally is only beaten by 2.4 million $ super cars. Compare vehicles priced the same from other manufactures and technically the Tesla will beat them.

Tesla was busy going down market and payed little attention to S/X and that was good strategy.

The new generation of S/X will likely reach the peak of those products and more, but again this is tiny part of the story.

Tesla valuation might be high, but they are proven manufacturer, who have delivered strong growth for a decade, have many new factories and products in the pipeline and have proven they can execute.

Tesla took a long time before they reached what Rivian is now, and had to prove way more. Comparing them is not quite far. Rivian is surfing on what made Tesla possible.

Once auto manufacturers spool up EV production and buyers start buying more EVs, companies like tesla are just screwed. So screwed. They kick started a trend but I don't think they are in a position to hold their market share for very long.

A company like Ford has manufacturing facilities around the globe. Tesla makes their cars in a tent, and Rivian is delaying their first order until 2023 despite securing all this funding. Manufacturing is a huge challenge, probably a harder problem to solve than actually designing the EV. To even get the manufacturing capacity that ford has today would cost these companies probably an order of magnitude if not more than what Ford paid to build out this capacity decades ago, given the increases in costs of land, labor, and construction globally over those decades.

Best case would be for Tesla or Rivian to lease manufacturing space from an automaker, at which point they always lose out in a price war vs a company that owns their own manufacturing space and doesn't have to lease it from a competitor.

Your opinion on Tesla is built based on twitter hot takes.

> spool up EV production and buyers start buying more EVs, companies like tesla are just screwed.

That's what people have been saying since 2016. Yet Tesla sells almost 3 times as many BEV as the second best.

More then basically all other non-China companies combined.

Other manufactures have announced their scaling plans publicly, turns out they can't magically make EVs. You severly underestimate how difficult it is to suddenly build something totally different that depends on different suppliers and supply chains.

If it was so easy, why are they not doing it. Why are their plans by 2025 still below what Tesla is doing now in many cases? If its so easy according to you.

> Tesla makes their cars in a tent

They built 1 final assembly line in 'tent' that was actually a pretty stable fixed structure that pratically is almost no difference to a traditional factory building. The guy who did that was well respected manufacturing engineer that since built the factory for Lucid.

The CEO of VW just had an emergency meeting saying that Tesla is doing better in manufacturing then them. I bet you have heard 1000 times about the 'tent' and nothing about the CEO of VW point out that they need to do better to keep up with Tesla.

Tesla is doing fantastic at manufacturing and scaling manufacturing, this is a simple fact. Tesla next generation factories are even a significant step beyond what they have done in China, and that factory is doing amazing.

Tesla is vertically integrating battery and car manufacture into the same buildings, nobody else is close to that outside of maybe BYD, they have actually made innovations in body manufacture that is beyond what anybody else has, and its not close. Tesla electronics is way beyond any other companies.

You seem to have built your opinion of Tesla in 2017 and not adjusted to what actually going on since then.

A 'lease manufacturing company' simply doesn't exist that could help Tesla. The best one is Magna Steyr and they couldn't come close to building what Tesla can.

It's amazing they are almost at the same market value as the makers of Porsche ...

And that company also happens to do millions of VW, Audi, Skoda, Cupra, Seat, Lamborghini, Ducati, Bently and now own a chunk of the new Bugatti/Rimac

I'm having a hard time grasping the valuation..

Hard to read it as anything other than epic FOMO on the next Tesla.

> They will build/sell 1000 cars this year! They should be doing that every day for this kind of evaluation.

This sort of statement doesn't really make sense. Investors don't invest based on how a company is operating today. At that point, it's basically too late. They invest based on how they believe the company will be doing in the future.

Personally, I'm agnostic about the future of Rivian, and suspect this valuation is probably way too high, but I definitely don't think that because of their current production numbers.

Don't you need to take into account current conditions to forecast into the future? Unless there is some silver bullet information or wild speculation, predicting future financial states needs some basis to stand on.

Sure it plays a role, but mostly only in mature businesses. But that's clearly not a factor in many other investments.

If you truly believe that an immature business like Rivian will explosively grow, then you'd be an idiot to wait for that growth to happen before investing. You'd just be leaving money on the table.

Of course, we don't know for sure what'll happen with Rivian, but clearly some people with money have some strong beliefs.

Some people with money are buying cryptographic keys with a tenuous connection to digital images of rocks and whatnot. What a time to be alive.

Valuation is on potential, but I agree with sentiment. They will get mass production up and running over the next 2 years. Whether there will be demand then or not is unclear to me. I think people are underestimating the extent to which the electric F-150 will eat up the demand in the market for Rivian mass market products. So to me, it feels like the bet is their commercial fleet business (Amazon) will grow rapidly and be highly valuable, which given Amazon's 20% stake, seems like a reasonable bet. I don't personally think that's 100Bn mkt cap, but that's why I won't be buying in unless the outlook changes.

So they make a pickup and an SUV. How can they possibly be bigger then ford? People are pouring money into them specifically because they don't have any baggage. The only reason that Ford is not worth 100B is because they are saddled with management. I think another factor is at play here- car manufacturers are digging deeper and deeper into their heritage cupboard creating new designs that are vaguely reminiscent of 50 yo models. They also include unique design elements such as grilles and headlights and this has been expanding to every part of the car and often gets in the way of functionality. I think drivers are fed up of this stupid self promotion and are tired of all this.

The secret is to not actually make anything. Then there is no disappointment and bad news.

So there's obviously a lot of reasons why this is too much, but can anyone opine what the pro reason are?

The main one I see is Ford's involvement looks an awful lot like they're considering the future of the F-150.

So that’s about $1B per production vehicle delivered? Not bad!

So you are telling me if I make single production vehicle I can sell a company for 1B?

Compared to Nikola Motors that would be big bing improvement.

Making anything production ready is hard, if you can get a company to make one production car, you have solved a ton of the problems that will kill most companies

It is not smooth sailing after of course, but lot of the problems are already solved

Just ended up getting in line for an R1S. I am hyped about this company and believe they will present a true competition to Tesla and the likes

If you had a choice to go to space would you use SpaceX or Bezos's Blue Origin? If you had a choice to buy a EV car would you ....?

Very happy for Rivian - I hope they stay afloat and give Tesla some worthy competition which will benefit consumers in the end.

314 miles range to "experience nature" feels very problematic.

I immediately had to think about the movie "Into the wild".

Yea ~300 miles isn't that much, especially since the range drops while driving uphill.

I believe they are planning a charging network at popular trails and remote locations. This seems like its gonna take atleast 5yrs if not more to become reliable enough to not have range anxiety.

Range drops while driving uphill, when in cold weather, and when using juice for heating. Winter driving is one of the unspoken issues with EVs.

TBH my diesel VW bus also has ~25% less range in the winter (especially when doing mostly short trips) and burns fuel like there's no tomorrow when driving uphill.

But you can refuel it in minutes, and easily carry extra diesel in jerrycans.

By the same token it recharges when going downhill.

It's still a net negative; there's no perpetual machine inside. Regen braking can only do so much. And if you're towing you're even in worse shape with battery life.

Hasn't sold a car yet and worth as much as Ford.

The funny thing is Ford owns a chunk of them. Yet Ford stock went down today.

(Also to be fair they’ve sold a handful of cars…)

I'd imagine that this is how 1999 felt like.

Blind optimism, gurus promising the future and companies with bogus valuations that haven't made a single dime yet.

I'm gonna grab my pop corn.

I read "pop corn" as "dot com" :P

The fed wasn’t buying junk bonds in 1999 to keep failing companies afloat. There wasn’t an overvaluation of everything from real estate to NFT’s. The decade before hadn’t seen QE used to help bail out the rich. There wasn’t stagflation happening. The worlds most powerful country wasn’t deeply divided on every major issue. China wasn’t sending fighter jets to Taiwan and their leader wasn’t giving speeches about retaking that land while the USA conducted war games admitting it couldn’t stop them.

The tech bubble of 1999 is looking pretty good by comparison.

Uggh, pickup trucks.

(eyes COP26 climate change summit)

Do they correct for inflation when making comparisons for "biggest IPO?"

They say "biggest IPO *of 2021*". Not "biggest ever".

Sure, and in Q1 of 2021 I was buying ribeye steaks for about 25% less than I can today at my local grocer...

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