Elon Musk: Tesla May Be Overvalued Today, But I Think It'll Be Worth More In 5 Years (cnbc.com) 251
In an interview with Kara Swisher via a New York Times podcast, Elon Musk said he thinks Tesla will be worth more than it is today in 5 years. CNBC reports: "Some critical mass of the market has concluded that Tesla will win, I guess," said Musk on the stock's increases. "I've gone on record already saying the stock prices have been high, and that was well before the current level. But also if you ask me, do I think if Tesla will be worth more than this in 5 years? I think the answer is yes." In May, Musk tweeted that Tesla's stock price was "too high," which sent it down 12% that day. However, since he made those remarks, shares are up almost 200%.
In the wide-ranging interview, Musk also said, "Tesla at this point is not in mortal danger, as it was, say, three years ago." He added, "The thing that Tesla has been able to achieve is get to volume manufacturing and have sustainable positive free cash flow. From a car company standpoint, that is the real achievement of Tesla." "Tesla should be measured by how many years we accelerate the advent of sustainable energy," said Musk.
In the wide-ranging interview, Musk also said, "Tesla at this point is not in mortal danger, as it was, say, three years ago." He added, "The thing that Tesla has been able to achieve is get to volume manufacturing and have sustainable positive free cash flow. From a car company standpoint, that is the real achievement of Tesla." "Tesla should be measured by how many years we accelerate the advent of sustainable energy," said Musk.
Oh sure (Score:5, Funny)
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Good I'd do the same. I have started multiple (small) companies and learned the hard way not to have short-sighted morons invest in my company and drive it away from its goals and into hell. A lot of people don't realize that people don't just have companies to make short term cash for business suit fools. Does Elon really need some paper net worth increase, or does he want to do amazingly cool stuff? If idiot non-STEM background investors own massive chunks of the company they will exert control as shareho
then why doesn't he buy it back? (Score:2)
he is linked to short term next quarter thinking as a public company.. if its really that important why not buy it back private?
Dell did, and saved the company.
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You've hit on a very basic point that many who hate billionaires do not understand...
Not all billionaires are the same. You can't just look at the theoretical value of their companies and go "let's tax that, he has the money after all". Most billionaires aren't billionaires because they sleep on cubic meters of 1000 dollar bills, Breaking Bad style.
They are billionaires because if they theoretically sold all their assets right now at the current price (given the volume an absolutely impossible undertaking a
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Whether Elon Musk attempts to sell those share holdings in Tesla is pretty arbitrary at this time, the problem is all the other car manufacturers now jumping into the electric car market, generating a whole lot of competition. Tesla now has a factory in China able to produce lots of cheap cars and readily able to expand that factory to produce even more electric cars.
High speed rail will also be electric, induction current, from a shielded middle rail probably, depends who gets that. The US government is st
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High speed rail will also be electric, induction current, from a shielded middle rail probably, depends who gets that. ...
Why would you use induction instead of a overhead line (catenary).
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If idiot non-STEM background investors own massive chunks of the company they will exert control as shareholders and vote against doing long term advanced projects
That is not how share companies work.
Re:Oh sure (Score:5, Interesting)
Indeed. The reporter was pushing him to pump battery day and pump the stock, and he was having none of it. At one point, he actually said, "My premise is never to try to convince people why they should invest in Tesla. Sell your stock! I don't care; what is the point of this podcast?" Sounded exasperated with her. The part about the current value vs. the future value came later in the interview.
This came after this conversation:
Elon: (responding to a question that was clipped out) "This is something that the average person really has no idea about whatsoever. Not that they're stupid. Smart people on Wall Street have usually not the faintest clue about manufacturing and how difficult it is. They think that once you come up with a prototype, well, that's the hard part, and everything else is trivial copying after that. It is not. That is perhaps one percent of the problem. Large scale manufacturing, especially for new technology, is between 1000% and 10000% harder than the prototype. I would really regard at this point prototypes as a trivial joke."
Kara: "Mmhmm."
Elon: "The press coverage of this event was sad."
Kara: "OK, tell me why."
Elon: "Most of the press takeaway was...."
Kara: "No battery."
Elon: "A sad reflection of their understanding, really."
Kara: "Well, explain it for them."
Elon: (exhasperated) "... I mean, I'll try, but I'm also not trying to convince people that much. The results will speak for themselves. The cells we're talking about, we've produced many of them. We've had cars driving with those cells since May. My premise is never to try to convince people why they should invest in Tesla. Sell your stock..."
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Musk lies to investors. If he doesn't care about them as he claims then why does he lie to them? Why even bother with things like Battery Day, which is entirely for investors i.e. "give me money and in 3 years this is what we will have". It's not about selling cars today.
Maybe you could argue that the lies about Full Self Driving are for the benefit of customers, who are getting a bit fed up after waiting for 4+ years on delivery with their cars coming off lease/finance. But most of it is clearly aimed at g
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Re: Oh sure (Score:4, Informative)
Those would have to be disclosed 6 months in advance. You should be able to check on it.
Comment removed (Score:4, Insightful)
Re:Bubble stock. (Score:5, Insightful)
How many battery electric vehicles has Toyota sold?
ICE cars are doomed. Lots of jurisdictions have ordered that no ICE cars are to be sold after 2030, 2035. What is Toyota to do then? They'll be playing catch up while Tesla has a 10-15 year head start. ICE cars are obsolete technology.
(People have been saying (for years) that the "majors" will eat Telsa's lunch. They are sleeping while Tesla keeps improving.)
Comment removed (Score:5, Insightful)
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There simply is not enough raw materials to make enough batteries right now for every new car sale. But using a hybrid you can get 10 times as many battery boosted cars as 1 fully electric car.
10 to 15 years is a long time for the big manufacturers to catch up. Once they do game over. Tesla stock will become like current big three US automakers. Especially if they don't get that fit and finish prob
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I don't really understand the value in what you are saying.
It doesn't count to have a car that is more expensive than an equivalent hybrid, with less range as well.
You have to do the total cost of ownership. From my understanding, the electric cars win out on having a much cheaper fuel source and on having extremely simple maintenance. A hybrid car can be cheaper, but doesn't it still have the costs of maintaining an ICE? That would mean that for the equivalent level of model it should come out more expensive in the long term, especially if it also had the battery system as well?
There simply is not enough raw materials to make enough batteries right now for every new car sale. But using a hybrid you can get 10 times as many battery boosted cars as 1 fully electric car.
What's the benefit of a batt
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I think it's a bit of a crap shoot.
Sometimes, the person who gets a lead holds the lead and no one else can catch up.
Other times, the person in the lead pays 100x as much for everything and then after the hard stuff is done, everyone easily catches up and passes them.
I don't know how Tesla will play out. Right now, I think my next car will be a Tesla tho.
I think a Tesla that costs as much as an ICE car and has 2/3 the cost of ownership will kill gasoline cars. So the window for gasoline car manufacturers
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If Tesla would put out an electric Sports Car, that looks great, 2 seater, and at least somewhere in the Corvette ballpark range, I'd be in the market for one too.
I have no interest in a family sedan.
If they had something like this as a flagship, it might get the general public interested more in them.
No, not everyone buys it, but like Vette does for Chevrolet, it draws the average car buyer's attention to the brand more.
I'd be interested in a 2 seate
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Tesla Parts Catalog [tesla.com]
Can't buy all parts, but you can buy most of them. Only things like computers and HV require Tesla certification for garages to buy them. Most parts are rather plug-and-play, and surprisingly simple. Repair by third parties under the maintenance period does not void the warranty, but any repairs made incorrectly or using third-party parts does. See Page 9, Voided Warranty, paragraph 2 [tesla.com] (beginning with "Although"). For any vehicle, whether in or out of warranty, modifying HV components (p
Re:Bubble stock. (Score:4, Interesting)
FYI: the battery pack of the long-range Model 3 is only 6 times heavier than that of the Prius, and the short-range version is only 4,7 times heavier. Despite having ~17x and ~12x more energy, respectively.
One of the problem with "scaling down" is that it doesn't work the way most people think. The smaller your battery pack, the more power output and faster charging on a per-kWh basis you have to do, and the more cycles you put it through. This means you have to use more expensive, less energy dense, heavier cells, and have large amounts of excess unused buffer capacity to avoid the slower charging / more damaging cycling near the extreme ends of the charge range.
Raw materials prices right now are cheap because mining production has outpaced cell production. Of course, one of Tesla's main goals is to reverse that trend with their new 4680 line, which is forcing them to get into mining as well. But a key aspect is that cathode mineral mining (the slowest to scale) can't limit total global cell supply, because LFP exists, and in case you didn't notice, iron mining isn't exactly some small-scale niche industry. Tesla is also switching from battery-grade nickel sulphate to class-1 nickel metal (which is in glut), and from graphite to metallurgical silicon (which is 10x more common than class-1 nickel).
Point of note: if someone has a head start and moves faster than you, you're not catching up.
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I think Toyota really only cares if they're selling a lot of Priuses.
Re:Bubble stock. (Score:5, Insightful)
Yeah people have been saying for years that the car companies sell millions of cars. Whenever people want to buy millions of battery cars, they'll sell them millions of battery cars. Right now, people buy thousands of battery cars and millions of gas cars. Toyota and Volkswagen are in the business of selling millions cars, not thousands.
And for years Musk fans have been saying that people will be buying millions of battery cars nine months from now.
Maybe one day people will buy millions of battery cars. The problem which Musk pointed out is that Tesla's stock price is appropriate for a company that *already is* selling millions and millions of cars, and has a stable track record of doing so for decades. That in no way describes Tesla. Maybe in 30 years they'll be the world's largest car manufacturer. *If* that happens, 30 years from now the company will be worth $350 billion. Thing is, Tesla's *current* stock price is $390 billion. People are paying $390 for what might possibly be worth $350, in thirty years.
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You're probably right. BEV's are currently marketed over hydrogen fuel cell cars with the argument that less energy is lost in the total energy supply-chain. Which is absolutely true, but in a clean-energy world it's ultimately an irrelevant argument.
There are some other small issues too, like keeping hydrogen chargers pressurized, cell safety, etc. But those are likely easily overcome when the demand is there.
Meanwhile we see big industry quietly move ahead with hydrogen. Mostly without any government subs
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Re:Bubble stock. (Score:5, Informative)
1) EVs don't take "hours" to recharge. Today's Model 3 LR, on a V3 supercharger, adds 2-3 hours of driving in 15 minutes (depending on how fast you're driving, in what conditions, what your SoC is when you stop, etc). We're already past the "bladder and stomach" cutoff point, where unless you're doing a cannonball run, your car tends to spend more time waiting for you than you do for it. And that's only going to keep improving with the next generations of chargers and batteries.
2) FCVs are more expensive, heavier, slower, shorter range, have shorter lifespans, consume far more energy, use a far more expensive fuel, far more dangerous fuel (even if just from the pressure alone), still require batteries, use much rarer minerals, are technologically advancing more slowly, AND in many cases (for example, very large or very high pressure tanks), fueling times can also be surprisingly long (~60kg at ~70MPa = ~45 minutes, due to heating; there are viable technological solutions to this being worked on, but they're immature).
FCVs are a total non-starter. They are, and will continue to be, a shiny coin to a magpie.
Re:Bubble stock. (Score:5, Interesting)
And yes, FYI, most people vastly underestimate how long they spend at stops on road trips, and how frequently they make them. Last time I timed a trip in an ICE vehicle, we were 5 adults and two children to a car. Everyone was encouraged to go to the bathroom before we left, but we still had to stop an hour and a half in. Everyone rushed the stop, with some people buying food to-go while the others used the bathroom. It didn't "feel" like a long stop at all.
Total time, from when we got out of the car to when we got back in? 18 minutes.
(It's also worth pointing out that the charge time for the first leg of each trip is "zero". E.g. if given your car and driving conditions you'd need to stop 3 hours after your first charge and every 2 1/2 hours thereafter, and you go on a 5-hour trip... that's not 5 / 2,5 = 2 stops, or even 5 / 3 = ~1,7 -> 2 stops, but rather, 1 stop. And a longer-than-five-hour-drive is not exactly an everyday occurrence for most people.)
All stock is valued based on future returns (Score:5, Insightful)
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Expected earnings in 5 years 2 billion per year; current earnings 0 risk of failure 75% before earnings. Expectation value of 20 year earnings = 7.5 billion
Move forward five years, company succeeds exactly as hoped for
Expected earnings in 5 years 2 Billion per year; current earnings 2 billion risk of failure 0% (for simplicity). Expectation value of 20 year earnings = 40 billion.
If you currently valued such a company at 20 billion then it would be overvalued. If you valued the same company at 20 billion
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Those big manufacturers are all very slightly differentiated from each other and always have been. I drive a car made twenty years ago and if I borrow a friend's car made last year there's really very little to remark on (esp if I have my cell phone with me which already has the GPS and audio features). Lots of things marginally improved, but nothing that really makes me overly care which vehicle I'm driving.
A fully electric, autonomous vehicle, however, is not a marginal improvement. It's the difference b
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Yeah people have been saying for years that the car companies sell millions of cars. Whenever people want to buy millions of battery cars, they'll sell them millions of battery cars. Right now, people buy thousands of battery cars and millions of gas cars.
There were 2.2 million battery cars sold last year. That's 1 in every 40 cars sold. That's worldwide. An average that includes San Francisco,CA but also Lagos,Nigeria.
Europe was close to 10% plug-in car share in the last quarter. China is over 5% for the past two years.
Toyota and Volkswagen will need to pay attention to this trend if they still want to be in the business of selling millions of cars
Maybe one day people will buy millions of battery cars. The problem which Musk pointed out is that Tesla's stock price is appropriate for a company that *already is* selling millions and millions of cars, and has a stable track record of doing so for decades. That in no way describes Tesla. Maybe in 30 years they'll be the world's largest car manufacturer. *If* that happens, 30 years from now the company will be worth $350 billion. Thing is, Tesla's *current* stock price is $390 billion. People are paying $390 for what might possibly be worth $350, in thirty years.
This is correct. At some level, this is what Musk has been acknowledging in the article - that they're not ther
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Demand for battery electric vehicles outstrips supply at the moment. The bottleneck is mostly battery supply. Long waiting lists on many popular vehicles.
Things will get better as more battery manufacturing capacity comes online and prices fall. Remember that most of the action is on affordable models, not Teslas and other high end halo cars like the Taycan or luxury barges like the Turd. At least in numbers, those expensive cars probably have better margins.
Re:Bubble stock. (Score:5, Interesting)
Whenever people want to buy millions of battery cars, they'll sell them millions of battery cars.
That's funny. It seems like the other majors definitely all have electric cars on the market, yet for some reason it's only Tesla that is getting orders that keep them permanently backlogged.
I mean it's not like the other car makers are sitting around. If anything a conspiracy would point to them making intentionally shit electric cars. Either that or car makers actually think that Tesla is ahead: https://electrek.co/2019/09/11... [electrek.co]
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> majors definitely all have electric cars on the market, yet for some reason it's only Tesla that is getting orders that keep them permanently backlogged
Another way of saying that is "only Tesla is incapable of actually producing cars". Yeah Toyota actually managesnto make cars available. Which is a coarser way of saying what Elon Musk has said - they want to license their parents to car manufacturers because Tesla's attempts at manufacturing at scale have been "hell".
Patents, not parents (Score:2)
Hopefully Musk isn't selling his parents to GM.
Sell the patents, keep the parents.
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Volkswagen already is ramping up their e-car lineup, e-up, the ID.4 and Porsche ...It is just that Tesla gets a load of press, but faxct is, Volkswagfen with their ID models are in a similar situation as Tesla, their cars are on backorder!
Re: Bubble stock. (Score:2)
VW is the most enlightened of the majors but their slowness in getting to market shows how difficult it is for ICE makers to switch to EVs. They need to throw away all of their hard earned ICE expertise and start from scratch with EVs
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But VW didn't. They did what they excel in with ICE cars: building a platform on which a range of cars can be built.
Their ICE platform MQB has over 20 models in 4 brands running on it. A factory can switch between different models in a short time. This gives them a lot of flexibility in regards to models and production capacity.
Now VW has developed their new electric platform MEB. On this platform they released 5 models THIS YEAR. Now VW has more electric models based on MEB than Tesla currently produces. A
Re: Bubble stock. (Score:2)
Anybody can build a roller platform. The hard part is the drivetrain and software and that is what's holding them back.
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Maybe they'll get to 1M cars by 2035
that will happen in 2022. 480K in 2020, 750K in 2021, 1.2M in 2022.
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They'll get to 1M cars/yr around FY '22, give or take some minor X-axis shift on the exponential curve.
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since California just passed a law that by 2035 all cars must be EVs
No such 'law' was passed. Governor Newsom signed an executive order (and the legality of that is in question). That executive order could easily be overturned by the next governor.
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Well the german car manufaturers are jumping on the e-car train big time the french as well atm... and the cars are selling well.
So Tesla soon has real competition or it is starting.
Toyota is pretty much the only one who does not see it.
As for Musk.. the usual stoner big mouth!
Re: Bubble stock. (Score:2)
Only VW shows signs of EV awareness and they are having trouble getting anything into production. Hopefully other majors will wake up but it's not looking good. Elon has said all along that his goal is to transition the world to EVs and to show other automakers the way. He's been surprised that they have been so slow on the uptake.
Re:Bubble stock. (Score:5, Insightful)
Whenever the rest of the automobile industry decides that there are enough battery-car customers to matter, Toyota and Honda will eat Tesla's lunch.
Indeed -- that is Musk's goal. He doesn't want Tesla to be the owner of the lucrative electric-car market niche. He wants Tesla to be the company that convinced the entire auto industry to go electric.
Just like Nokia ate Apple's lunch? (Score:5, Insightful)
Disruption is largely a software phenomena. (Score:3)
it was the disruptive new players (Apple, Android) that dominated. That's how disruption works usually, the cycle has repeated dozens of times.
It actually isn't. That only applies for easy industries. Software is an easy industry as are phones. You can outsource the manufacturing easily and most of the effort is in hardware and software design. Try doing that with something with safety standards and the need to actually work.
Phones have minimal regulations. They just have to please their customers, not explode, and not interfere with any existing communication channels. My Pixel 2 was an awesome phone, died after 1.5 years of me taking e
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That's called being silly. Tesla isn't a company consisted of a Kickstarter campaign and the obnoxious buzzphrase "disrupting a billion dollar industry". They produce half a million cars a year with new factories being built, and the reason they posted so many losses for so many years is they spent billions on battery production and a charging network. Even if a giant like Toyota or Volkswagon decides to go all-in on electric vehicles tomorrow, there's no check they can write that will get them caught up t
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He wants Tesla to be the company that convinced the entire auto industry to go electric.
... and sells parts/expertise to all those players who will compete in all the market segments that are not profitable enough for Tesla.
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Tesla is the #1 electric car manufacturer. ICE vehicles are a sunset industry their days are numbered no matter how many they sell today. Tesla is selling cars as fast as they can make them, you don't think the competitors would want a slice of that pie and to get away from buggy whips? I think everyone is making EVs as fast as they can but they just don't have the battery manufacturing that Tesla does, nor do they have the supporting infrastructure.
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Tesla cannot be bought (Score:2)
With such a high market cap and no clear way to translate that into revenue, we will never see a company take over while a purchase offer over $400B would be required just for the equity value of outstanding shared, and that's not taking cash and assets into account. Obviously if TSLA tanks then a purchase starts to become possible, but if it keeps moving up then I don't see that as a possibility.
What is more interesting is even if Tesla flounders and never managed to figure out how to make trillions sellin
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Right. And that's even worse for selling a company. If TSLA is worth $4T instead of $400B, it makes my equation above even more extreme.
Re:Bubble stock. (Score:5, Informative)
Tesla will sell around 90K cars this year.
Tesla will sell around 500K cars this year. 90k is the per-quarter figure and before the Chinese factory ramp-up.
Try again (Score:3)
Re:Bubble stock. (Score:5, Insightful)
Whenever the rest of the automobile industry decides that there are enough battery-car customers to matter, Toyota and Honda will eat Tesla's lunch.
Nah.
Whenever the rest of the automobile industry decides to get serious, they will have to: build factory lines that can make electric cars; train their line workers to make electric cars; set up supply chains for the special parts and raw materials that an EV needs and an ICE car doesn't; train their service staff to fix the new cars; and above all: need a source of enough batteries to build all the cars, at a price upon which they can make a profit.
That last one is the real problem. I will take Toyota and Honda et. al. seriously if I see them investing in battery factories. Tesla's "Gigafactory 1" in Reno, Nevada is making an estimated 80 GWh [electrek.co] of battery cells per year, and Tesla is working on other factories. Note that Tesla gets all the output from all its battery factories. (I'm not sure if it's still true, but a couple of years ago Tesla produced over half of all lithium ion batteries in the world!)
Where will the legacy car makers get enough batteries to "eat Tesla's lunch"? How much will they pay for them? Can they build reliable cars with them, or will their first cars fry their battery packs when you charge on a hot day?
Tesla makes a good profit on every car they sell. Can the legacy auto companies make enough money that they can even afford to "eat Tesla's lunch"? If they lose money on every EV, that's not eating Tesla's lunch.
So when the other companies build the needed factories, train all their people, somehow have a source for over 80 GWh of batteries per year, and can make even approximately as much per car as Tesla makes, then maybe they can start to compete with Tesla. Of course, by the time they do that, Tesla will be shipping their next iterations of technology.
Tesla recently revealed (on "Battery Day") that they have new battery technology in the pipeline that will reduce parts count, reduce weight, and reduce cost (by about 56%!) while increasing energy density. Tesla doesn't have this in production yet, but nobody else has anything remotely like it.
So no, the legacy car makers can't just snap their fingers and take away Tesla's market share. They can't even compete yet and I haven't seen any signs they are serious yet.
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They do already have these new batteries in production for testing.
"Elon: The cells we're talking about, we've produced many of them. We've had cars driving with those cells since May."
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Tesla, as every automaker, has the rights to emit a certain amount of CO2 per car. However all their cars emit zero CO2, so therefore they've got a lot of unused carbon rights.
They sell those rights to traditional automakers whose cars emit too much CO2. By buying these rights they avoid even higher fines.
Without selling those rights, Tesla would make a net loss.
Source: https://www.forbes.com/sites/g... [forbes.com]
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Re:Bubble stock. (Score:5, Informative)
TSLA's P/E ratio is over a thousand. Tesla will sell around 90K cars this year. Toyota will sell around ten million.
You still quote the 2017 numbers. They are growing, 250K in 2018, 360K last year, probably 500K this year, despite COVID. They are building two new factories and extending a third one, that would increase their capacity.
Toyota production numbers have been flat or decreasing all of this time.
Tesla already matches Jaguar - Land Rover in sales and production. And it's no longer crazy to think about Tesla overtaking BMW and Daimler in the next few years.
Then you have things that other car makers don't have. The technology assets - software, battery techology, driving automation, and the potential of being a player in the energy market.
The P/E is too high, indeed; but Tesla is no longer a rounding error, and the competitors are taking it very seriously.
Re: Bubble stock. (Score:2)
There are perhaps other aspects to consider as well: https://www.cringely.com/2020/... [cringely.com]
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Traditional ICE manufacturers are making the most of their tooling, investments and patents.
Tesla and electric cars are a tiny blip in their market at the moment, barely worthy of attention. Before 2035 they have to make everything they can because then ICE sales are banned and the whole industry has the reset button pressed on it.
All those patents for engines, emission control, drive trains, etc. are then useless and all the patents for batteries, electric motors, etc. take precedence.
In that regard Tesla
Re:Bubble stock. (Score:5, Interesting)
Tesla sell sold over 90,000 cars in one quarter of this year. So you're off by a factor of 4. Additionally, that's basically just with one factory in California fully up to speed. There are 3 *additional* factories being built at this moment, and Tesla sells higher end vehicles on average than Toyota plus is more vertically integrated (capturing more of the value chain). Tesla is growing in capacity at a very fast rate compared to any of their competitors. And Toyota and Honda are both still deeply invested in hydrogen fuel cell tech, which is a massive dead-end. They're not that concerning for Tesla.
Which isn't to say Tesla is valued properly. They're about 4 times as much as makes sense to me. But I suppose that's what growth in an otherwise-stagnating market will get you: people don't have anywhere better to put their money, I guess.
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It is not just about the cars. The megapacks batteries to handle peak load are probably a underestimated part of their business.
Re:Bubble stock. (Score:5, Informative)
Nice confusion of "market cap" and enterprise value. FYI: while Tesla is the highest market cap automaker, Toyota has a higher enterprise value than it. The difference is that bondholders own most of old-school automakers like Toyota, while stockholders own most of Tesla; Tesla has very little debt, while others are drowning in it.
If by 90K you mean 500k, then definitely!
Tesla delivered 90K in Q2 alone, a quarter where their main factory was shut down for half the quarter due to COVID, and the entire global supply and delivery chains were disrupted.
Ah, the good 'ol "Market caps should be a lifetime achievement award for how many widgets you make" theory.
Quiz time: If company A makes 10M widgets per year and sells them for $10k each with a 1% profit margin, and company B makes 100k widgets per year but sells them for $100k each with a 20% profit margin, and all else about the two companies is equal, should company A be valued at 100X that of company B, because it makes 100x more widgets? Nope - B should be valued at twice that of A!
The simple facts are that Tesla sells higher-ASP vehicles, with higher margins.
It's not about "how many widgets you make", and more to the point, it's not about today regardless. People look at trends. Toyota has been a joke with respect to electrification. Even Nissan, which had spent $5,6B on electric vehicles by fall of 2011 [greencarreports.com], can't keep up with Tesla. There's this notion that old-school automakers somehow will just magically beat Tesla "when they decide to try". Well, they've kept trying, and they've kept failing. Old-school automakers are primarily slow-moving integrators of parts from third parties, the big ones usually having low margins, with inhouse assets being focused around engine and transmission production and producing ICE platforms out of said third-party parts. Guess what doesn't help you with EVs? Engines, transmissions, ICE platforms, and even many existing third-party parts. Guess what you actually need? Rapid closed-loop iteration. Oh, and cash, but guess who it's by far easiest for to get cash today? Tesla. They just recently raised $5B (enough to build ~2,5M/yr EV production capacity) for under one percent of the company. Think GM can do that? Keep dreaming.
Tesla grows sales at an average ~50% CAGR. Most other automakers are in decline, and built around products that are on their way to extinction. Nobody wants to own a dying buggy-whip manufacturer.
And here we are pretending that Tesla is "just an automaker", when it's not even their fastest growing business line (that'd be Tesla Energy, particularly grid-scale storage, which is basically crushing the short-term peaker market, even at today's ridiculuously-inflated-due-to-cell-supply-constraints Powerpack/Megapack costs). Tesla is highly vertically integrated (retains the profits of its supply chains), also owns the "gas stations" (which form a virtuous circle for its cars), is expanding insurance (also forming a virtuous circle for its cars, as data access allows it to better determine who's a good driver and to offer them better rates than other insurers could), solar mandates could potentially turn solar roofs into a virtually essential part of all new home construction (as "solar roof" will virtually always be cheaper than "roof plus panels on top of it"), etc. Not even talking about autonomy (as I'm not a timeline optimist about that), which alone would create a valuation measured in multiple trillions. Or product lines not yet started (home heating/cooling, powersports, electric aircraft, etc).
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90K vehicles is for a quarter (Q2 2020 specifically).
Tesla sold 367,500 vehicles in 2019.
BMW sold 324,826 vehicles in 2019.
And no other company has the charger network.
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TSLA's P/E ratio is over a thousand. Tesla will sell around 90K cars this year. Toyota will sell around ten million.
Whenever the rest of the automobile industry decides that there are enough battery-car customers to matter, Toyota and Honda will eat Tesla's lunch.
Toyota is one of the few automakers which makes almost as much [detroitnews.com] per vehicle as Tesla does [zaginvestor.com]. So sure, Toyota will do pretty well. But Tesla makes on average even more than Toyota does, really only Porsche collects more profit per vehicle.
Better diversify (Score:2, Insightful)
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Sure. But as an individual, I can't implement your recommendations. Mass transit doesn't come to where I can afford to live and I also can't afford to live close enough to work to bike. The money just isn't there.
In the end, what you're asking for has to be more regulation combined with more taxes to support transit (rather than, as we have now, taxes to support individual cars). We need to be honest about this.
In the meantime, electric cars is a sensible response for individuals who can afford it (as I
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Sure. But as an individual, I can't implement your recommendations. Mass transit doesn't come to where I can afford to live and I also can't afford to live close enough to work to bike. The money just isn't there.
Lean on your local elected officials. If y'all have roads that have more than two lanes on a side, you have the money for solid mass transit. Once you have two lanes on a side, unless you're reserving those lanes for bicycles, transit, carpools or turns, you're just moving the traffic jam around at the cost of $8-16 million lane-mile
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In the meantime, electric cars is a sensible response for individuals who can afford it (as I hope to in, maybe, 5 or so years).
If you're looking for a green way to keep driving, upcycle an older vehicle. If your'e going from the last 20 years, most vehicles on the road haven't improved significantly in fuel economy, and the raw material cost is mostly sunk. Meanwhile, Tesla sponsored a coup in Bolivia [counterpunch.org] because they're trying to reign in the environmental disaster that is lithium mining.
I'm not saying electric vehicles aren't green. The grid based ones are (aaand we're back to mass transit vehicles), a fullsize car that takes enou
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If you're looking for a green way to keep driving, upcycle an older vehicle.
Only about 1/3 (or less!) of a vehicle's lifetime energy consumption is in production. Switching to an EV makes a massive difference, and does not actually cost very much energy all things considered.
I'm not saying electric vehicles aren't green. The grid based ones are (aaand we're back to mass transit vehicles), a fullsize car that takes enough battery to power a whole fleet of electric pedal assist bikes? That's just rolling coal with extra steps.
Only if you assume that the driver would/could ride a bicycle instead of driving, which is an unsafe assumption. Most wouldn't or couldn't.
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Only if you assume that the driver would/could ride a bicycle instead of driving, which is an unsafe assumption. Most wouldn't or couldn't.
Or transit. If either or both is just as available as driving, people do switch. Because driving in the city sucks expensively. The Netherlands went through this in the 1970s, they collectively realized this and did something about it. Go back to before that and you'd be hard pressed to tell Amsterdam from Los Angeles in a side-by-side shot.
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Only if you assume that the driver would/could ride a bicycle instead of driving, which is an unsafe assumption. Most wouldn't or couldn't.
Or transit. If either or both is just as available as driving, people do switch.
Now you're moving the goalposts from comparing to bicycles to comparing to buses (or whatever.) And that's very different. You went from talking about vehicles much easier to build than cars to vehicles which are substantially if not dramatically more difficult. It's also only really a benefit if you are talking about rail. Buses do basically all the in-city road damage. That means environmental costs as the roads are ripped up and replaced far more frequently than if you don't have buses. It also means imp
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Neither does building more lanes for cars.
It does, but you need to plan for the growth that will result from building more lanes.
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Musk has tried to do something about traffic but so far it's all been flops. Hyperloop turned out to be impractical and unlikely to be profitable, and the tunnel idea with cars on sleds seems to have been abandoned for similar reasons.
If he really wants to do something about traffic then he should be promoting technology to help us work remotely, or at least from satellite offices.
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Huh? So far they've built a test tunnel... and it was a success.
Then they built the first leg Vegas loop... and while it's not opened yet, they've finished the tunneling well ahead of schedule and are just finishing up the end stations.
Exactly what have they tried to do that turned out to be a "flop" in implementation? The only things that have "flopped" have been out of their hands (e.g. Chicago backing out of their contract when political power changed hands). Or are you d
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The Vegas tunnel is just an ordinary tunnel. I'm talking about the new technologies he has been hyping.
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If he really wants to do something about traffic then he should be promoting technology to help us work remotely, or at least from satellite offices.
So, Starlink then?
Elon Musk is very impressive. (Score:3)
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*COUGH* SpaceX *COUGH*.
Re: Elon Musk is very impressive. (Score:3)
Re: Elon Musk is very impressive. (Score:2)
Have to start somewhere. The power grid is not all fossil fuel. Most of it is renewable energy or nuclear (which is the best and cleanest).
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https://www.rollingstone.com/c... [rollingstone.com]
Market signal (Score:2)
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Yep (Score:3)
Batteries are the real investment. (Score:2)
Both cars and self-driving component are nice but the real value in Tesla is that they are forcing the battery market to evolve very quickly. A good energy storage medium (batteries in this case) is a key component to a non-polluting society. An evironmental reckoning is coming and without better batteries we cannot avoid the worst of it.
I have a beautiful Dutch tulip to sell you (Score:2)
No cash (Score:2, Interesting)
and have sustainable positive free cash flow.
False. Tesla does not have free cash flow. It is still losing money. The one and only reason Tesla had a small profit was because it is selling carbon credits [cnbc.com]. From the link:
According to its earnings report, Tesla's total revenue hit $6.04 billion for the quarter, with about 7% of that, or $428 million, coming from sales of these credits. To put that in perspective, regulatory credit sales were greater than the company's free cash flow and amounted to four times Tesla's $104 million of net profit for the quarter.
This does not include the billions in government subsidies, here and in other countries, Tesla receives (i.e. the taxpayer is footing the bill). This article from two years ago [thestreet.com] breaks down the subsidies and whatnot Tesla received to show it had a "profit".
Still further, Mr. "Communism is
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False. Tesla does not have free cash flow. It is still losing money. The one and only reason Tesla had a small profit was because it is selling carbon credits [cnbc.com].
You're ignoring the other side of that particular coin. If you take away Tesla's ability to sell carbon credits, then you also take away other car companies' ability to BUY those credits. And without that ability, they all fail to meet emissions guidelines. That means that they'd have to pay big fines - much bigger than how much they pay for ZEV credits - at which point they would no longer be profitable.
Other Automakers Paid Tesla a Record $428 Million Last Quarter [caranddriver.com]
Re:No cash (Score:4, Insightful)
Tesla is
. The US government literally pays EV buyers $7500 to not buy from Tesla. Tesla could be charging more if they had a level playing field, to the tune of about 1 1/2 billion dollars in extra revenue per year. Tesla is facing a massive headwind due to the US's credit structure, and thriving regardless.
As for the other, much smaller automotive credits (primarily in Europe), they're available to anyone who makes EVs. Want some? Make EVs. That's why the policies were established. In general, in this too, most other automakers get way more out of their EV sales than Tesla does. CARB credits for example usually go for pennies on the dollar in the open market because of a glut.
Like essentially everyone, because some countries (like Norway for example) were basically making it financial idiocy to not furlough any worker you can do without, due to the incentive structure they offered. Note that these in general weren't "we just hand you cash" deals, but rather, "you let the person stay home, and you don't have to pay severance or unemployment benefits - we'll pay them instead". Designed to compensate for the fact that COVID legal restrictions were preventing many companies from operating aspects of their businesses (including Tesla).
"This endlessly repeated garbage which won't die..."
Words have meaning. Tesla does have free cash flow and profits. It's other automakers that are drowning in the red right now.
Yes, if you want to pick out this quarter, free cash flow was approximately equal to regulatory credits, in the middle of a pandemic with their factory shut down for half the quarter. By contrast, in Q4, before the impact of the pandemic, it was 7,6 times higher. I'll also point out that EBITDA was nearly three times higher than regulatory credits, and margins exluding regulatory credits is over 17%. In Q2, in the middle of a pandemic with their factory shut down for half the quarter amid global supply chain and delivery disruptions.
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That's true but when you do need to travel, it's better to have EVs than ICEVs.