While the Bull case has not been proven for Tesla, The Bear case is laughably bad at this point.
As for being the energy provider of the future, as much as people love to hate energy companies, Chevron is not going to roll over so easily. They love oil because it makes money. As soon as it stops making money, they are much better positioned to transform their infrastructure into charging stations than Tesla is to bootstrap that side of their business.
At this point, it is obvious Tesla will be a profitable car company moving forward but I still think they are more likely to end up as another Mercedes-Benz (Daimler market cap is 80B) than eating the automotive industry plus another industry.
Not that they’re making an effort they’ve proven they can make electric cars. The only thing they’re missing imo is the ubiquitous supercharger network.
Tesla might grow to eclipse the existing auto industry! Certainly the story of "incumbent industries fail to adapt to changing conditions" is a common one but "industry supports several equally sized competitors" is as well.
They can also justify a higher market cap through higher margins. The challenge with that is that other automakers are showing they can also build electric cars, so there's competition that will drive down margins. It also looks like Ford is beating them to the truck market (and with a truck truck people actually want).
Tesla literally started to work on is in-house battery and battery manufacturing plans years and years ago. When most manufactures didn't even consider having a dedicated battery partner. They even have in-house materials manufactures where they make their own cathode and might even make their own lithium hydroxide. This looks like a brilliant bet right now, in comparison Ford only now realized that they need a dedicated battery manufacturing partnership (something Tesla had in 2014). The margin lost on a battery if you buy it is significant, and that is outside of the chance to make it cheaper and better integrated.
I trust that Musk and Tesla are internally already looking at what the next thing is they need to continue their growth. Grid Energy is only starting to really go of now and will look quite good over time, they just started a new factory fully dedicated to grid storage. Tesla is also not bound to cars, electrification will go to aviation next, as they continue to improve batteries at some point the density will hit a point it simply makes sense to look into aviation and Tesla is a great position to do that at some point.
In my opinion just saying car market size is X therefore Tesla can't be more then Y is a false analysis.
> Waymo doesn't need to make the cars or have gigafactories.
Yes, they just need relay on partners who want them to pay as much as possible and are not fully integrated in what Waymo actually needs.
Waymo has no clear way to profitability, Tesla even without Full-Self Driving can make lot of money selling driver assistance.
> As for being the energy provider of the future, as much as people love to hate energy companies, Chevron is not going to roll over so easily. They love oil because it makes money. As soon as it stops making money, they are much better positioned to transform their infrastructure into charging stations than Tesla is to bootstrap that side of their business.
This makes little sense. First of all, charging is a lost leader, you don't really make money. Its a huge investment and maybe at some distant point in the future you make money. And charging and gas are simply different and have different requirements, and you don't need as many.
Chevron has no expertise in high power electronics needed and all the software required to make it a great experience for costumers.
If that would happen they would need to invest many billions now, and even then, this is something Tesla would welcome as its a good argument and makes their cars more attractive, not less. Tesla can not build ever EV charger in the world.
Right now Tesla's market cap is about 10x that of Ford, on a third to half the revenue (2021 numbers aren't available, I'm estimating based on Q1/2/3).
Tesla was about 2x as profitable as ford in q3 2021, but that varies a lot quarter-to-quarter. It was generally around 10% though.
Instead of car companies, consider a similarly sized company in market cap, Meta. Meta has 85 billion in revenue and a 30% (!) profit margin.
For Tesla to grow into its cap it needs to massively increase both its scale and its profitability. It'd need to more than double its revenue while also doubling its margins. New sources of revenue for tesla are going to be moving downmarket, which makes profit margins hard in a manufacturing business. Tesla has nice cars but it has a lot of competitors with deep sales teams and manufacturing excellence (consider other comments in this thread: Tesla cars have bad fit and finish for how expensive they are and lack a lot of standard features).
Tesla is clearly going to continue to be a big car manufacturer but its current valuation requires that it become staggeringly gigantic.
It all depends on what kind of investor you are and where you are in your financial planning. At some point growth stocks have to stop being growth stocks.
Debatable. AMZN would like to have a word
Remember when people said they could never make 5k Model 3s a weak and would never figure out mass manufacturing?
However since then the Stock price went up quite a bit.
As a long time investor I still believe in a Bull case, but its certainty harder to justify.
Ford's 2020 Q4 report [0] indicates a sales rate of ~2M cars / yr. The entire Ford truck brand sold around 1.1 M trucks [0] that year (2020) and 1.2 the year before (2019). Fordauthority.com (who may or may not be authoritative...) says that Ford is/was running slightly worse sales this year than last year [1]. However I don't think Ford has published their numbers for 2021 yet.
Personal Opinion: Given Tesla's ramp of ~70%/yr, is it not absurd to think that Tesla will pass Ford's truck sales numbers within the next year and all of Ford's sales numbers within the next 2-3 years. (This is assuming lack of innovation on Ford's part. If Ford innovates with e-trucks then it will probably take a lot longer for Tesla to catch up)
[0]: https://media.ford.com/content/dam/fordmedia/North%20America...
[1]: https://fordauthority.com/2021/10/ford-motor-company-sales-n...
Ford is also years behind in battery and fsd tech. That being said, they need to match / best expectations handily to retain these valuations
Just looking at past sales numbers and ignoring these transition is insane.
Transitioning millions of vehicles to EV is an incredibly hard task and has massive cost and massive constraints do to battery, battery materials and chip availability.
I'm not gone say Tesla is not 'overvalued' but just saying F-150 sells a lot therefore Tesla is overvalued is bad argument.