Half-Price Tesla Stock Is Still No Bargain
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A combination of higher interest rates, traditional automakers fielding some good EV options in mass, and Elon’s personal instability seem to all be hitting at once to get towards a more reasonable valuation.
Rivian looks like it might pop.
Really would love there to be some alternatives of good EVs that aren’t tied to stealerships.
People like the product, but they aren't making nearly enough for how much money they burn. If the recession hits and funds dry up, I think it's game over.
new Toyota EV = wheels falling off, battery overheating and not able to charge to 100% new VW EVs = large panel gaps
> processes new VW EVs = if you are lucky with your firmware version, to update the car via OTA you have to leave your car dealer's service center; dealers still a pain in the ass for both VW and customers GM EVs = just don't produce them because of parts shortage
I don't believe their expertise helps, it was the slow iterative upgrade path that created this myth. As soon as the OEMs need to create a new product, they encounter the same problems that Tesla was criticised for and eventually solved.
> It just is not that hard to build a decent EV anymore.
There are lots of low-hanging fruits for EV efficiency and production that traditional manufacturers are slow on adopting. Like single-piece rear casting (IDRA Gigapress, etc.)
It’s unlikely these car makers wouldn’t fix these quality control issues after that. By comparison Tesla quality is abysmal and took many years to improve to meet other car makers. It’s hard to stand up large car factories for the first time alongside a new car model.
EVs share probably 90% of the non engine parts with other cars. The big components which are different are the drivetrain (simpler), motors, battery and charging equipment. Motors are a commodity and far simpler to manufacture than ICEs. Batteries are the difficult component right now but will likely become more if a commodity as well. EVs are much easier to build than ICEs.
Ultimately we can expect far higher car quality going forward (from our current period of already excellent car reliability).
The latest CCS charging standard supports the "plug and charge" model like tesla does. It'll take time, but I expect at the end of 5 years most stations will have it.
Tesla chargers.. never heard of a station being dead. If it was, the in-app nav would reroute you.
The difference is Tesla cares about charge quality. CCS network made to settle Diselgate? No one really cares or puts in the effort to keep them all 100% up.
Maybe in the US? In Europe, that's not even remotely true. Lots of choice among providers, Tesla is one of many. Germany has ~12k stations, about 900 are Tesla's.
EDIT: I was way off, there are about 900 Tesla charging stations in Europe! In Germany, it's about 150. Of course, this is all debatable because many of these 12k stations have only one connector and often have limited kW, whereas Tesla's are usually equipped with several superchargers, but still, it's a small player in Germany's charging network.
Requiring a non-dealership EV removes all but a handful of companies. Those are the companies that as sibling commentators have pointed out are delivering EVs in volume.
Rivian or Tesla, you can skip that 4-5k dealer surcharge. I am not sure Ford can really source the parts that much cheaper to sell the same final product for the same price?
When the cult of personality is being a big jerk to the well-to-do tech workers at one of the biggest companies for them, that's pretty close to home. (It's easier for someone to seem fabulous when they're only stepping on other people.)
"Might want to be selling that Muskmobile soon. Value falling at 2-3 times the Car Guru index. Look at the fall between 30 and 90 days. Much, much steeper than, say Mercedes or Toyota"
Shows Model3's off almost 16% in the last 90 days.
So... sure? If you're owning a Tesla as a form of value store, you might want to sell? If you're owning a Tesla as a car, then these don't look like the right numbers - you'd need the spread for buy->sale price, probably for new and used (since these used prices look about the same as new prices).
Edit:
Also, on second look, the tweet links to a Car Guru chart of a bunch of gas cars. The one I'd look at is the Rav4 Prime, IMHO one of the alternatives to the Y (sure was for me), which while still doing better than the Y on these charts, not by nearly as much as the originally selected cars.
Model Y - https://www.cargurus.com/Cars/price-trends/Tesla-Model-Y-d30... RAv4 Prime - https://www.cargurus.com/Cars/price-trends/Toyota-RAV4-Prime...
The drops for 2021 models are almost identical, although I'd probably look at the 2022 numbers since the Rav4s in 2021 were heavily marked up by dealers ($10k+) due to rarity that year.
While I can't sell my Y for more than I paid for it, I can sell it for more than than the outstanding balance on the loan (by... 25%?) sooo
(Note: totes agree that the recent stuff is having / will have an impact; but; it doesn't look like it's this impact)
For example: Both the Rav4 and the Model Y show ~10% drop over this time period according to this website; but, non-EV staples show a ~2% drop. And the Y shows a bigger drop than the Rav4. So, could be interpreted as Federal changes causing the 10% drop in EVs and the Musk shenanigans causing the additional 5% drop in Model Ys.
Imo, this could be attributed to a few factors all compounding each other.
1. Most Tesla owners/interested consumers are more "online" than average. (no evidence, just my experience)
2. Tesla recently asked the FCC to withhold docs on a newer radar system. [0]
3. The Model 3 has also been rumored to have a refresh next year. [1]
But also I think they are just cherry picking data points to try and make a claim. [2]
Other brands are down worse than Tesla but not mentioned.
- Tesla is down 9% YoY or 15.03% in the last 90 days.
Now let's compare to some others in the list...
- Lexus is down 24.56% YoY or 5.69% in the last 90 days.
- Wagoneer is down 28.92% YoY, or 5.99% in the last 90 days.
- Infiniti is down 9.44% YoY or 6.76% in the last 90 days.
While others are still down similarly (within a few % points), but not worse than Tesla.
- Scion is down 6.45% YoY or 7.76% in the last 90 days.
- FIAT is down 5.95% YoY or 8.84% in the last 90 days.
- Dodge is down 7.04% YoY or 6.63% in the last 90 days.
- Chevrolet is down 6.19% YoY or 4.97% in the last 90 days.
I think what we're actually seeing in the numbers here are just signs that people are slowing on buying used cars, but also slowing on buying more expensive vehicles in general (at least until you hit the other side of the curve, where rich people are still buying ex ferraris).
[0]: https://insideevs.com/news/625502/tesla-alerts-fcc-new-radar...
[1]: https://www.carscoops.com/2022/11/tesla-working-on-model-3-r...
[2]: https://www.cargurus.com/Cars/price-trends/ (9/13/2022 through 12/10/2022
Now that the delivery time for new Teslas is down to a month or two depending on model, of course used prices are dropping like a rock.
That said Telsa is still probably the most common vehicle on the roads here, but not quite as dominant as a few years ago.
Some people probably can't get Musk out of their head whenever they see a Tesla. But the company has an independent brand as well, so many people just associate it with EVs, environmentalism, fast cars, etc.
The experience was completely fine, especially compared to the last two cars I purchased, which previously made me swear I'd only deal with tesla, specifically to avoid dealerships. The biggest problem was that the online EV inventory was completely out-of-date, so I had to physically show up to browse cars.
The whole process took less than 5 hours end-to-end (roughly 2-3 in the dealership). I paid a fair price vs. other local sales of similar cars. I'm not sure how much of the good experience was due to being at a luxury car dealership vs. them copying off of tesla and other online-only dealerships.
Presumably most sellers would be happy to drive and have you sit shotgun without a license.
But if you don't want anyone to make a copy of your drivers license, you have the options I laid out: buy without driving, or be a passenger.
The move to Texas and the embrace of antics that play well with conservative social media is an attempt at getting free marketing to a new segment of buyers.
It is beneficial to Tesla if it wants to expand into the middle American auto market - which is probably bigger in size - where buyers are probably skeptical of adopting EVs and would otherwise be hesitant to trade in their gas powered F150/Hemi for an EV Cybertruck.
I get the appeal of the Cybertruck and Rivian, but they're completely impractical for use as pickup trucks. I hope they find their niches and everything, but there's no way they'd replace a conventional full sized pickup that was actually being used for truck stuff.
All car manufacturers end up having to redesign/restyle their cars because they literally become unfashionable. People look forward to redesigns and then when the new design is out, older models look dated. Tesla hasn't gone thru that cycle that I'm aware of and all of their models, sans cybertruck, look exactly the same. I imagine there is significant cost to redesigns and re-tooling manufacturing processes while keeping old design parts, etc. still available.
Tesla is increasing production and keeping its margin while competitors are still having problems to catch up. Now they produce comparable EVs but still with much less margin.
Also Semi seems to be quite a game changer that will keep Tesla ahead in another market for quite a while
Even with the higher margin, Tesla would need an insanely higher volume to justify their market cap. It’s never going to reach those volumes.
I also suspect Tesla will not be able to maintain all of their margin as they face increased competition. Some of that margin doubtlessly comes from selling their FSD - and I think it’s unclear if they will be able to keep selling that at a premium as other car makers catch up and/or regulators investigate some advertising claims around it. Tesla’s highest margins appear to be in China, where operations are distinctly delicate for someone owning a large social media company.
The Semi may legitimately make a difference; we’ll have to see how many they are able to produce and their market uptake. There are going to be other competitors in that space who are more aligned to the trucking industry. The current Tesla Semi seems to be a niche for short haul runs (which is still a big segment).
Tesla is actually a valuable company and I wouldn't be surprised if it truly is more valuable than Ford or GM at this point -- but for a meme stock, the fundamentals are not tied to the price at all. It could go up or down based on a Tweet.
We have some spaces with Chargepoint chargers where I work, and they are powered by several electrical boxes that are each about half as big as a parking space. There is some serious juice being pushed through those -- and the Chargepoint chargers are only serving 30-40 amps, which is about the same as a home charger and nowhere near what a Telsa Supercharger delivers.
This kind of stuff is not trivial, or cheap. Tesla spent a lot of money to get their network to where it is.
I would have bet that this would have come unraveled based on the dubious rescue of Solar City. But it was going to come unraveled.
Tesla has not succeeded by building 'moats' (an anti-competitive concept favoured by monopolists). Tesla has succeeded and continues to succeed by their pace of (real, not fake) innovation, and there have been no signs, in my opinion, that they are losing this edge. Rather, again in my opinion, they continue to pull away from the major car manufacturers on this front.
It's easy to quibble about that, of course, but the Chevy costs 30% as much.
Hard to see how Tesla is "pulling away" from anybody in 2022.
If you can show me they can and they are then I'll be interested. I'm interested in business facts, not sponsored endorsements by influencers.
P.S. Pretty sure MKBHD isn't getting paid by Chevy. His sponsors are phone/tech companies, even on his car-focused videos.
This means at comparable margins, for Tesla to reach its current valuation, 3/4 cars sold in the developed world would have to be Teslas. For reference, the marketcap of the entire automobile industry [1] minus Tesla is $1300b.
[1] https://companiesmarketcap.com/automakers/largest-automakers...
Tesla is a stock to gamble on. Unlike GME, there is probably a lower bound on how much you can lose. (maybe ~70% at worst if Elon has a heart attack). But, 70% is a long way down.
So what about in reality, where Tesla makes over double the margins of GM or Ford[0] or on the extreme end, 8x Toyota's profit margins[1]?
[0]: https://www.reuters.com/business/autos-transportation/teslas...
[1]: https://asia.nikkei.com/Business/Automobiles/Tesla-earns-8-t...
Once Tesla starts selling Prius & Corolla competitors, their margins should go down accordingly.
None of the other car makers can produce EVs at a profit. Tesla has very high margins on their cars and are continuing to reduce their production costs.
They have the following advantages: 1) Most efficient use of batteries (kWh per distance) 2) Most extensive charging network 3) Contracts for battery minerals, and battery supply contracts
Once the the 4680 dry electrode process, structural battery pack and castings for the new Model Y and 3 are worked out and ramped, their manufacturing mote with be even bigger.
I'm ignoring the FSD software, even though they are in the best position to pull that off. It's still too far off.
2) The Tesla charging network seems less extensive in silicon valley than the multiple competing networks. Also, Tesla is advertising that they'll open it up to all other manufacturers (at least in the US) really soon, so to the extent you believe Tesla can still deliver stuff, the charging network is not a competitive advantage. On top of that, the Biden infrastructure plan is subsidizing standard chargers, so the proprietary Tesla charging port is turning into a competitive disadvantage.
3) I agree that Tesla still has an advantage in terms of production ramp, but this is eroding too. BofA is projecting Tesla's market share will be in the low teens within a few years. Assuming their analysts aren't idiots, this implies the other manufactures have been able to secure battery sources.
Regarding FSD: I strongly prefer the jog wheel computer + physical buttons in my BMW over Tesla's touch screens, and that's comparing features that exist. Other manufacturers have a bigger software functionality gap, from what I've heard, but that's not unique. Most manufacturers have auto-braking and lane keeping, which is most of what FSD has delivered so far.
Regarding the rest of the company: Apparently, they pulled out of solar installs. Anecdotally, all the tesla powerwall licensed contractors around here hate supporting them (poor reliability), and point homeowners to LG on the low end or Enphase on the high end.
Yeah, there are car people thinking they can get the margins Apple does. These are the people who came up with heated car seat subscriptions.
I once went to an IoT meetup, and the Samsung guy was touting a refrigerator with a built-in tablet. For more than the cost of a refrigerator and a tablet. That margin didn't last.
(Are people actually paying $15,000 for Tesla's Fake Self Driving?)
Tesla has some impressive factories being built but at the end of the day batteries are the limiting factor and the other automakers are catching up. Not to mention the QC is awful for teslas compared to traditional car manufacturers.