Tesla 2Q 2021 Quarterly Result(tesla-cdn.thron.com)
tesla-cdn.thron.com
Tesla 2Q 2021 Quarterly Result
https://tesla-cdn.thron.com/static/ZBOUYO_TSLA_Q2_2021_Update_DJCVNJ.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D%22q2_2021.pdf%22
155 comments
Regulatory credits down. Critics have continued to say Tesla loses money if not for regulatory credits, so seeing those shrink while still growing is strong.
Tesla is big tech company? What tech company are you comparing Tesla against? People, get some perspective. It's easy to grow from 0.5 to 1 (wow, double) than from 500 to 1000
Comparing revenue to a prior quarter when their factory was shutdown due to a pandemic is a little disingenuous. Look at “same store” sales (same market, like China or Europe) over time for the real growth story.
Their market share in China keeps increasing. Europe market shares are stagnating because they don't have local production capacity (Berlin plant is coming online later this year). They had to export MIC cars to Europe only to maintain some sales. US demand is off the charts and it makes no sense to sell US cars in Europe if the US market wants them now (especially as the US market is extremely tight).
You can use sales as an indicator of success if they are still production constrained. Read the report, it's well explained.
You can use sales as an indicator of success if they are still production constrained. Read the report, it's well explained.
More vehicle sales, less cash funds, more superchargers, looks like the explosive growth came to a halt.
Btw where are all the announced vehicles that were supposed to be released after the model 3?
They are supply constrained until the Texas factory opens. Literally a 3-6 month wait if you go order one today. With Texas open they are on track to double sales if demand stays strong.
Cybertruck comes next after Texas is pumping out 500k units a year, and they have the next battery pack ready to scale. My guess is summer-fall 2022 by the slow news on the topic.
Cybertruck comes next after Texas is pumping out 500k units a year, and they have the next battery pack ready to scale. My guess is summer-fall 2022 by the slow news on the topic.
How many factories do they have and how many do they plan to open?
Texas, Berlin, something in China?
Also, do we have a time frame for all of them? I'm trying to figure out how many vehicles they'd expect to sell per year in 5-10 years.
Plus, the really interesting challenge, I wonder if they can do it: could they make a cheap compact car for ~20-25k?
Texas, Berlin, something in China?
Also, do we have a time frame for all of them? I'm trying to figure out how many vehicles they'd expect to sell per year in 5-10 years.
Plus, the really interesting challenge, I wonder if they can do it: could they make a cheap compact car for ~20-25k?
Elon already promised a ~$25k "Model 2" car within 3 years about a year ago, and the icon at Battery Day made it look like a compact car.
Though with Elon-time maybe tack on another year.
Though with Elon-time maybe tack on another year.
Elon mentioned that they are targeting 20 million vehicles (per year) by 2030. See the Battery Day presentation for more context.
The fact that cheap sedans have such a low profit share in the industry, and already get great mileage, probably means that will be one of the last ICE segments to get eroded.
Right now they have Fremont operating at capacity, and Shanghai still ramping. Austin and Berlin are under construction and the hope is they get the first vehicles out this year. All told, total capacity under construction represents something like a tripling of current production bandwidth.
I hope they are close to deciding where the next few factories will go. They probably need to start building those as soon as Texas and Berlin begin production.
For US at least, the Texas site is real big. Like I think they could double capacity a few times. So may be a matter of scaling it up for a bit before needing to add another brand new factory.
I recently drove past the Austin construction site. It's so incredibly huge. And they keep buying the surrounding land. It's really impressive to see in person.
They are constructing two factories at the same time. Berlin, & Austin. That's where all the cash is going.
Both of them are much bigger than the existing ones (Fremont and Shanghai). They're also converting Tillburg (Netherlands assembly plant) to an energy manufacturing plant. And they're planning on building a plant in India.
Uhh - aren't they shipping these things as fast as they can make them? Two factories under construction should help. They've been raising prices too I think a bit but could probably charge more in short run. I hope new factories do Model 3 / Model Y vs cybertruck.
When you say growth has ended do you mean that there is no more demand or they just can't build and ship these $30K+ items fast enough?
When you say growth has ended do you mean that there is no more demand or they just can't build and ship these $30K+ items fast enough?
> looks like the explosive growth came to a halt
128% YoY growth in gross profit
998% YoY growth in GAAP Net Income
920% YoY growth in GAAP EPS
151% YoY growth in production
120% YoY growth in deliveries
All the while building out two more factories and going through a global pandemic and supply shortage.
Yup. Definitely looks like it's come to a halt.
128% YoY growth in gross profit
998% YoY growth in GAAP Net Income
920% YoY growth in GAAP EPS
151% YoY growth in production
120% YoY growth in deliveries
All the while building out two more factories and going through a global pandemic and supply shortage.
Yup. Definitely looks like it's come to a halt.
Made over a billion in profit, and margins are close to 25% which are great.
Operating margin is 11%. It’s the first time Tesla has been GAAP profitable without regulatory credit sales (pollution credits that delay other automakers’ EV programs) included, which is significant. They never should have sold a single pollution credit; that’s a violation of their supposed mission statement. Every Tesla you buy allows a big polluting gas guzzler to be sold elsewhere, so there’s no environmental benefit.
>They never should have sold a single pollution credit; that’s a violation of their supposed mission statement. Every Tesla you buy allows a big polluting gas guzzler to be sold elsewhere, so there’s no environmental benefit.
These credits allowed Tesla to build the factories that are now pumping out EVs. If they had not sold these credits, the other manufacturers would sold less ICE, and without a successful EV markers to convince politicians that EV are viable, ICE makers would have proved to regulators that penalties are killing jobs and hurting the economy... for nothing. Credits would have been canceled and we would have more big polluting gas guzzlers around a handful of aging Tesla roadsters for billionaires.
These credits allowed Tesla to build the factories that are now pumping out EVs. If they had not sold these credits, the other manufacturers would sold less ICE, and without a successful EV markers to convince politicians that EV are viable, ICE makers would have proved to regulators that penalties are killing jobs and hurting the economy... for nothing. Credits would have been canceled and we would have more big polluting gas guzzlers around a handful of aging Tesla roadsters for billionaires.
Hard to perform the mission if you go out of business.
This may be an overly naive take on my behalf, but if it was 25% on a Model 3 specifically that means each one costs them $30K~ to build at a $40K price (and frankly 25% is likely too optimistic for their lowest margin vehicle).
That makes me think we're many, many years away from seeing $25K~ EVs. You can cut some things off of the Model 3, but battery reduction in particular is a headache since you risk damaging your reputation/EV's reputations if you make it too weak (particularly with normal degradation).
I know this is proprietary/secret, but I'd love to see a pie chart of where each dollar on a Model 3 goes. In particular how much is pure battery/drive system, and basically the whole rest of the car.
That makes me think we're many, many years away from seeing $25K~ EVs. You can cut some things off of the Model 3, but battery reduction in particular is a headache since you risk damaging your reputation/EV's reputations if you make it too weak (particularly with normal degradation).
I know this is proprietary/secret, but I'd love to see a pie chart of where each dollar on a Model 3 goes. In particular how much is pure battery/drive system, and basically the whole rest of the car.
If the total cost of ownership is lower with an EV, you can drag the payments out longer with lower interest financing because the vehicle will last longer. The upfront cost is higher, but you hack around it with financial engineering. I don't mind an 84 month auto loan at <2% interest, as long as it's cheap to drive (EVs are half the cost per mile as combustion vehicles) and retains enough value to defend against negative equity as the loan balance and vehicle value decline roughly at the same rate.
You might not see $25K new EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new (there are Model S and X vehicles with hundreds of thousands of miles on their drivetrain still going strong).
TLDR We're financially engineering our way out of combustion based transportation.
You might not see $25K new EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new (there are Model S and X vehicles with hundreds of thousands of miles on their drivetrain still going strong).
TLDR We're financially engineering our way out of combustion based transportation.
Why do you assume they'll drive like new? It's wear and tear that makes a car feel old, and Tesla isn't known for high quality.
I have ridden in Teslas with hundreds of thousands of miles on them, and am able to compare between that and my own Teslas and their (lower) mileage.
> If the total cost of ownership is lower with an EV, you can drag the payments out longer with lower interest financing because the vehicle will last longer.
An EV is much less convenient than a conventional vehicle, it needs to have a lower CoO just to offset that. Once electric vehicles can charge in comparable times to gas for comparable miles, then we can talk, in the meantime you're gaining lower ownership cost for more hassle (and that's ok, but you cannot double-dip it).
> I don't mind an 84 month auto loan at <2% interest
That's available on gas vehicles too (and even better interest rates in some cases), largely offsetting whatever edge you're trying to argue.
> You might not see $25K EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new
Drive like? Yes. Range? Unlikely. Just look at the costs of a full battery module replacement, it would eat up over 50% of that $25K price. Plus the rate of technological advancement may hurt old EVs worse than gas vehicles, because one is advancing more rapidly than the other.
I suspect a lot of people care that electric sedans costs almost $15K more than hybrid sedans, and I suspect you'll see sales explode if a "Model 2" that cost $25K~ were ever produced (with a few disclaimers on range, seat capacity, etc).
An EV is much less convenient than a conventional vehicle, it needs to have a lower CoO just to offset that. Once electric vehicles can charge in comparable times to gas for comparable miles, then we can talk, in the meantime you're gaining lower ownership cost for more hassle (and that's ok, but you cannot double-dip it).
> I don't mind an 84 month auto loan at <2% interest
That's available on gas vehicles too (and even better interest rates in some cases), largely offsetting whatever edge you're trying to argue.
> You might not see $25K EVs, but you'll see used versions around that price with 100k+ miles on them that still drive like they're new
Drive like? Yes. Range? Unlikely. Just look at the costs of a full battery module replacement, it would eat up over 50% of that $25K price. Plus the rate of technological advancement may hurt old EVs worse than gas vehicles, because one is advancing more rapidly than the other.
I suspect a lot of people care that electric sedans costs almost $15K more than hybrid sedans, and I suspect you'll see sales explode if a "Model 2" that cost $25K~ were ever produced (with a few disclaimers on range, seat capacity, etc).
> An EV is much less convenient than a conventional vehicle
Probably not true for a lot of people. I’d hit range limits maybe one or two days a year. In exchange I can have my car “full” all the time. It cuts out a lot of trips to the gas station, which aren’t always convenient.
Probably not true for a lot of people. I’d hit range limits maybe one or two days a year. In exchange I can have my car “full” all the time. It cuts out a lot of trips to the gas station, which aren’t always convenient.
> An EV is much less convenient than a conventional vehicle... Once electric vehicles can charge in comparable times to gas for comparable miles, then we can talk...
I wish this argument would just die. It's so ignorant and assine. The convenience is different, not less.
I haven't had to stop at a gas station to fuel up either of my cars since Nov 2018. I haven't used a charger outside of my home since last August to charge my Nissan Leaf, and in 2020 I only used chargers twice. That's 2 times since Nov of 2019 on a vehicle with an 80 mile range.
Our Model 3 was driven across country and kept time with a box truck moving all of our belongings.
I plug my cars in when I need a charge at home. I don't have to run out for gas the night before a trip or on the way. I don't have to make planned or unplanned stops at gas stations. I don't have to go to gas stations at all.
But EVs are less convenient because you can imagine scenarios in your head.
I wish this argument would just die. It's so ignorant and assine. The convenience is different, not less.
I haven't had to stop at a gas station to fuel up either of my cars since Nov 2018. I haven't used a charger outside of my home since last August to charge my Nissan Leaf, and in 2020 I only used chargers twice. That's 2 times since Nov of 2019 on a vehicle with an 80 mile range.
Our Model 3 was driven across country and kept time with a box truck moving all of our belongings.
I plug my cars in when I need a charge at home. I don't have to run out for gas the night before a trip or on the way. I don't have to make planned or unplanned stops at gas stations. I don't have to go to gas stations at all.
But EVs are less convenient because you can imagine scenarios in your head.
As someone who owns an EV and an ICE I’m not sure where you’re getting ICE being more convenient.
Ymmv buy in my experience my EV is way more convenient
Ymmv buy in my experience my EV is way more convenient
An EV is much less convenient than a conventional vehicle
Your statement is laughably inaccurate, and sounds to me to support a narrative more than being based on personal experience. I fill the "tank" on the Leaf when I sleep, instead of going out of my way to find a gas station when I drive the ICE. And this is first-get Leaf, which is a loooong way from what more modern BEVs offer. I'm also reminded that I have to go get the oil changed on that Scion xB soon; how convenient.
Look, you don't want a BEV, don't buy one. You don't want to buy TSLA, don't buy the stock. What you don't get to do is just make shit up, like this statement:
Just look at the costs of a full battery module replacement, it would eat up over 50% of that $25K price.
I've looked. Your numbers aren't even close to reality.
Your statement is laughably inaccurate, and sounds to me to support a narrative more than being based on personal experience. I fill the "tank" on the Leaf when I sleep, instead of going out of my way to find a gas station when I drive the ICE. And this is first-get Leaf, which is a loooong way from what more modern BEVs offer. I'm also reminded that I have to go get the oil changed on that Scion xB soon; how convenient.
Look, you don't want a BEV, don't buy one. You don't want to buy TSLA, don't buy the stock. What you don't get to do is just make shit up, like this statement:
Just look at the costs of a full battery module replacement, it would eat up over 50% of that $25K price.
I've looked. Your numbers aren't even close to reality.
When's the last time you drove more than 300 miles in a day?
I drove from Sacramento to Denver in a model 3, no big deal, we averaged 200 miles per stop, and often I could often stop a bit short, or a bit long depending on random preferences. Do you often drive 6 hours without a bathroom or food break?
Our average stop was between 20 and 30 minutes, when the battery is low it charges at 550 miles an hour or so, and we often just need 200 or so. That way we stop every 3 hours to stretch our legs, let the dog go potty, and let anyone hungry get a snack.
Sure, maybe sometimes we would have left 10 minutes sooner. But then again in the last year I've gone to a gas station zero times, taken my car in for an oil change zero times, had zero issues with spark plugs, timing chains, head gaskets, etc. I very rarely drive more than 300 miles a day, so just waking up in the morning to a full car is quite a convenience. Recently I was a bit worried about range, drove to the top of a 14,000+ mountain and was at 51% at the top, after starting with 90% (the Tesla recommended maximum for normal daily driving). I got home with 72%, which I found pretty amazing, the wonders of regenerative braking.
So I'd rank an EV for normal usage (commuting less than 300 miles a day) SIGNIFICANTLY more convenient than a gas car.
I drove from Sacramento to Denver in a model 3, no big deal, we averaged 200 miles per stop, and often I could often stop a bit short, or a bit long depending on random preferences. Do you often drive 6 hours without a bathroom or food break?
Our average stop was between 20 and 30 minutes, when the battery is low it charges at 550 miles an hour or so, and we often just need 200 or so. That way we stop every 3 hours to stretch our legs, let the dog go potty, and let anyone hungry get a snack.
Sure, maybe sometimes we would have left 10 minutes sooner. But then again in the last year I've gone to a gas station zero times, taken my car in for an oil change zero times, had zero issues with spark plugs, timing chains, head gaskets, etc. I very rarely drive more than 300 miles a day, so just waking up in the morning to a full car is quite a convenience. Recently I was a bit worried about range, drove to the top of a 14,000+ mountain and was at 51% at the top, after starting with 90% (the Tesla recommended maximum for normal daily driving). I got home with 72%, which I found pretty amazing, the wonders of regenerative braking.
So I'd rank an EV for normal usage (commuting less than 300 miles a day) SIGNIFICANTLY more convenient than a gas car.
Completely agreed on all points.
I just bought a model 3 a month ago or so. I don't drive often but I have been looking to drive my car because I now love driving the thing.
back to my point. I have been using this app optiwatt which, very conservatively, tracks my charging efficiency and how much it costs me to charge. In the first month i've saved almost $80 in what it would cost a gasoline car. This is coming from someone who doesn't drive very much. I can definitely see this number adding up for someone who has a 45min-1h commute.
I just bought a model 3 a month ago or so. I don't drive often but I have been looking to drive my car because I now love driving the thing.
back to my point. I have been using this app optiwatt which, very conservatively, tracks my charging efficiency and how much it costs me to charge. In the first month i've saved almost $80 in what it would cost a gasoline car. This is coming from someone who doesn't drive very much. I can definitely see this number adding up for someone who has a 45min-1h commute.
When we can have $40K F-150 Lightning's and Cybertrucks, with their massive batteries, I think $25K electric econo-boxes will also be possible. The $70K F-150 Lightnings and Cybertrucks are coming next year, the $40K ones will take a little longer.
What you are missing is that a $25K would be quite a bit smaller then the Model 3, just as the Model 3 is quite a bit smaller then the Model S.
The advantage there will come from a number of places over the current Model 3.
Structural battery will make the car lighter, cheaper and of course efficient. The perspective $25K car will also likely use a cheaper battery chemistry produced by Tesla themselves and a much smaller overall pack. The range should be the same or slightly only slightly less.
Put those things together, smaller, lighter, lower production cost and slightly lower margin (15%) makes this very much possible. Of course this car would have upgrades to, in the car industry the base model has much worse margin then the upgrade models.
> I know this is proprietary/secret, but I'd love to see a pie chart of where each dollar on a Model 3 goes. In particular how much is pure battery/drive system, and basically the whole rest of the car.
You can go to Munro & Associates and they will sell you a report with a detailed break down of the cost for literally every screw and how much it cost to screw it in. You can even get reports on the difference between China/US and so on.
They also have a lot of video very you can learn about this. They don't show all the numbers of course but they do show a lot of interesting numbers.
See: https://www.youtube.com/channel/UCj--iMtToRO_cGG_fpmP5XQ
(Currently they are working on Ford Mach-E)
If you are more interested in EV in general, not just Model 3, they have actually made their report of the BMW i3 almost free. You can literally get a report that used to be $50k for $10.
See here:
https://munrolive.com/support-%2F-store/ols/products/bmw-i3-...
You can go and build your own BMW i3.
The advantage there will come from a number of places over the current Model 3.
Structural battery will make the car lighter, cheaper and of course efficient. The perspective $25K car will also likely use a cheaper battery chemistry produced by Tesla themselves and a much smaller overall pack. The range should be the same or slightly only slightly less.
Put those things together, smaller, lighter, lower production cost and slightly lower margin (15%) makes this very much possible. Of course this car would have upgrades to, in the car industry the base model has much worse margin then the upgrade models.
> I know this is proprietary/secret, but I'd love to see a pie chart of where each dollar on a Model 3 goes. In particular how much is pure battery/drive system, and basically the whole rest of the car.
You can go to Munro & Associates and they will sell you a report with a detailed break down of the cost for literally every screw and how much it cost to screw it in. You can even get reports on the difference between China/US and so on.
They also have a lot of video very you can learn about this. They don't show all the numbers of course but they do show a lot of interesting numbers.
See: https://www.youtube.com/channel/UCj--iMtToRO_cGG_fpmP5XQ
(Currently they are working on Ford Mach-E)
If you are more interested in EV in general, not just Model 3, they have actually made their report of the BMW i3 almost free. You can literally get a report that used to be $50k for $10.
See here:
https://munrolive.com/support-%2F-store/ols/products/bmw-i3-...
You can go and build your own BMW i3.
Structural battery sounds like Pinto 2.0.
If you take incentives into account, you can get a Chevy Bolt under 25k out the door today.
Cheap EVs are already here, made in China. Here is a $1k EV, that's right, $1k.
https://www.youtube.com/watch?v=1GG1RC7GV0Y
https://www.youtube.com/watch?v=1GG1RC7GV0Y
It's interesting (to me) that Model S/X units are only about 1% of all vehicles produced/delivered. Makes sense since those cars are much more expensive than Model 3/Y, but still.
Sales of these models have been collapsing for several years now, because they’re at the end of their cycle and in need of an exterior redesign.
Musk mentioned on one of their earnings calls they're made for sentimental reasons [1]. The new Plaid S looks good inside (imho, having sat in one). Based on their revenue numbers, I'm inclined to believe they don't need S/X halo cars to sell 3s and Ys (and soon, Cybertruck and Semi). The brand has been built, Plaid is for bragging rights against legacy automakers (Porsche Taycan). Stationary storage has huge demand and should not be discounted, every cell manufactured is being sold in a product.
[1] https://www.businessinsider.com/tesla-making-model-s-x-for-s...
(disclosure: no TSLA exposure, but keep my ear to the ground, also for sentimental reasons)
[1] https://www.businessinsider.com/tesla-making-model-s-x-for-s...
(disclosure: no TSLA exposure, but keep my ear to the ground, also for sentimental reasons)
This quarter isn't representative, they only started deliveries of the new Model S at the very end of the quarter. Historically it's about 10%.
That's only because they stopped production fully in Q1 for the refresh. Most likely the numbers will catch up to be just under 10% - at least until more factories open up and M3/Y production increases again.
I suspect the margins on those cars are significantly higher and their contribution to profitability is higher than 1%
I find that the model S doesn't have enough 'premium' to be justified over a model 3.
That is unless you're looking at the model S plaid, but I can't envision huge demand for a car starting at 129k.
That is unless you're looking at the model S plaid, but I can't envision huge demand for a car starting at 129k.
This - before the update to Model S that included the rear screen, it was getting REALLY hard to figure out why you would want to pay 2x for an electric car unless you wanted the... ventilated seats? marginal range improvement?
If 500+ mile range becomes an S/X exclusive for a few years, feels like they need to do more to differentiate.
If 500+ mile range becomes an S/X exclusive for a few years, feels like they need to do more to differentiate.
Everything that is premium in the Plaid is included in the new Model S. The whole line has been refreshed (and the X will too, soon).
The base S is 85k (depending on the week, it changes so much). It has the same performance as the model 3 performance (top end 3) and more range. I think the s is a much nicer car, though 25k is a lot more. The S was as low as 70k at one stage, if it was 75k I'd say the extras are worth it over the 3.
If you drive a lot of long distances the 75 miles of extra range can save you hours of charging, but I do agree the premium is not worth it.
In our country the incentives for electric vehicles where being lowered just around the same time the Model 3 came around. Before that, you would be a fool for not buying a Model S (as business/contractor) as adding up all incentives and tax breaks would almost half the price. I believe other European countries follow a similar trend.
How much did they rake in from selling FSD vaporware?
Many $ from happy customers, many autonomous kilometers driven, have fun in your Ford focus
This vaporware recently drove 95%+ of a 2000 mile road trip for me. If only other vaporware was like this ...
Each and every modern car has a driving assistive system. It is vaporware since it is still no autonomous drive as touted for, but simply an assistance to the driver which requires his permanent attention.
I have been much more impressed with HUDs in common cars lately. Now that, although definitely not related to autonomous is a huge help to offset the cognitive load.
I have been much more impressed with HUDs in common cars lately. Now that, although definitely not related to autonomous is a huge help to offset the cognitive load.
Both your POVs can be true.
It's not "full" if it's missing the 5%. In that sense, it's vaporware.
It's not "full" if it's missing the 5%. In that sense, it's vaporware.
I too use my adaptive cruise control on German Autobahn and barely touch any commands while on it, I'd say it covers 95% of my needs too (it's not Tesla). And I call it as it is, adaptive cruise control, not the FSD
Adaptive cruise control doesn't steer the car. That plus "Lane Keep Assist" is mostly what Tesla "Autopilot" does. "FSD" does a bit more right now but not nearly as much as has been promised.
This is adaptive cruise control to you? https://www.youtube.com/watch?v=sYW75nKPMoY
This[1] part of the video really gives you the confidence to use AP for anything other than adaptive cruise control to you? Stopping a spot before is okay, but the abrupt stop, in the middle of two lanes, understanding the correct traffic light but then still creeping ahead...
1: https://youtu.be/sYW75nKPMoY?t=1190
1: https://youtu.be/sYW75nKPMoY?t=1190
[deleted]
No, that is just horror
For that figure to be true you would have to ignore the requirement that you maintain awareness and control of the vehicle at all times. Autopilot !== FSD. Your car did not "drive itself," you were in control of the car 100% of the time — at least I hope so...
In terms of workload, there is a huge difference between monitoring a system as opposed to hyper-focus and constant micro-adjustments for hours on end. The car stays in the lane as if on rails, passes other cars and takes exits. It also stops at traffic lights off highway and then continues as it turns green (if following a lead car).
I know what I paid for. And I am getting my money's worth given how much it has kept improving. The new FSD Beta looks even more promising. It's swiftly reaching the point where it is a question of liability and regulatory approval.
I know what I paid for. And I am getting my money's worth given how much it has kept improving. The new FSD Beta looks even more promising. It's swiftly reaching the point where it is a question of liability and regulatory approval.
I see my FSD as watching a new driver about 18 years old. It's not amazing, it's a bit jerky, but watching an 18 year old drive vs having to drive is still a reduction in mental stress. It makes commutes bearable.
I have a Lexus with lane-keeping assist and adaptive cruise, on a 9 hour trip on Canadian highways, I have had to disengage only when I am exiting the highway to make pit stop. Should Lexus market their "Full Self Driving" capability too?
Sure, as soon as your Lexus does that with just an OTA update: https://www.youtube.com/watch?v=wD_mF0OLJPs
Only 1700 miles here (Portland<->Yellowstone). And straight up: this was the most relaxing and engaging road trip I've driven, anywhere, in any car, since I got my license in 1990. Standing up after a leg driven by the AP is just magic: no stiffness, no soreness. It's no different than if I'd been sitting in an office chair.
No, check that. My office chair frankly isn't as comfortable as the car.
No, check that. My office chair frankly isn't as comfortable as the car.
A bit off topic: every car sheets are heavily underrated compared to other chairs. Even cheaper car sheets are very comfortable for various use compared to cheaper chairs. I wish there are more recycling market for car sheets.
I bought at 48k car in Q1 partially because of the autonomy potential. If FSD doesn't meet your expectations then don't buy it.
Tesla is performing great. Unfortunately, people have already priced that into the stock.
Not at all. P/E just dropped by half. Given the growing economies of scale and the two giant factories being built in Europe and Texas and more soon, the sky is the limit. You can ignore FSD and still easily project a $4,000 target by 2026. I highly recommend this short thread https://teslamotorsclub.com/tmc/threads/tesla-valuation-base... (by a TMC member who's been highly reliable over the years). Disclosure: have been invested in TSLA for more than a decade now.
Easily project a ~$4.3 trillion market cap in five years for an automaker that's already comically overvalued and has typical auto industry margins and nowhere near enough growth to get there. Fascinating.
Plotting ~$60 billion in earnings and a 70+ PE ratio in five years.
To do that they'll merely need $500b-$600b in sales (a couple trillion in sales across the next five years). And everyone in the developed world has to buy a Tesla within the next five years.
Hilarious. All from the Model 3, which is the only thing they have to carry the entire company to those levels. The Model S and Model X certainly aren't going to move the $633b market cap needle beyond where it's already at, nor will solar (look at what the top solar companies are worth), nor will batteries (look at what the world's largest battery businesses are worth), nor will the big rig (look at what the top big rig segments are worth to other automakers).
The article has some gigantic caveats given the obscene forecast, like this one: "the Cybertruck launch will need to go well" - understatement of the century. The Cybertruck is going to flop, after it initially sells well. Ford and the other traditional truck manufacturers will dominate electric trucks, because they're going to sell their customers the trucks those customers actually want to buy, not impractical gimmicks. Musk already knows it's going to ultimately flop, he has begun preparing the market for that outcome.
If Tesla owned the entire auto market globally in five years, it wouldn't be worth half that $4.3t forecast. That's every car, truck and big rig sold everywhere on earth. Add up the value of all other automakers, now or five years ago, or ten years ago. The fantasy projection dissolves instantly when you shine light on it. It'll be a small miracle if Tesla is able to maintain their present valuation while pushing earnings up to $20b in five years, that will require extraordinary market-conquering continued growth across all product lines. They have to become akin to another Toyota in five years just to do that.
I'll bookmark this ridiculous forecast and we can revisit it in a few years.
Plotting ~$60 billion in earnings and a 70+ PE ratio in five years.
To do that they'll merely need $500b-$600b in sales (a couple trillion in sales across the next five years). And everyone in the developed world has to buy a Tesla within the next five years.
Hilarious. All from the Model 3, which is the only thing they have to carry the entire company to those levels. The Model S and Model X certainly aren't going to move the $633b market cap needle beyond where it's already at, nor will solar (look at what the top solar companies are worth), nor will batteries (look at what the world's largest battery businesses are worth), nor will the big rig (look at what the top big rig segments are worth to other automakers).
The article has some gigantic caveats given the obscene forecast, like this one: "the Cybertruck launch will need to go well" - understatement of the century. The Cybertruck is going to flop, after it initially sells well. Ford and the other traditional truck manufacturers will dominate electric trucks, because they're going to sell their customers the trucks those customers actually want to buy, not impractical gimmicks. Musk already knows it's going to ultimately flop, he has begun preparing the market for that outcome.
If Tesla owned the entire auto market globally in five years, it wouldn't be worth half that $4.3t forecast. That's every car, truck and big rig sold everywhere on earth. Add up the value of all other automakers, now or five years ago, or ten years ago. The fantasy projection dissolves instantly when you shine light on it. It'll be a small miracle if Tesla is able to maintain their present valuation while pushing earnings up to $20b in five years, that will require extraordinary market-conquering continued growth across all product lines. They have to become akin to another Toyota in five years just to do that.
I'll bookmark this ridiculous forecast and we can revisit it in a few years.
You make good points, but I still wouldn't take that side of the bet. TSLA price has been divorced from reality for years and it's entirely unpredictable when and how that will end.
There's a bit divorced from reality, and there's implausible.
Amazon was a bit divorced from reality as well for most of its history. They had extraordinary continued sales growth to fuel that divorce, to underpin those high expectations, along with a quasi segment monopoly. That held up for a time. However it began to stall as online retail growth rates began to falter (look at Amazon's stock from 2011-2015, nice but nothing crazy while still carrying a ridiculous multiple; that's the result of retail profit & margin reality setting in). And then they started publishing AWS results and its software-like margins, and eventually the hyper margin ad business; kaboom goes the stock, due to that earnings growth and its forward expectations.
What's the Tesla AWS / Ad explosion? There isn't one. They don't have a business like that, where they'll get to print monopoly-like software profits. Amazon blazed a new path with AWS that they got to own as they went. Tesla has to take auto share from companies like BMW, Toyota, Honda, Hyundai, Daimler, VW, Ford, GM, etc. as they go (to say nothing of the Chinese EV makers that will eventually dominate that domestic market and gradually push outward globally). Entirely different context.
Tesla is an increasingly boring automaker, nothing more. EVs are just vehicles, they don't come with 4x or 6x the margins of ICE vehicles that Mercedes or BMW produce. The best case scenario, realistically, is that Tesla becomes Toyota or Daimler. That will be an astounding outcome, to get there and then hold that ground against that much competition. There's no AWS business coming to save their valuation. Batteries are not a stellar business, the solar business sucks big time (just look at the solar companies, their earnings and their market values), and the big rig business is also not at all spectacular.
Tesla also is not going to own the luxury market, they're horrible at making luxury vehicles. Daimler & Co will continue to dominate luxury vehicles. Tesla had its shot, a huge headstart, at conquering luxury EVs and entirely failed to put a big enough stake into the ground, they're out of time (look at what their high-end segment of sales is worth today or yesterday, it's a pittance despite the huge headstart; they've done a terrible job there).
The Cybertruck isn't going to take over the truck market.
What's left? The Model 3 has to conquer planet Earth in four to five years. Everyone has to buy one. It's not going to happen.
I defended Tesla for most of a decade on this forum. When a lot of people here said Tesla would never produce the Model 3 at scale, I argued against that skepticism across numerous threads over and over again; it was obvious it could be done. There's a difference between recognizing Tesla wasn't going to go bankrupt a few years ago for example (an easy argument I took up across numerous threads), and buying into really really crazy forecasts that are well outside of the realm of believable. There's being objective about what's actually likely, plausible, and just frothing at the mouth on bubble kool-aid.
Amazon was a bit divorced from reality as well for most of its history. They had extraordinary continued sales growth to fuel that divorce, to underpin those high expectations, along with a quasi segment monopoly. That held up for a time. However it began to stall as online retail growth rates began to falter (look at Amazon's stock from 2011-2015, nice but nothing crazy while still carrying a ridiculous multiple; that's the result of retail profit & margin reality setting in). And then they started publishing AWS results and its software-like margins, and eventually the hyper margin ad business; kaboom goes the stock, due to that earnings growth and its forward expectations.
What's the Tesla AWS / Ad explosion? There isn't one. They don't have a business like that, where they'll get to print monopoly-like software profits. Amazon blazed a new path with AWS that they got to own as they went. Tesla has to take auto share from companies like BMW, Toyota, Honda, Hyundai, Daimler, VW, Ford, GM, etc. as they go (to say nothing of the Chinese EV makers that will eventually dominate that domestic market and gradually push outward globally). Entirely different context.
Tesla is an increasingly boring automaker, nothing more. EVs are just vehicles, they don't come with 4x or 6x the margins of ICE vehicles that Mercedes or BMW produce. The best case scenario, realistically, is that Tesla becomes Toyota or Daimler. That will be an astounding outcome, to get there and then hold that ground against that much competition. There's no AWS business coming to save their valuation. Batteries are not a stellar business, the solar business sucks big time (just look at the solar companies, their earnings and their market values), and the big rig business is also not at all spectacular.
Tesla also is not going to own the luxury market, they're horrible at making luxury vehicles. Daimler & Co will continue to dominate luxury vehicles. Tesla had its shot, a huge headstart, at conquering luxury EVs and entirely failed to put a big enough stake into the ground, they're out of time (look at what their high-end segment of sales is worth today or yesterday, it's a pittance despite the huge headstart; they've done a terrible job there).
The Cybertruck isn't going to take over the truck market.
What's left? The Model 3 has to conquer planet Earth in four to five years. Everyone has to buy one. It's not going to happen.
I defended Tesla for most of a decade on this forum. When a lot of people here said Tesla would never produce the Model 3 at scale, I argued against that skepticism across numerous threads over and over again; it was obvious it could be done. There's a difference between recognizing Tesla wasn't going to go bankrupt a few years ago for example (an easy argument I took up across numerous threads), and buying into really really crazy forecasts that are well outside of the realm of believable. There's being objective about what's actually likely, plausible, and just frothing at the mouth on bubble kool-aid.
I think the people who value Tesla at these rates don't believe Tesla will continue just selling cars. They believe the cars are just the first step in a range of products and services that will make Tesla a trillion dollar company. Just like Amazon, obviously a book store wouldn't be as valuable as Amazon is now, and it was hard to see this 15 years ago.
Anyway, definitely agree with you on the valuation. Even if you believe there's a chance it's going the Amazon route and we'll all be driving Tesla autopilot cabs in 5 years, it's priced as if that's a certainty.
Anyway, definitely agree with you on the valuation. Even if you believe there's a chance it's going the Amazon route and we'll all be driving Tesla autopilot cabs in 5 years, it's priced as if that's a certainty.
I agree with most points made here. However, I wonder if it's as easy to predict the new high-growth/high-margin units as you suggest that Tesla has none.
Were most people in 2011-2015 aware of the "AWS / Ad explosion" that was about to come? Or did we know ex ante that Amazon was willing to shift their focus towards these units? Likely not, but the high multiples (despite the retail margins dragging down the gross margins) suggest that a large portion of investors were willing to bet that better units with protective moats (i.e. AWS) were coming soon.
I don't follow Tesla as much, but it seems difficult to dismiss that some of their business units won't follow high-growth/high-margin paths. What if their FSD software is licensed out? What if the supercharger network is shared with other EVs for a per-charge fee? Given Musk's personality, I can see investors taking on risk and betting that he'll be bringing something better than just selling cough regulatory credits cough cars. It makes me wonder if Tesla losing market share in the EV market will be the ultimate catalyst for this shift.
That being said, I agree with you that the market has "priced in" all these what-ifs for Tesla with extremely high expectations of success -- which did not seem to be case for Amazon. A slip or trip in car sales these days doesn't seem to move $TSLA much - investors that are long seem to be betting on other stuff and we'll see how patient they are in times to come.
Were most people in 2011-2015 aware of the "AWS / Ad explosion" that was about to come? Or did we know ex ante that Amazon was willing to shift their focus towards these units? Likely not, but the high multiples (despite the retail margins dragging down the gross margins) suggest that a large portion of investors were willing to bet that better units with protective moats (i.e. AWS) were coming soon.
I don't follow Tesla as much, but it seems difficult to dismiss that some of their business units won't follow high-growth/high-margin paths. What if their FSD software is licensed out? What if the supercharger network is shared with other EVs for a per-charge fee? Given Musk's personality, I can see investors taking on risk and betting that he'll be bringing something better than just selling cough regulatory credits cough cars. It makes me wonder if Tesla losing market share in the EV market will be the ultimate catalyst for this shift.
That being said, I agree with you that the market has "priced in" all these what-ifs for Tesla with extremely high expectations of success -- which did not seem to be case for Amazon. A slip or trip in car sales these days doesn't seem to move $TSLA much - investors that are long seem to be betting on other stuff and we'll see how patient they are in times to come.
But you're forgetting their solar roof industry! As they improve, the number of roof fires they cause are sure to decrease. If they don't, Tesla could instead turn a profit here by selling fire insurance. /s
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> The Cybertruck is going to flop, after it initially sells well. Ford and the other traditional truck manufacturers will dominate electric trucks, because they're going to sell their customers the trucks those customers actually want to buy, not impractical gimmicks.
Complete nonsense. Ford or GM do not have supply of batteries to produce all those trucks you believe they will make. Specially not when also attempting to ramp many of their normal cars.
The claim that Tesla vehicles will drop of in sales after early adopters has been wrong every single time. Cyblertruck has more pre-orders then any vehicle ever. Every single analysis on interest in the truck show gigantic interest.
> Musk already knows it's going to ultimately flop, he has begun preparing the market for that outcome.
This statement is literally wrong. Musk actually did the exact opposite. Musk says its the best product they have ever designed. And they are building a gigantic factory specifically for that product, a factory that cost billions.
Solar, EV, Battery, Grid Battery, Semis are all in exponential growth. Saying 'look at the currently biggest battery company' is an dumb measure. That like saying 'look at what the largest airplane company is worth in 1920, therefore no large airplane company in 1940 can that big'.
I haven't look at that specific forecast, it might well be optimistic. But there is no question that all of those markets are gone grow exponentially and its no question that Tesla is incredibly well placed to take advantage of those growth curves.
Complete nonsense. Ford or GM do not have supply of batteries to produce all those trucks you believe they will make. Specially not when also attempting to ramp many of their normal cars.
The claim that Tesla vehicles will drop of in sales after early adopters has been wrong every single time. Cyblertruck has more pre-orders then any vehicle ever. Every single analysis on interest in the truck show gigantic interest.
> Musk already knows it's going to ultimately flop, he has begun preparing the market for that outcome.
This statement is literally wrong. Musk actually did the exact opposite. Musk says its the best product they have ever designed. And they are building a gigantic factory specifically for that product, a factory that cost billions.
Solar, EV, Battery, Grid Battery, Semis are all in exponential growth. Saying 'look at the currently biggest battery company' is an dumb measure. That like saying 'look at what the largest airplane company is worth in 1920, therefore no large airplane company in 1940 can that big'.
I haven't look at that specific forecast, it might well be optimistic. But there is no question that all of those markets are gone grow exponentially and its no question that Tesla is incredibly well placed to take advantage of those growth curves.
> Solar, EV, Battery, Grid Battery, Semis are all in exponential growth.
Solar is a modest growth business, you can see that represented in the sales growth of all the largest solar companies. Annual sales growth in the industry is not expanding as you're implying.
The big rig / semi market is the exact opposite of experiencing exponential growth, it's largely a slow growth replacement market.
EV sales are overwhelmingly replacement sales, largely taking up the sales from the ICE vehicle market. Which goes back to Tesla's competition problem, they have to forever take market share from Daimler, BMW, Toyota, et al.; to become a giant, they have to eat one of the giants. The global auto market is not a high growth market, it's a slow growth market, which creates a ceiling growth problem for Tesla; the overall industry is growing slow, and they have to kill the other giant competitors to keep growing, which is a very difficult and expensive thing to accomplish. The masses of people in the developed world are not going to suddenly wake up and decide they should needlessly add an extra car to the family vehicle lineup; they're going to do gradual replacement purchases over time. And over that time, the competition is going to get a lot worse for Tesla in EVs, not easier.
What's Panasonic's entire battery business worth today? Now increase that 5x or 10x. What would that be worth? How much is Tesla worth today in comparison? How does that battery growth forecast then stack up to the $4.3 trillion in the forecast in question?
And besides that, even with the battery business and assuming an extraordinary outcome, Tesla is selling cars for $45,000+ and the battery packs are a modest fraction of that value. You think Tesla is going to validate $4 trillion in market value by selling $20-$30 billion in batteries on the side every year at 15% end profit margins? It doesn't get them anywhere remotely close and that's the optimistic outcome.
And we're specifically talking about what Tesla can do between now and 2026, not 2050. Five years. That's the $4 trillion forecast timeline in question that is the root of this discussion and that's what I focused on. How many vehicles Tesla can sell in that time, how their other segments might contribute, how much growth they can generate overall in that time, what their profit could be, and how that might translate to their market cap circa 2026.
> This statement is literally wrong. Musk actually did the exact opposite.
Nope. Musk has been trying to guide the market expectations and the high risk of the Cybertruck being a flop. He knows the damage a flop could cause to the stock.
July 16, Barrons: "Elon Musk Admits Tesla’s Cybertruck Might ‘Flop’ Because It’s so Different"
https://www.barrons.com/articles/elon-musk-admits-teslas-cyb...
> Complete nonsense. Ford or GM do not have supply of batteries to produce all those trucks you believe they will make. Specially not when also attempting to ramp many of their normal cars.
Tesla is still at an inferior position to both Ford and GM when it comes to industrial scale (to say nothing of political connections). There's no reason to believe Ford and GM will be incapable of securing the necessary resources to scale their EV businesses in the coming years. GM has an exceptional partnership history in China for one thing, if they need to produce huge volumes of batteries. What Tesla has done in making battery factories for their demand isn't a unique value proposition, it's going to be easily endlessly replicated by their competition.
Tesla represents a very small share of the auto industry globally. The majors all have more total resources, more political connections (which is very important for securing natural resources and manufacturing), and greater industrial scale. And they are bringing all of that to the field; not tomorrow, but right now. Tesla needs all the headstart they can get. The past decade was the easy part for Tesla, not the hard part.
Solar is a modest growth business, you can see that represented in the sales growth of all the largest solar companies. Annual sales growth in the industry is not expanding as you're implying.
The big rig / semi market is the exact opposite of experiencing exponential growth, it's largely a slow growth replacement market.
EV sales are overwhelmingly replacement sales, largely taking up the sales from the ICE vehicle market. Which goes back to Tesla's competition problem, they have to forever take market share from Daimler, BMW, Toyota, et al.; to become a giant, they have to eat one of the giants. The global auto market is not a high growth market, it's a slow growth market, which creates a ceiling growth problem for Tesla; the overall industry is growing slow, and they have to kill the other giant competitors to keep growing, which is a very difficult and expensive thing to accomplish. The masses of people in the developed world are not going to suddenly wake up and decide they should needlessly add an extra car to the family vehicle lineup; they're going to do gradual replacement purchases over time. And over that time, the competition is going to get a lot worse for Tesla in EVs, not easier.
What's Panasonic's entire battery business worth today? Now increase that 5x or 10x. What would that be worth? How much is Tesla worth today in comparison? How does that battery growth forecast then stack up to the $4.3 trillion in the forecast in question?
And besides that, even with the battery business and assuming an extraordinary outcome, Tesla is selling cars for $45,000+ and the battery packs are a modest fraction of that value. You think Tesla is going to validate $4 trillion in market value by selling $20-$30 billion in batteries on the side every year at 15% end profit margins? It doesn't get them anywhere remotely close and that's the optimistic outcome.
And we're specifically talking about what Tesla can do between now and 2026, not 2050. Five years. That's the $4 trillion forecast timeline in question that is the root of this discussion and that's what I focused on. How many vehicles Tesla can sell in that time, how their other segments might contribute, how much growth they can generate overall in that time, what their profit could be, and how that might translate to their market cap circa 2026.
> This statement is literally wrong. Musk actually did the exact opposite.
Nope. Musk has been trying to guide the market expectations and the high risk of the Cybertruck being a flop. He knows the damage a flop could cause to the stock.
July 16, Barrons: "Elon Musk Admits Tesla’s Cybertruck Might ‘Flop’ Because It’s so Different"
https://www.barrons.com/articles/elon-musk-admits-teslas-cyb...
> Complete nonsense. Ford or GM do not have supply of batteries to produce all those trucks you believe they will make. Specially not when also attempting to ramp many of their normal cars.
Tesla is still at an inferior position to both Ford and GM when it comes to industrial scale (to say nothing of political connections). There's no reason to believe Ford and GM will be incapable of securing the necessary resources to scale their EV businesses in the coming years. GM has an exceptional partnership history in China for one thing, if they need to produce huge volumes of batteries. What Tesla has done in making battery factories for their demand isn't a unique value proposition, it's going to be easily endlessly replicated by their competition.
Tesla represents a very small share of the auto industry globally. The majors all have more total resources, more political connections (which is very important for securing natural resources and manufacturing), and greater industrial scale. And they are bringing all of that to the field; not tomorrow, but right now. Tesla needs all the headstart they can get. The past decade was the easy part for Tesla, not the hard part.
> The big rig / semi market is the exact opposite of experiencing exponential growth
Non of those are EV now.
> EV sales are overwhelmingly replacement sales, largely taking up the sales from the ICE vehicle market.
All those need to be replaced by EVs. Tesla has no ICE vehicles so for them its simply growth.
Tesla can scale EV faster and they can reach better margin then current companies. Currently these manufactures can subsidies their EV with ICE sales, but their ICE infrastructure will turn into a liability soon.
At the same time they build out global charging infrastructure to fuel all those cars giving them a long term income at great margin.
> What's Panasonic's entire battery business worth today? Now increase that 5x or 10x.
We are only just at 2% EV in the market and Panasonic is only a part of that market. Add grid and home storage, industrial vehicles and so on. And eventually also planes.
> Tesla is still at an inferior position to both Ford and GM when it comes to industrial scale
Who wouldn't want all those distributed factories with union workers demonstrating while giving most of the profits to the dealers and suppliers.
> (to say nothing of political connections).
Yeah California and Texas where Tesla produces all the jobs are politically so weak. Elon Musk is also not on of the most famous people in the world and a twitter profile more powerful then GM/Ford marketing budget.
> Tesla represents a very small share of the auto industry globally.
Yes and they are already at industry leading operating margin while still being comparatively small and they continue to grow very fast.
> The past decade was the easy part for Tesla, not the hard part.
And just continuing to produce ICE vehicles and ignoring EV was the easy part for the competition. Repeatably in history we have seen how difficult massive technology transitions are and how established players ran into a lot of issues.
Non of those are EV now.
> EV sales are overwhelmingly replacement sales, largely taking up the sales from the ICE vehicle market.
All those need to be replaced by EVs. Tesla has no ICE vehicles so for them its simply growth.
Tesla can scale EV faster and they can reach better margin then current companies. Currently these manufactures can subsidies their EV with ICE sales, but their ICE infrastructure will turn into a liability soon.
At the same time they build out global charging infrastructure to fuel all those cars giving them a long term income at great margin.
> What's Panasonic's entire battery business worth today? Now increase that 5x or 10x.
We are only just at 2% EV in the market and Panasonic is only a part of that market. Add grid and home storage, industrial vehicles and so on. And eventually also planes.
> Tesla is still at an inferior position to both Ford and GM when it comes to industrial scale
Who wouldn't want all those distributed factories with union workers demonstrating while giving most of the profits to the dealers and suppliers.
> (to say nothing of political connections).
Yeah California and Texas where Tesla produces all the jobs are politically so weak. Elon Musk is also not on of the most famous people in the world and a twitter profile more powerful then GM/Ford marketing budget.
> Tesla represents a very small share of the auto industry globally.
Yes and they are already at industry leading operating margin while still being comparatively small and they continue to grow very fast.
> The past decade was the easy part for Tesla, not the hard part.
And just continuing to produce ICE vehicles and ignoring EV was the easy part for the competition. Repeatably in history we have seen how difficult massive technology transitions are and how established players ran into a lot of issues.
> And they are building a gigantic factory specifically for that product, a factory that cost billions.
Are you talking about Austin? Thats not specifically for Cybertruck, it is also building Model 3, Y, and the Semi according to wikipedia.
Are you talking about Austin? Thats not specifically for Cybertruck, it is also building Model 3, Y, and the Semi according to wikipedia.
One side of the factory is for the Model Y. The other larger side is for the Cybertruck. That is a huge space.
Semi might be in Austin but likely not in the current building.
Semi might be in Austin but likely not in the current building.
You think you know so much and still think the Model 3 is the star. Not a single mention of Model Y… the only ridiculous thing here is your arrogance.
Let’s pick some easy numbers to get a feel for sizes
Let’s say 70million cars are sold in 2021. And that they sell for 30k each. So that’s 2100 billion.
Say a 6% profit, we get 126 billion a year on global sales.
Say you expect a mature company to eventually coast along at 20x price/earnings
So a company with 100% market share (and you can’t really price in growth as it’s 100%) should be worth 2500 billion.
I’m no economist, and I may have made a math error somewhere, but I feel this puts a rough upper bound on the valuation
Let’s say 70million cars are sold in 2021. And that they sell for 30k each. So that’s 2100 billion.
Say a 6% profit, we get 126 billion a year on global sales.
Say you expect a mature company to eventually coast along at 20x price/earnings
So a company with 100% market share (and you can’t really price in growth as it’s 100%) should be worth 2500 billion.
I’m no economist, and I may have made a math error somewhere, but I feel this puts a rough upper bound on the valuation
>If Tesla owned the entire auto market globally in five years, it wouldn't be worth half that $4.3t forecast. That's every car, truck and big rig sold everywhere on earth. Add up the value of all other automakers, now or five years ago, or ten years ago. The fantasy projection dissolves instantly when you shine light on it. It'll be a small miracle if Tesla is able to maintain their present valuation while pushing earnings up to $20b in five years, that will require extraordinary market-conquering continued growth across all product lines. They have to become akin to another Toyota in five years just to do that.
Do you realize that Tesla might not sell cars but rides in the medium term? And if their fleet drives more than 2% of the time (current usage of privately owned cars), they'll generate many, many time the profit the industry have been getting from car sales? And I'm not talking about energy generation, grid services and charging (the oil and gas of the auto industry)...
Do you realize that Tesla might not sell cars but rides in the medium term? And if their fleet drives more than 2% of the time (current usage of privately owned cars), they'll generate many, many time the profit the industry have been getting from car sales? And I'm not talking about energy generation, grid services and charging (the oil and gas of the auto industry)...
P/E dropping sharply to a number that is still “normal” or higher is what is meant by good numbers being priced in.
P/E of 160 is nowhere near normal.
“or higher” was the part of the comment referencing Tesla’s P/E ratio. Normal was in quotes because there’s no prescribed value for an appropriate earnings per share, just historical averages and popular economic models.
50% YoY growth for the next several years is not normal either.
I think most agree that the pricing can seem unreasonably high, but plug the numbers into a spreadsheet and see where you end up. Basically the market believes that Tesla is to become one of the big players in the auto industry.
I think most agree that the pricing can seem unreasonably high, but plug the numbers into a spreadsheet and see where you end up. Basically the market believes that Tesla is to become one of the big players in the auto industry.
Tesla is worth more than all the other automakers combined. They'll have to be much more than a car maker to accomplish what this valuation requires.
Other OEMS are loaded with debt which reflects in their valuation, if measured in Enterprise value Tesla vs OEMS- the numbers doesn't give so much headroom as you suggest.
But yes, right now their valuation is a bit high, but reflect on this ; Tesla is in a net cash position, have already the infrastructure and technology to make electric cars. They now have to replicate/duplicate, create new models and markets, but they have a very solid footing within the EV space.
The other OEMS is laden with debt which was used to build outdated factories and invested in technologies which suddenly have a payback period in the singles, instead of decades - and they still must invest heavily into EVs to maintain their market share and service their debt.
The incumbent OEMS are having to run the gauntlet of the valley of death; Falling demand for gas/diesel while at the same time investing heavily into EV production. While beeing loaded up with debt.
But yes, right now their valuation is a bit high, but reflect on this ; Tesla is in a net cash position, have already the infrastructure and technology to make electric cars. They now have to replicate/duplicate, create new models and markets, but they have a very solid footing within the EV space.
The other OEMS is laden with debt which was used to build outdated factories and invested in technologies which suddenly have a payback period in the singles, instead of decades - and they still must invest heavily into EVs to maintain their market share and service their debt.
The incumbent OEMS are having to run the gauntlet of the valley of death; Falling demand for gas/diesel while at the same time investing heavily into EV production. While beeing loaded up with debt.
Profits will double in the next 12-18 months (https://www.youtube.com/watch?v=kA4D3VZv2C8), revenues will continue to grow by >50% for years (95% of sales were only from one platform, the Model 3/Y), and the economies of scale are just starting to materialize. With that in mind, I find their P/E extremely low.
I think this is possible, but not likely. Historically companies with such high valuations and extreme popularity don't perform well in the long term. If you got in 10 years ago you've done exceptionally well of course.
There is a lot of competition in electric vehicles coming. There is no reason to think that the EV industry will be materially different to the ICEV industry in terms of competition, margins and company performance when the dust settles. At the end of the day the market is the same, convincing people to spend many 10s of thousands on a complicated machine.
The huge asset price inflation that has happened over Amazon's history is also not going to continue.
Additionally there are some major risks to Tesla's trajectory. One is China deciding to freeze out an American EV company. Another is something happening to Elon Musk, which will cause a stampede of retail investors out the door.
There is a lot of competition in electric vehicles coming. There is no reason to think that the EV industry will be materially different to the ICEV industry in terms of competition, margins and company performance when the dust settles. At the end of the day the market is the same, convincing people to spend many 10s of thousands on a complicated machine.
The huge asset price inflation that has happened over Amazon's history is also not going to continue.
Additionally there are some major risks to Tesla's trajectory. One is China deciding to freeze out an American EV company. Another is something happening to Elon Musk, which will cause a stampede of retail investors out the door.
>There is a lot of competition in electric vehicles coming. There is no reason to think that the EV industry will be materially different to the ICEV industry in terms of competition, margins and company performance when the dust settles. At the end of the day the market is the same, convincing people to spend many 10s of thousands on a complicated machine.
How do you explain Apple's shares of profits in the phone industry, then?
How do you explain Apple's shares of profits in the phone industry, then?
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Way to go to TSLA.
I was a naysayer through 2020 and I lost a lot of money personally betting against this company ("but what about regulatory credits", ugh); however, with over one billion in net income in a single quarter and growing revenues and declining reg. credits , I will admit that I couldn't have been more wrong.
I was a naysayer through 2020 and I lost a lot of money personally betting against this company ("but what about regulatory credits", ugh); however, with over one billion in net income in a single quarter and growing revenues and declining reg. credits , I will admit that I couldn't have been more wrong.
I’ve noticed the number of Tesla cars on the road in SV is around 4%, possibly more. It surprising how quickly they’ve become commonplace, even on their home turf.
Our entire neighborhood seems to have at least 1, sometimes 2 each in Cupertino/Los Altos.
Im in the suburbs of Houston, TX and I easily see that here too if not more.
It is way more than 4% in SV.
I've always been bullish tesla and a lot of the arguments against them ignore the underlying ideas (will electric vehicles, power storage and solar be major areas?). I think the power storage piece is also going to just be huge and would love if they let their cars feed into a transfer switch etc.
The stock price does seem very high though even if you DO buy into their story (which I do) - but a lot of the stock market feels high - just a lot of money sloshing around these days.
The stock price does seem very high though even if you DO buy into their story (which I do) - but a lot of the stock market feels high - just a lot of money sloshing around these days.
Storage is flat to modestly in decline. Battery storage is a competitive, commodity business. Not sure how huge it will be.
No it isn't. Look at year over year. They have massive demand they can't deliver. Quarter over Quarter grid storage is very depended on when project finish.
> Battery storage is a competitive, commodity business.
No isn't. There is really not that much Li-Ion grid storage being deployed right now and not by that many companies. That market is growing fast.
> Not sure how huge it will be.
The amount of needed grid storage is gigantic.
Edit: Elon just said on the call that they are massively limited on production. Partly because of the chip issue, same chips are used in the cars and the cars have higher margin. But cell supply is also limited. So the demand is growing but they can't increase production as fast.
> Battery storage is a competitive, commodity business.
No isn't. There is really not that much Li-Ion grid storage being deployed right now and not by that many companies. That market is growing fast.
> Not sure how huge it will be.
The amount of needed grid storage is gigantic.
Edit: Elon just said on the call that they are massively limited on production. Partly because of the chip issue, same chips are used in the cars and the cars have higher margin. But cell supply is also limited. So the demand is growing but they can't increase production as fast.
Assuming that the world will eventually transition to 100% renewable energy, it's not unreasonable to estimate the eventual total market size to be higher than the world's nightly power consumption.
I agree that storage will be a commodity business, but so is oil and that seems to be fairly profitable.
Battery construction is incredibly intricate and has a huuuuge amount of process tech. There's already a huge moat around it because of the level of knowledge needed and a severe lack of talent. That moat will only grow as more and more in house tech is developed for production and for chemistries. There's a solid chance that all the players of one of our biggest new economic sectors this century are already producing.
Battery construction is incredibly intricate and has a huuuuge amount of process tech. There's already a huge moat around it because of the level of knowledge needed and a severe lack of talent. That moat will only grow as more and more in house tech is developed for production and for chemistries. There's a solid chance that all the players of one of our biggest new economic sectors this century are already producing.
What's the moat? So far their cells are Panasonic and something prismatic off the shelf from other suppliers for China. They are working on their own cell now, yet to be proven out (debuting in the car that is supposed to fly around with compressed air).
> would love if they let their cars feed into a transfer switch etc
I have to imagine that's a non trivial task that would require Permission To Operate from your power company.
When you have solar/batteries installed, you have to be inspected and receive PTO from your energy provider.
They only just opened up their Beta to allow your Powerwall to backfeed power to the grid on demand.
If and when they allow vehicles to supply power to the grid, it is going to require the vehicle owner to have their setup inspected and PTO granted. I have a feeling this will dissuade people who don't already have solar/batteries from participating.
I have to imagine that's a non trivial task that would require Permission To Operate from your power company.
When you have solar/batteries installed, you have to be inspected and receive PTO from your energy provider.
They only just opened up their Beta to allow your Powerwall to backfeed power to the grid on demand.
If and when they allow vehicles to supply power to the grid, it is going to require the vehicle owner to have their setup inspected and PTO granted. I have a feeling this will dissuade people who don't already have solar/batteries from participating.
I'm looking more for a replacement for the generator, you can usually get a generator + transfer switch without too much difficulty because you are not backfeeding grid, but you would be backfeeding your house.
The capacity in these vehicles is actually relatively good relative to household loads.
Their powerwall stuff with grid support / virtual power plant obviously has much bigger grid impacts / risks (ie, how do workers lock out feed to grid when working on lines etc).
The capacity in these vehicles is actually relatively good relative to household loads.
Their powerwall stuff with grid support / virtual power plant obviously has much bigger grid impacts / risks (ie, how do workers lock out feed to grid when working on lines etc).
> (ie, how do workers lock out feed to grid when working on lines etc)
Part of PTO is an inspection and one of the requirements to pass is that there's an ED on the exterior of your home so the power company can come by and disconnect you from the grid.
It's kind of the reverse of registering life support systems with the power company so they know not to shut off your power.
Part of PTO is an inspection and one of the requirements to pass is that there's an ED on the exterior of your home so the power company can come by and disconnect you from the grid.
It's kind of the reverse of registering life support systems with the power company so they know not to shut off your power.
Doesn't the new electric Ford truck do this?
It can output AC, I believe the new Hyundai can as well. This isn't the same as backfeeding to the grid.
If you have a cut over in your home you could run your house off the car power but without PTO you can't backfeed the grid. That requires inspection of your installation and external ED installed so your energy provider can disconnect your home from the grid when doing service.
If you have a cut over in your home you could run your house off the car power but without PTO you can't backfeed the grid. That requires inspection of your installation and external ED installed so your energy provider can disconnect your home from the grid when doing service.
Thanks for being honest, far too many people cannot admit they are wrong and double down and call Tesla a fraud only making them look worse in the future. I've certainly been wrong about companies before. I shorted AAPL for a week in 2002.
I could have seen people doing that during the time before Jobs' return. By 2002, OS X had been released, and the wave of iMacs and what not had been around.
What happened during that week in 2002 that I'm not remembering?
What happened during that week in 2002 that I'm not remembering?
I was in college and it seemed that the first IPOD was overpriced and just a "cool" thing to buy. There were other MP3 players that were cheaper coming on the market. But I quickly realized the risk is too high if AAPL continues to be popular even if their hardware is overpriced.
The famous ipod review by CmdrTaco (creator of Slashdot):
> No wireless. Less space than a nomad. Lame.
> No wireless. Less space than a nomad. Lame.
True. True. Opinion.
So a fairly accurate review, and the opinion is totally fair. Maybe a bit short sighted now with hindsight and what not, but at least he compared a nomad instead of a zune. That would have caused the review to not age well.
So a fairly accurate review, and the opinion is totally fair. Maybe a bit short sighted now with hindsight and what not, but at least he compared a nomad instead of a zune. That would have caused the review to not age well.
I don't think most people would argue that his review aged well, in spite of getting the direction of gravity right.
The first Zune was released in November 2006, just over 5 years after the first iPod. So, it wasn’t hard for him to not compare it with a Zune. It also isn’t surprising that that Zune was better than the 2001 Nomad.
Boo!
>overpriced and just a "cool" thing to buy
I haven't read a more concise description of AAPL.
I haven't read a more concise description of AAPL.
Having profit is not a proof of not being fraud. The full self-driving still is a lie.
But with the market cap it’s at now it is really hard to phantom. I mean it’s the most valued car manufacturer in the world and beat Toyota by so much..! Even by being a bullish for a long long time. It’s hard to see a reasonable spot to enter now.
Thanks! Will do.
NB: this excludes robotaxi, so any revenues from an autonomous fleet would be cherry on top (it could double the profit, still).
I think Toyota backed the wrong horse.
https://www.theverge.com/2021/7/26/22594235/toyota-lobbying-...
https://www.theverge.com/2021/7/26/22594235/toyota-lobbying-...
The Models 3 and Y are astonishingly good cars. I have an Audi S4 and a Model Y. The Audi now sits in the garage most of the time. Driving it feels like a giant step backwards compared to the Model Y. And the superior driving experience of the Model Y is in addition to the obvious benefit that I can refuel the car in my garage.
I was a huge Better Place fan and thought Tesla would definitely lose that battle. I also thought their initial government investment was a waste of taxpayer money. Happy to be wrong and see at least one winner.
I really liked the idea of Better Place. But I saw them on the cover of Wired, and knew that it wouldn't succeed.
My rule of thumb is that if you're on the cover of Wired, either you've already succeeded, or you never will. They pick people who are already famous, or who want to be famous -- rather than people with the idea and ability to succeed. If you're on the cover and haven't already proven it, you're almost certainly better at selling yourself than your product.
I didn't know what would be wrong with the product, but I knew there would be something before I even opened the magazine.
My rule of thumb is that if you're on the cover of Wired, either you've already succeeded, or you never will. They pick people who are already famous, or who want to be famous -- rather than people with the idea and ability to succeed. If you're on the cover and haven't already proven it, you're almost certainly better at selling yourself than your product.
I didn't know what would be wrong with the product, but I knew there would be something before I even opened the magazine.
I wonder how many more orders of magnitude are required to solve self driving…
do we need 10 or 100M more vehicles streaming data, or do we need to use 1000x more transistors daily for the AI annealing? 10,000x the number of parameters?
Maybe things have to be a billion times better before we get real FSD?
do we need 10 or 100M more vehicles streaming data, or do we need to use 1000x more transistors daily for the AI annealing? 10,000x the number of parameters?
Maybe things have to be a billion times better before we get real FSD?
Record driving behavior off all cars coupled with their number plates and let the AI decide what to do next.
"the AI." You know this doesn't exist, right?
I think there's a whole lot of people that would be upset to find out you don't think they exist. I mean, come on, people have a hard enough time with eternal questions like "who am I?" and you come along and tell them they don't exist? I now understand why Marvin the robot was in the mood he was. Why bother?
What's needed is qualitative not quantitative change, AI needs a fundamental breakthrough to mimic natural cognition to some minimal degree, but it's all pseudo-science at this point unfortunately.
The current deep learning approach is a dead end.
The current deep learning approach is a dead end.
> Maybe things have to be a billion times better before we get real FSD?
One problem with this kind of estimation is that it's not actually clear that we can get there from "here" using current approaches. If it turn we can't, estimation is pretty hopeless if history tells us anything about putting a timeline on breakthroughs...
One problem with this kind of estimation is that it's not actually clear that we can get there from "here" using current approaches. If it turn we can't, estimation is pretty hopeless if history tells us anything about putting a timeline on breakthroughs...
The “fleet learning” pipeline Elon described at Autonomy Day doesn’t actually exist in practice. They have some hardcoded heuristic triggers that capture snippets of data to be annotated by human labelers to train perception models off of. The bottleneck is labeling/engineering.
Autonomous vehicles by and large aren’t a data problem anyways - it’s a robotics problem conditioned on the output of ML models for perception and prediction. The majority of the work is just implementing all of the bizarre edge cases inside of the robotics stack.
The idea of tackling this with an e2e ML model is a pipe dream touted by people that aren’t familiar with the space or trying to hype up their approach. Whenever this approach is attempted teams will very quickly realize how untenable it is and return to implementing individual robotics modules.
tl;dr there’s nothing special about Tesla’s approach to AVs or machine learning and you shouldn’t expect them to leapfrog the competition because of some nebulous ML-based advantage.
Coming from someone who has seen the interiors of both the FSD beta and the stack at an actual AV company.
Autonomous vehicles by and large aren’t a data problem anyways - it’s a robotics problem conditioned on the output of ML models for perception and prediction. The majority of the work is just implementing all of the bizarre edge cases inside of the robotics stack.
The idea of tackling this with an e2e ML model is a pipe dream touted by people that aren’t familiar with the space or trying to hype up their approach. Whenever this approach is attempted teams will very quickly realize how untenable it is and return to implementing individual robotics modules.
tl;dr there’s nothing special about Tesla’s approach to AVs or machine learning and you shouldn’t expect them to leapfrog the competition because of some nebulous ML-based advantage.
Coming from someone who has seen the interiors of both the FSD beta and the stack at an actual AV company.
>The idea of tackling this with an e2e ML model is a pipe dream touted by people that aren’t familiar with the space or trying to hype up their approach. Whenever this approach is attempted teams will very quickly realize how untenable it is and return to implementing individual robotics modules.
Except Andrej Karpathy. Why dumb down if they know it isn't working, now that they have all the financial resources to pivot and overtake the other manufacturers (who have not achieve anything anyway)? It makes no sense, unless Karpathy does not know what he's doing.
Edit: the argument that others don't agree is not convincing because Tesla should not have succeeded by others' standards either.
Except Andrej Karpathy. Why dumb down if they know it isn't working, now that they have all the financial resources to pivot and overtake the other manufacturers (who have not achieve anything anyway)? It makes no sense, unless Karpathy does not know what he's doing.
Edit: the argument that others don't agree is not convincing because Tesla should not have succeeded by others' standards either.
They’re not tackling it with an end to end model - all of the ML at Tesla is used for perception (and some prediction - I think there’s a cut-in prediction head running), which then feeds into traditional robotics algorithms, like I described in the parent comment.
If you listen to any of AK’s talks he only really talks about perception and he’s basically said that right now none of their planning is based on ML models. This is backed up by what reverse engineers have found in their Tesla’s.
If you listen to any of AK’s talks he only really talks about perception and he’s basically said that right now none of their planning is based on ML models. This is backed up by what reverse engineers have found in their Tesla’s.
Yes, but we've all heard about Dojo https://youtu.be/Ucp0TTmvqOE?t=8809 https://www.inverse.com/innovation/tesla-dojo-self-driving-v..., and Software 2.0 https://karpathy.medium.com/software-2-0-a64152b37c35
Afaict dojo is just a training asic integrated into a cluster, just like other big tech companies have had for years. If anything at all it’ll just mean a lower cloud or compute bill for Tesla. It’s telling that Elon is the one that likes to mention Dojo and Karpathy is generally quiet about it - it’s not actually a quantum leap in ML capabilities.
> "data to be annotated by human labelers"
Could you speed up labelling by using a combination of eye tracker cameras, road cameras, and brain signal sensors on real drivers? That way you could quickly understand what road footage corresponds with certain brain signals. Assuming brain signals are easier to label.
Could you speed up labelling by using a combination of eye tracker cameras, road cameras, and brain signal sensors on real drivers? That way you could quickly understand what road footage corresponds with certain brain signals. Assuming brain signals are easier to label.
While I can't say what will happen in the future, on the current course we are on self driving is simply not getting solved. Driver assist will keep improving, sure, and it may be the case that most miles driven are automated, but there will still need to be a steering wheel and trained drivers.
The operating margin is 11% very high up their in the industry. Automotive margin is 25% and that is also very good.
Energy and Solar margin are much worse but at least not negative anymore. This is a fast growing market and nobody else in the world is set up for it as well as Tesla is, both for home and grid. This will just continue to grow every year and there is large economics of scale that can be reached.
Something that many people miss is that other car companies make a huge amount of money on service, because they have such large old fleets that need parts. Tesla does not have this and service has been a huge negative for them. This seems to be starting to slowly turn. In a few years Tesla service will be a huge cash cow, and Tesla will not have to share that money with dealers for the most part.
Its the same with the supercharger network, huge investment now, hugely negative. But eventually that will be very profitable for them. Again, something people miss on the Tesla story. Large amounts of super-high margin revenue. Unlike players like Electrify America, Tesla builds its own chargers fully vertically integrated. Eventually Tesla can open the network to the competitors and that will give them high utilization on the network, making it very profitable.
They are still not a large car company, their operating margin has a chance to be significantly better in another year. More local production in Europe and Eastern US, more S/X sales, better margin on solar and storage for sure, and profitable Cybertruck.
Model Y/Cybertruck/Semi produced in Texas/Berlin will also use their own Tesla internal batteries, the far away most expensive part that they had to buy from suppliers. Tesla new manufacturing methods should allow them to both remove the profit the supplier would have made, and also produce the cells more cheaply. Storage should eventually get batteries from those plants as well but that might take a while.
Overall pretty happy with the progress.
Energy and Solar margin are much worse but at least not negative anymore. This is a fast growing market and nobody else in the world is set up for it as well as Tesla is, both for home and grid. This will just continue to grow every year and there is large economics of scale that can be reached.
Something that many people miss is that other car companies make a huge amount of money on service, because they have such large old fleets that need parts. Tesla does not have this and service has been a huge negative for them. This seems to be starting to slowly turn. In a few years Tesla service will be a huge cash cow, and Tesla will not have to share that money with dealers for the most part.
Its the same with the supercharger network, huge investment now, hugely negative. But eventually that will be very profitable for them. Again, something people miss on the Tesla story. Large amounts of super-high margin revenue. Unlike players like Electrify America, Tesla builds its own chargers fully vertically integrated. Eventually Tesla can open the network to the competitors and that will give them high utilization on the network, making it very profitable.
They are still not a large car company, their operating margin has a chance to be significantly better in another year. More local production in Europe and Eastern US, more S/X sales, better margin on solar and storage for sure, and profitable Cybertruck.
Model Y/Cybertruck/Semi produced in Texas/Berlin will also use their own Tesla internal batteries, the far away most expensive part that they had to buy from suppliers. Tesla new manufacturing methods should allow them to both remove the profit the supplier would have made, and also produce the cells more cheaply. Storage should eventually get batteries from those plants as well but that might take a while.
Overall pretty happy with the progress.
Elon has tweeted that he doesn’t want service side of the business to turn a profit, as it sets up a bad incentive, i.e to make unreliable vehicles
Nice sentiment but it will happen anyway. Its good.for them not wanting to make this a cornerstone of profitability as it is for traditional manufactures but its still gone make a fair amount of money.
As usual, the inverse HN index seems to outperform.
A lot of people against tesla seem to be more against Elon musk, then the company. I often wonder if someone like Steve Jobs or Mark Cuban had started it if they would have a different opinion. For all intensive purposes, they are great cars.
Not knocking the comment, but the phrase is "for all intents and purposes" fyi.
they should include autopilot and fire deaths in their results
This is pretty cool, but you look at how valued Tesla is and the tiny earnings it makes next to the size of the projected earnings that spaceX and starlink are likely to make...
spaceX and starlink could end up being absolute MONSTERS of companies. Musk is just one incredible guy, despite his personality quirks.
spaceX and starlink could end up being absolute MONSTERS of companies. Musk is just one incredible guy, despite his personality quirks.
Anything else that stands out?
Are there other examples of big tech companies that doubled their revenue over the last year?