Back in the day, there was an inherent understanding that a stock price is supposed to reflect "the fundamentals" - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least tried to be profitable.
But if you look at the share price of like, Tesla - it's completely insane. There is no way your slice of the company is worth that much. The stock market has been behaving like a pyramid scheme, where everyone assumed there will be more money entering than leaving any given stock.
Tech is a pretty egregious sector because of how many business models basically boil down to "we don't actually need to make money if we have a desirable stock". In the long run, I don't think we'll be worse off if the next generation of software companies actually focuses on making products people want to buy rather than play games with DAU and user acquisition and etc.
Tesla made more money last quarter than Ford, GM and Toyota. Toyota made 10x the number of cars as Tesla. Tesla is growing vehicle production 50% YoY, while growing profit even faster (having barely hit economies of scale yet). Tesla has a backlog of orders approaching a year in many regions. Everyone else is losing money on their EVs and can't make them in volume production, can't find the batteries for them, because they started 10 years too late. That's the reason for Tesla's valuation, it's pretty simple.
Whether you believe the competition will catch up, or Tesla will fail for some other reason is besides the point. I'm just trying to show that the current valuation is not "insane" given current trends, there's a very real logic to it and not (completely) FOMO.
Correction: Toyota's earnings were higher than Tesla, it was operating income that was higher (remembered it wrong).
I'm not sure where you are getting those numbers from. Ford had $37b in revenue Q4. Tesla had $16b.
Tesla is an impressive company that's managed to finally be profitable. But currently their market cap is higher than all other auto manufacturers combined.
> Everyone else is losing money on their EVs and can't make them in volume production, can't find the batteries for them, you do the math.
That's the thing, this space is getting incredibly crowded this year. Kia/Hyundai, Ford, and VW are all putting out very impressive mass-market EVs that are selling like hotcakes.
> I'm not sure where you are getting those numbers from. Ford had $37b in revenue Q4. Tesla had $16b.
Tesla makes a 27.4% gross margin on that revenue though, while Ford has a gross margin of 4.8%.
> Tesla is an impressive company that's managed to finally be profitable.
Although technically true, this is a little misleading as it implies that Tesla is barely profitable - in reality they have moved from 'finally becoming profitable' to now being the most profitable automaker (in terms of total profit).
Tesla pulls all sorts of accounting tricks to make gross margin appear higher than it actually is. Warranty repairs are apparently done by pixies for free, so is R&D, factory amortization, or service centers
A like-to-like comparison would have Tesla's gross margin at ~18%, which is decent, bu not all that unusual for a premium car brand. Ford and GM tend to have much lower gross margins than VW or Toyota. The latter two are usually in the mid-to-high-teens, while competing in a cutthroat mass-market
I'm not saying they are worth their valuation, I'm just saying you can't exactly claim/imply that they aren't very profitable compared to others in the market they are operating in.
Also remember that they almost tripled profit in the last year, so that PE ratio will be 1/3 if they manage to do that again. Again, I'm not claiming that it is possible, or that that would be a sensible P/E ratio, or that they aren't overvalued, but P/E can change quickly.
I would be shocked if they were able to maintain those margins.
They’ve faced relatively little competition in the EV space until this point and benefited from a shortage juicing prices. As demand eases and more entrants come into the EV space, they will have to lose margin, market share, or both.
> I would be shocked if they were able to maintain those margins.
I wouldn't be. They have fundamental and very broad patents on important things like:
* Pre-heating the battery on the way to a charging stop (enables the battery to accept faster charging without damage on road trips)
* Using motor waste heat for battery heating (increases range while use the above strategy)
* Dynamically adjusting charge rates due to real-time battery conditions (enables charging faster)
Those patents don't expire until the mid/late 2030's. That allows Tesla to force competitors to either pay a licensing fee or use more-expensive workarounds, like different battery chemistries, to match the battery range and charging rate. Either way, it means Tesla is likely to have larger margins than competitors.
I’m not intimately familiar with teslas patent strategy, but to my knowledge they aren’t enforcing any of those patents at all. Every single one of those features are present on competitor vehicles already.
Good. The fact that very specific mechanisms that anyone could have thought of for something everyone understands is beneficial (keeping your battery warm) is patentable to begin with is... not great.
Tesla as a product is a status symbol though. It's naturally going to be a high margin product but the cost means that the market is smaller. For example, the cheapest Tesla currently sells for $61,980 before tax in Canada. The number of people who can drop $62,000 on a car are a lot fewer than those than can spend $30,000.
I for one am very happy with the wider EV push, because I will never need to buy a Tesla. I am sure many other people have similar sentiments. Obviously they are valued for their batteries and solar as well, but their business model and product offerings there are far from a fit for everybody either. It all does not add up to current value, although it is hard to see where the mad dash to buy "the future^TM" runs out of cash to throw at it.
Solar is race to bottom, very low margin competition with Chinese manufactures. Batteries will follow as well. And if that was really going great why did SolarCity get bailed out by Tesla money? I would have expected it to be a massive company as well.
Also, I never really understood robotaxis as something magical high margin business. It is also race to bottom operating with very thing margins. And probably only after huge waste of VC capital.
The way i can see robotaxis getting out of the thin-margin category is to ensure they have proprietary AI etc for the nagivation and safety.
This way, there would be a huge barrier for entry to any competition, and they can keep the price high.
And thus, i would want to see the gov't set legislation to prevent this from happening - the AI and navigation software must be made open (ostensibly for audit purposes...but it would be something that is hard to prove you've copied it?). After all, the thin margins of such a business means benefits to society at large.
Don't confuse market cap and enterprise value, the amount of debt on non tesla manufacturers' books is staggering and strangling the business in other ways
Far exceeds? It is only 5% higher so that's a bit of a stretch ($22.4bn vs $21.4bn).
Plus Toyota had shrunk it's net income from 20/21 to 21/22, while it was a 116.86% increase for Tesla, so it would need an optimistic person to think that Tesla hasn't already overtaken in the last few months since 21/22 year end.
I was responding to a comment which was referencing Q1 2022. Not sure if you missed that or intentionally chose annual figures to shift the goalposts, but either way I agree Tesla is trending toward sector domination and has the potential to prove its valuation as valid. Alas, that has not happened yet, and the market is more complex than net income trajectories. If you firmly believe Tesla will be the EV king in 10 years then so be it, but don't hold your breath.
Gross income is just an intermediate-step in the way towards the bottom line (net and/or profits).
Its strange that the earlier poster wants to talk about gross instead of net on this point. You can almost always tell that someone is being a bit shady with their arguments when they say "income" or "profits" and then backtrack it to say "Oh, I meant gross income".
When you say "income" or "profits", everyone rightfully assumes you mean "net income", the bottom line. The most important number.
No worries, but I'm not sure what notion you're trying to craft with that stat. Toyota had far more revenue and profit. Operating income was lower... so what? Tells me Toyota has been spending money to carve a huge chunk out of the EV sector. Maybe they are late. Maybe Tesla will show that it's current valuation holds. I doubt it.
Looking at a single quarter is not a great way to compare large companies. Even looking at just a single year is not a great way, but for comparison, in 2021 Tesla had revenue of $54 billion and net income of $5.5 billion. In 2021 Ford had revenue of $136 billion and net income of $17.9 billion. Toyota had similar net income as Ford in 2021.
Yes, in the most recently reported quarter Ford lost money. And in previous years Ford has also lost money. But so has Tesla.
Looking at Tesla as a traditional automaker is not fair to Tesla. They don't want to be a traditional automaker, I get the impression they want to be more like General Electric was back 50-100 years ago, making all kinds of things and being rather innovative.
For Tesla it makes way more sense to use the annualized Q4 numbers vs Ford total 2021 because Tesla grows like crazy, that's the whole point. It doesn't matter that Tesla lost money in the past if they're printing it like there's no tomorrow now, with nothing stopping them (except lock downs). Traditional autos ICE sales have been decreasing and will continue to do so, and they're trying to replace it with EV sales they lose money on, and can't make fast enough to replace their lost ICE sales.
Either way, I get it that you can look at the same data and come to another conclusion, but clearly, for a lot of investors they look at the growth, the barrier to entry, the overall trends and that's why Tesla is valued as it is.
And maybe competition? The market is booming but other automakers are starting to have competitive lines.
I want to see what Tesla could have in their sleeve to ever become as desirable as they were the past years... I'm not sure if all this hope in eternal growth of Tesla will hold.
Tesla has nothing on the market for smaller, cheaper european markets, and smaller, cheaper cars like Renault Zoe are getting more and more common sight on the streets. There is no premium pricing on those, but the numbers of cars sold is quite huge.
All of those things can be true and Tesla's stock can also be over-valued. A rapidly growing and popular company doesn't justify any arbitrary valuation.
Indeed, which also begs the question; How much of that growth is driven by the over-valuation?
Particularly as Musk is no stranger to using creative accounting techniques, and sheer speculation, to make his companies suddenly look more profitable [0]
There's also him leveraging his other companies to create growth among each other. Like Starlink being a major customer for SpaceX.
Which could either be really smart, or the making of a really impressive house of cards.
It's not about revenue, it's about valuation. The revenue can be whatever you want, the valuation determines long run returns.
Tesla could be priced at 20x PE or 100x PE and be the same company. Your returns will be vastly different between the two scenarios.
OPs point, which is pretty obviously objectively true, is that valuations far exceeded future yields by any fundamental valuation metric. Tech has been valued as if every company will be a pseudo Monopoly like the FAANG companies, which is very unlikely to be true
Talk to a Tesla zealot and this is the story: Tesla masters self-driving and their robotaxis take over global transportation leading to complete and unending dominance.
It's almost as if none of them has ever run a business or even studied history. It's best not to try to reason with them at this point. Just smile and walk away. Over time they'll figure it out.
I mostly agree, I just feel the need that valuation metrics rely on past values, which aren't as useful depending on the company you're talking about. If a company has net income X, but a new high margin product launching next month that could easily double or triple that, their P/E will look ridiculous but , in fact, be quite reasonable.
The reason to use past values is because they're known. Anything anticipating the future is speculation, and relies on many assumptions. Check analyst earnings estimates for S&P companies for 2008 and you may be surprised what you find.
I fully believe Tesla can be the number one auto maker, and get self driving working to a sufficient extent to be marketable. But what's the upside? A few X at most. To me that risk/reward is pretty awful... many more attractive companies selling at 1x PS and fast growth/smaller market cap that can go up 10x easily over a few years
I don't know about Tesla production forecast and how its stock value can be interpreted but there is something interesting that Marques Brownlee said few days ago about pre ordering cars [1]. Basically, if people that put down the $250k for a Tesla Roadster founder edition to finance the company and for a product they still don't have into Tesla stock the would now have $4.5MM.
Not complaining about Tesla stock price as it has the price that people is willing to pay but to me this is definitely a redefinition on what people care when deciding where to invest.
That's just an extremely simplistic analysis, as if there is absolutely no change in the future. Tesla's forward P/E is currently 51. In a years time it might be 30-35. A year after that, well you can see where this is going. There are definitely a few years worth of growth baked in. But when you compare the valuation to the likes of GM, also consider the possibility that they will simply not survive the transition to EVs. They already went bankrupt once, and sales have declined every year since 2016, please have a look at this graph: https://www.statista.com/statistics/225326/amount-of-cars-so... For a great number of reasons, many traditional OEMs will find the next decade very difficult, and that's reflected in their current P/E.
Take this logic and compare AAPL and RIMM in 2009. This is why people are buying TSLA.
If you think that GM is going to successfully pivot to EVs and that Tesla will not continue to grow 50% a year, that is a fine opinion to have, but if you look at CNBC clips from 2009 you will see very similar comparisons being made around AAPL and RIMM, to what you are saying today.
Can you link a source for the Toyota vs Tesla claim? From what I saw on the reports it looks like Toyota had way more revenue and net income. Maybe I'm interpreting it incorrectly
Even if that all were true (it's not), Tesla could be the most important and revolutionary car company since Model-T era Ford and _still_ be insanely overvalued. Before their recent stock slide they were worth as much as every other major manufacturer _combined_. Their P/E ratio hovers around 300. Mercedes-Benz hovers around 5.
I admit Q2 will be lower than Q1, but Q4 this year will likely see an even lower forward P/E if price remains the same.
Sure, they could be overvalued, I'm just trying to explain why it's valued as it is for those that think it's "insane".
Mercedes hovers around 5 because many investors believe they could go bankrupt if they can't successfully transition to EVs. GM, for example, will very likely go bankrupt (again). Many others as well.
Tesla’s source of profit is mainly from 2 things:
- they’re selling cars that have quality of $25k cars for $60k
- they’re basically a first manufacturer that sells Chinese made cars to western world at scale (all their other operations are either not ramped up or unprofitable)
Power of their brand is insane. But they seem to be mainly raiding it and diminishing it. Music will likely stop one day.
If average Jane, who is not a raving Tesla fan, wants to spend circa $140K on an EV, and she has to choose between the Mercedes EQS 580 and the Tesla Model X, which one would you say is the no-brainer (better value for money)?
That is the future of Tesla. Increasing competition by better products offered by manufacturers with far more experience in manufacturing vehicles, and far superior dealership, service, and parts networks.
At both price points on the link the Tesla vehicle metrics are dominant over the Mercedes vehicle metrics. In fact, the $110k cost Tesla has better metrics than the $130k cost Mercedes: it is faster, accelerates faster, has higher horsepower, and has higher range. If the average Jane has $140k and wants the best value for money it is really hard to see why they would choose the objectively inferior car according to most metrics. They could save $30k and still have a better car.
I really don't understand, at all, how you can conclude that it is a no brainier to get a Mercedes? It seems like a really ridiculous conclusion?
Just clicking around on the site and trying to do the order shows you are wrong that Mercedes is far superior on non-car related things. The dealership model is famous for its failings. Car salesmen have a notorious reputation. The website for Tesla lets you put in a purchase order within three clicks, no interaction with a dealership. The Mercedes purchase workflow had more like seven clicks and it resulted in getting an interstitial telling me to talk to a dealer about how the car wasn't going to have all the features because of chip shortages, that the price would change as a consequence of that, and directed me to talk with a dealership.
How is that better? How is not giving me the listed price but making me go through a high pressure sales channel superior to just letting me buy car the now? I don't understand at all how you can say that dealership model is far superior. Is it right in your eyes that someone poor at negotiating should have to pay more than someone who is better at it? I don't get it. I don't understand at all how you can think Mercedes is providing the better experience.
“Range” is likely the only one of those metrics Jane will care about. This sounds like one of those rants we used to hear about “why would anyone buy a Mac when PCs have higher specs??”
Mercedes does cabin UX like Apple does software (and BMW is better still). Maybe Jane wants a button for her wing mirrors. And door handles that work. Actually comfortable suspension. An instrument cluster. A dealer to look after her from decision to delivery.
I've opened Tesla's doors, enjoyed the suspension of the Tesla finding it comfortable, and when I adjusted my mirrors I used buttons on the steering wheel. Usually I don't have to adjust the mirrors, because the car can automatically detect that it is me who is driving and it has memorized my mirror preferences.
Why are you lying?
Why not focus on the metrics? For example... Storage space. The Tesla? It has four times the storage space. Eighty eight cubic feet to twenty two cubic feet. The person you are defending didn't bother to announce that they created a different comparative context and no wonder - even the Tesla Model 3 beats Benz across pertinent metrics like range and storage space despite costing $50,000-$80,000 less depending on configuration choices.
Look, you can like Benz eight click and get told that you need to call the dealership and that the price listed isn't the actual price UX, but don't try and tell me that they are Apple. They aren't. Tesla lets you order in three clicks. Much cleaner. They also don't expect you to adjust your mirrors with buttons. Much much cleaner.
Oh, and who was it who removed the buttons from phones again? o.O Need to correct my worldview apparently. Thought it was Apple, but according to you they are the pro-buttons companies. Please, help darkens us with your ignorance. We need to unlearn the truth lest we make a good decision and save $80k getting a better car than Mercedes can provide.
“Lying” is a bit emotive, suggests you might be a bit too invested here to get the argument the GP was making.
Look, Tesla got early success in EVs by being considerably better where everyone else was weak (drivetrain, battery, software, charging network). That doesn’t mean it’s not weak where they are strong (QC, basic manfacturing competencies like panel gaps, dealer network, interaction switchgear refined over generations).
Yes, Tesla have also been innovative in attempting to turn those “bugs” into features - better online ordering, rapid response to QC fails, replacing complex switchgear with an tablet and a modally overloaded pair of dials).
Regardless, what matters is there are people who feel about Mercedes the way you clearly feel about Tesla. Emotion has always mattered with cars; you don’t win those people over with talk of cubic feet.
GP is betting there’s a huge market for “car like I always knew it from a manufacturer I love except with a battery” and I’ll bet they’re right.
> “Lying” is a bit emotive, suggests you might be a bit too invested here to get the argument the GP was making.
Emotion doesn't come into it. You built an argument upon a poor foundation. In strictly logical terms even if your argument structure was correct your argument would be invalid because its premises aren't correct.
You said several things that are objectively false. I know them to be false because I have first hand experience which shows me that they are false. Moreover, considering that Tesla has an industry leading satisfaction score, I know that my experience is not uncommon. What is uncommon, even vanishingly rare, is the veracity of the statements which you used when building the case against Tesla.
Perhaps I sound emotive because I referred to what you did as lying. The principle of charity isn't leaving me much room for you, because you are either wrong and informed or wrong and uninformed. You can take your pick, but whichever you choose don't cheapen the debate by appealing to me as being emotional.
> Look, Tesla got early success in EVs by being considerably better where everyone else was weak (drivetrain, battery, software, charging network). That doesn’t mean it’s not weak where they are strong (QC, basic manfacturing competencies like panel gaps, dealer network, interaction switchgear refined over generations).
This is a very different argument than the idea that it is a no brainer to go with Mercedes. You are moving the goal posts. It is a stronger argument too. Unfortunately, you don't support it well. For example, the argument for the dealer network being an advantage rather than a liability seems doubtful to me. Years back during the era Tesla was rising there were other EVs. Dealerships recognized that recurring revenue from maintenance wasn't as high for these vehicles. They intentionally sabotaged sales of EV vehicles, following perverse incentives, by doing things like giving test rides on vehicles which hadn't been charged and then using the resulting failure to persuade to other purchases. This is a liability, I think, but existing laws tend to protect dealerships as a model at the expense of car companies. So it isn't something that Mercedes and other car manufacturers can easily circumvent. Worse is that the experience at a dealership is much much worse than ordering things over the internet. Tesla just drives the car to your door after you order it. Dealerships expect someone else to drive you there and to go through high pressure sales channels. Tesla can pursue a three click and order model, but dealerships would be furious and go after automakers legally if they were cut out of the loop.
> Regardless, what matters is there are people who feel about Mercedes the way you clearly feel about Tesla.
Again, you are making a very different argument. We started with average Jane not devoted Mercedes fan. Trying to strawman my position by switching from average Jane to devoted Mercedes fan is not at all in keeping with the principle of charity. It also does a disservice to the OP you try to represent, because it contradicts their post, yet you act like you are speaking for them.
> GP is betting there’s a huge market for “car like I always knew it from a manufacturer I love except with a battery” and I’ll bet they’re right.
Which is reasonable, which lets you convince yourself you are right, but average Jane would rather pay $100k for four times as much space or save $50,000 to $80,000 and /still get more space and better range. And she might even like the Tesla aesthetic more than Mercedes: it is Tesla, after all, that has the majority of the EV market. Presumably if their aesthetic was strictly inferior to alternatives that wouldn't be the case. Regardless it doesn't really matter - taste is by its very nature subjective. It is the heart of qualia, not a criteria we can evaluate on behalf of others without knowing their preference set.
The principle of charity is to make the strongest possible version you can imagine of the opposing argument, and I also struggle with constructing yours. It appears to be “no electric car buyer with $140k to spend could ever rationally choose anything other than a Tesla”.
If that’s your position, as a Tesla owner who has invested an awful lot of effort across this post in battling Someones Wrong On The Internet, I’m going to say there’s emotion at play, yes.
If it’s merely “a Mercedes isn’t a slam dunk choice, Tesla still has something to offer”, well yes, that is true.
Regardless, and after reflecting on everything you said, I do now think Tesla is quite like Apple here. Just as with the first few years of the iPhone, they created the market and had it essentially to themselves. They offer a limited set of choices and highly opinionated take-it-or-leave design with fixed high prices.
Now the other manufacturers are arriving, just as the array of Androids did, with a variety of models, price points and customisability.
Now will follow years of mutual incomprehensibility and internet arguing over why one set of trade-offs are objectively better than another.
> It appears to be “no electric car buyer with $140k to spend could ever rationally choose anything other than a Tesla”.
My argument is that it isn't credible that buying the Mercedes is so obviously superior that is, and I quote the GP, "the no brainer" decision on account of it being "better value for money" because on every metric worthy of note the Tesla has superior statistics while lower cost except for qualities which are highly subjective. Moreover, the GP used a comparison with a vehicle that is in a different class - an SUV versus a sedan. Tesla has a sedan style vehicle - it crushes on the metrics much moreso than the SUV does while being at the same price point. Moreover, on pure value? They have comparable metrics for $80,000 less. I'm absolutely sure some people will prefer the aesthetic of Mercedes, but claiming value for money superiority let alone claiming it so much so that the purchase is a no brainer is objectively wrong whereas the accurate claim that they have a potential subjective appeal is a much lesser claim that I don't disagree with.
> Now the other manufacturers are arriving, just as the array of Androids did, with a variety of models, price points and customisability.
Yes, that is pretty much exactly what is happening. Complete with the death of the former type of phone and the threat to legacy business which that shift includes.
It is slow in happening because mass manufacture of cars isn't something that happens instantly - we don't even have the capacity in terms of minerals to meet the demand that the shift is creating, nor the volume of production at a high enough ramp to allow for the mass transition as we saw with phones. So a lot of people aren't noticing that it is like this, because the transition with phones was relatively fast. They are using the wrong mental model of transition speed. The better one is something more like the transition from horses to cars - fifty years after the ICE engine, horses finally got phased off farms, these transitions are playing out on a much larger time scale then our transition to smart phones, but they aren't actually so different.
Mercedes in this model isn't Apple, but Blackberry - great and in theory they should be able to survive, on the fundamentals of the current product, they have an advantage. Ergonomically, they execute better, but tragically they do so according to the old paradigms. The thing that a lot of people are anticipating is that the old paradigms are about to be destroyed by the smart car which in this case means the car that drives itself, not the car that runs on electricity provided by batteries. Thus, the Tesla valuations.
Ironically, auto makers like Mercedes-Benz are actually relying on BlackBerry QNX for some of the smart car war. So in a way we're seeing the BlackBerry versus Silicon Valley play out a second time. It is kind of shocking to me that they would go this route, since I figured the obvious partnerships would be with Google, not Blackberry, but I don't find their decision to be a strategic blunder. When I realized the strategic position that BlackBerry put itself in with regard to car companies, I switched to long BlackBerry. Apparently the market disagrees with me on this potential. It seems firmly convinced Tesla will win, but I suspect everyone will get to full self-driving sooner rather than later even if Tesla does get there first.
> They offer a limited set of choices and highly opinionated take-it-or-leave design with fixed high prices.
Tesla will not aim to be high priced; they'll aim to be the budget vehicle. It is a strategic imperative introduced by both climate change needing to be solved and also by the demand for vehicle telemetry to enable deep learning at a massive scale. So while this is true historically, it is a bad going forward prediction as to how Tesla will behave. You can already see this in their strategic decisions with the Model 3, which after factoring in ToC is actually a contender among budget cars, rather than the luxury segment. They don't want to be Apple; they want to be the future.
Just to clarify, since people seem to disagree with me that this person lied: my evaluation of his sentence paragraph has more than 50% of his statements as false, with only one statement being compelling.
(truth? "And door handles that work.") resolves to false, because the subclaim (truth? "Tesla door handles don't work.") is false.
(truth? "Maybe Jane wants a button for her wing mirrors.") resolves to false, because it includes the subclaim "Tesla doesn't allow adjusting of wing mirrors via buttons" which is a false claim.
(truth? "Actually comfortable suspension.") is a subjective claim, but I personally find the suspension to be comfortable. So at least from my perspective this is a false claim. Moreover, there are a multitude of Tesla options and they don't all share the same suspension style. So even if you didn't like one suspension style, you could still like another, negating the thrust of this point for a larger category than would otherwise be negated. Thus, it seems false to me in a more general way, despite the subjective nature.
(truth? "Mercedes does cabin UX like Apple does software") is a subjective claim. but I heavily disagreed with its veracity. Since then the person I'm quoting has changed their mind on the basis of reflection. While not a lie, this sentence now resolves to false according to their stated worldview.
(truth? "An instrument cluster.") resolves to true. It is a compelling reason that someone might choose not to get a Tesla. If we're not going to give them the benefit of the doubt there are models of Tesla that do come with this panel. We'll give it to them anyway. We'll give it to them even though the very car that we're discussing has a display above the steering wheel. We'll give it to them even though it is a different car than was used for the comparison which didn't have this instrument cluster.
(truth? "A dealer to look after her from decision to delivery.") could be true, but it is a highly subjective situation. Moreover, I don't find it to be well founded that the average person would prefer a dealership environment rather than an online order.
So 4 false, 1 true, 1 true but not particularly convincing.
At what point does stating falsehood transition from being ignorant to being lying? Because I feel they have went well past a reasonable number of errors. This isn't a case of the majority of their words being true. The majority isn't true. They are majority false and arguably all of them are false. At the same time that they are majority false they were derisive: I posted facts, but they dismissed me as someone who was ranting.
Or maybe Jane just wants to say "fold the wing mirrors" and then she doesn't need a button.
BTW thanks. I rarely need to fold the wing mirrors manually in my Tesla so I only tried doing it by voice today in response to your comment and it worked. What were you saying about the cabin UX?
It is indeed a no-brainer. The Tesla wins hands down.
I've owned many very good German cars for the last 30 years and loved them, but my Model Y makes them all seem quaint and obsolete.
--Electric cars don't need dealers. I want to be able to buy a car online without spending an hour kicking gravel and haggling with some commissioned salesperson over the price.
--Electric cars don't need as much service as ICE cars, and it doesn't need to be done at a dealer's high-profit service bay. When my Tesla needed its rear seat coat hook replaced, a technician drove to my house and replaced it. For free.
--Electric cars need very good batteries. Tesla has a 10-year, several-billion dollar lead over every other car manufacturer on battery technology. Everybody else is playing catch-up. Ditto for motors and single-piece castings.
--Electric cars need very good UI software. The Germans make the second-worst automotive UI software of anybody (only the Japanese do an even worse job). Tesla's UI has elements I don't like, but every other car's software experience is so bad it's not even worthy of criticism.
Mercedes, Porsche, and Audi are all offering electric cars with specs inferior to Tesla at much higher prices. This will be unsustainable after they stop coasting on their reputations and the supply of German car snobs who refuse to try a Tesla dries up.
I'm sure the Germans will eventually catch up; Mercedes invented the ICE car after all. But Tesla invented the modern electric car and it's a whole different beast.
It’s not snobbery, as a luxury car a Tesla is unimpressive. The styling and interior quality is comparable to a Mazda, not a Mercedes. I’m not a fan of the giant tablet for controls unless the car genuinely drives itself, even a generation old BMW’s iDrive 6 paired with carplay is preferable for me. They’re really different categories of product, IMO a Chevy Bolt is closer in spirit to a model 3 than a 3 series is.
Current price on your link is ~$100k not $140k. It was much more confusing to use the first site, but click through I found something that was also about $100k when you chose the budget options. Meanwhile, for all numbers that both Tesla and Mercedes list publicly the Model X has better numbers. For example, in horsepower and 0-60 the Tesla does better. For some numbers, the Tesla lists the number - like range - but the Mercedes doesn't.
Declaring my bias: I think this is because they are much worse in range. Now looking up the numbers: 340 mile range for Mercedes. 350 for the Tesla. I was wrong. Tesla was only better, not much better.
Clicking through to order takes several clicks for Mercedes. Along the way of the happy path toward immediate purchase an interstitial pops up and warns me that the price will be changed if I try to order because they don't have the supplies to service the order. Tesla by contrast just lets me order the car with a delivery date in January of next year.
To say your post is deeply misleading as to who is obviously the no-brainer in value for money is an understatement.
Opened the Mercedes site again to check some more. Tesla allows escalation to ordering in two clicks. After more like seven clicks Mercedes was ready to let me 'save my build' rather than letting me order. They also still continually warn me:
> Due to a worldwide shortage, semiconductor chips that are typically present in our vehicles are limited in supply. This has changed the availability of certain features. Vehicle pricing will vary and depends on the availability of certain features. Please verify with your dealer whether any feature is available in a particular vehicle. To learn more, please see your dealer.
Whereas Tesla just lets me put in the order with delivery in January.
Lets move away from the ordering experience. My experience with Tesla service is that I notice an issue, then with my phone, I put in a service request. They come to my house while I'm sleeping and fix the issue. Super easy. Painless. By contrast car dealership salesmen and auto mechanics have an infamous reputation.
I find Tesla to be superior. Maybe others won't, but personally - I find them extremely superior. Driving to a dealership sounds pretty lame to me. Especially if I'm having car trouble. Tends to be the kind of thing that makes driving to the dealership a bit annoying, you know?
I'm not any kind of stock valuation expert, but I figure a big part of Tesla's share price (and GME's for that matter) is just the natural market consequence of too many short positions and someone calling their bluff. The current valuation might not be rational, but that's beside the point. A lot of money was invested betting that Tesla would fail (or at least, the stock value would fall), and the consequence of them losing the bet is that they have to buy stock at whatever the price happens to be, thus driving it higher. I see it as just the market correcting itself, not some inherent bug in the system. (There's an argument that maybe allowing people to short stock in the first place is a regulatory bug.)
> But if you look at the share price of like, Tesla - it's completely insane.
So was the stock prices of amazon, google, etc. You don't expect companies that are opening new industries/businesses to trade like AT&T. You don't expect these companies to pay dividends.
> Tech is a pretty egregious sector because of how many business models basically boil down to "we don't actually need to make money if we have a desirable stock".
Tech companies are some of the most profitable companies in the world. Apple, google, amazon, facebook, etc print money. These companies make more cash profit that your companies with "fundamentals" make in revenue in a decade.
> I don't think we'll be worse off if the next generation of software companies actually focuses on making products people want to buy rather than play games with DAU and user acquisition and etc.
That happens in all industries. From finance to hospital equipment to real estate.
If the bubble is popping, it isn't a tech bubble that's popping, it's an asset bubble that's popping.
Back in the day, there was an inherent understanding that a stock price is supposed to reflect "the fundamentals" - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least tried to be profitable.
Yes. And after each crash, people have to re-learn that.
First off, it isn't irrational to allocate an excessive amount of capital to sustainability. The meme that this level of provision is short-sighted is myopic to the extreme, because obviously over the long term it is failure to be sustainable, not being sustainable, which is myopic. Perhaps it is overvalued, but calling it completely insane goes a bit too far.
Second, you are obviously right that the present value of their assets doesn't justify their current price, but it is hubris to try and claim that their is no future in which their revenues can justify their increased valuation. Think ahead to the future while skipping the steps to get there and we are obviously incredibly likely to exist in a world in which AI and automated labor is commonplace, in which energy is provided through renewable means, and in which transport from point to point is handled by electric vehicles. It is not __completely insane__ to think Tesla might play a large role in this future. It is quite reasonable to expect they would. Their present course has them explicitly targeting playing a very large role in that sort of future. They have been making progress and inroads in playing that role. They are on track to play that role and can play it if they execute successfully. Whether they do, that is another question, but whether the potential exists? It certainly seems to exist.
A lot of times people point at automakers when they try to justify calling Tesla overvalued. The idea that Tesla wouldn't be larger than that industry is silly. That industry spent billions on building out manufacturing capabilities. They took on debt in order to create products which the market doesn't believe will be viable in the future. The projected value of those companies has to account for that and obviously they aren't going to be valued as highly as they might be if they weren't burdened with those liabilities. Perhaps you don't know this, but a few years back legacy automakers were struggling with dealers who would intentionally sabotage the ability to sell electric vehicles by giving test drives in vehicles which were intentionally left without charge. Perhaps you don't know this, but dealers have laws in place to protect them from car companies which force legacy car companies to use them despite the way the perverse incentives could spell the death of the ICE auto industry. There are real structural reasons to value these companies as being less able than Tesla to flourish. Thinking this is the case isn't completely insane.
The standard explanation is that the market tends to price in future gains, and Tesla is seen as having far greater growth and market domination potential than the other brands with small P/E.
Over a long enough time frame the stock market and even the whole economy behaves like a pyramid scheme as it is dependent on new generations to be more people than the previous one.
This is not true. The stock market is usually valued after the dividends it can pay over a certain number of years, somewhat between 10 and 20. It’s not infinite. If no further grow comes that’s it and the stock keeps it value and will keep paying dividends for the foreseeable time, and has for already 100 years. Sure investors ask for growth in their communication, but the actual thing they are asking for is a better performance than the rest of the market. You could say this bottoms out at 0 but recent event have shown that low negative interests are possible, because stashing cash has a physical cost.
Many economies can still work well without population growth, other fail despite population growth. If that was the case that population dictates GDP, then investment choices would be very easy.
That really only seems to be true when you allow unchecked mergers and acquisitions, because once you've eliminated competition continuing to grow the market through innovation is almost impossible.
I'm not convinced this is some natural "tech" bubble. This feels like an M&A bubble to me.
I think you're right but I don't think it has to be that way.
Like others, up until a few years ago, I was a Keynesian. But then I realized that if you allow inflation you're not just "rewarding investment", but you're taking non-participation off the table -- and that's a big problem. Because then people participate in markets not based on value but because they have no choice. That means that you go from value investing to "growth investing" -- which is another name for pyramid scheme and people unironically saying that "the market always goes up."
Not how I understand it. That just means you're willing to tolerate a higher P/E for that stock. You still expect earnings will eventually cover the price.
When you have 401(k) plans which essentially say, "Put your money in the 'market' and it will go up to beat inflation," or you outright say (as many do) that "the market will always go up over time," that's growth investing, and it's straight up a Ponzi scheme. You don't care about the earnings, you just expect to sell for a higher amount than you bought.
Why not? Do you think the society will soon stop inventing new things? They are clear indicators that evolved societies are disconnecting their growth from the energy usage, and especially carbon emissions. With that new heights are possible.
But besides this, yes, slow growth back like for most of humanity is also an option and probably not a bad one in the longer term. It’s a very bad option until we are depending on fossil fuels, because we need the money for the transition.
There is still an element of optimization which involves compressing the problem space. This might be why we see thin vertical segments, but they are way over-valued for the optimization they provide.
I think VCs' expectations misalign with reality. They are the ones incentivising infinite growth.
That isn't true. Otherwise when the wheels come off (recession/depression) then the market would never recover as it's "just a Ponzi scheme". there is real value in the market and until some communist or anarchist can provide a reasonable solution that doesn't depend on the general human being altruistic 100% of the time I'll just keep going with the market and count on avarice. I'll trust in the general sense of fairness that most humans seem to have even if they aren't altruistic.
I don’t understand finance. But with tech I can often see from a mile if something might happen, I don’t have ideas, but I understand „this solves a problem“ or „this is high quality“ versus „this is made up“ or „someone else will do this better“.
In my opinion the issue with the stock market is that it is often finance driven and too drawn away from the actual work that is being done and the actual needs and problems potential buyers have. And this problem is specifically worse in tech.
I wouldn't even call it an `understanding` more just a `reality`. Markets can stay irrational longer than you can stay solvent and the last 10 years have been an amazing case in point, but they can't stay irrational literally forever.
There's a gravity to it. At some point whatever is inflating the values artificially is going to hit some kind of force against it and people are going to want the underlying cash flow. It would be the equivalent of a sort of financial perpetual motion machine if this never happened. I'd argue that's not an probability but something more like a law of physics and is actually literally constrained by the laws of physics (it requires continual population growth, consumption growth, and growth of energy use to keep some of these valuations rising)
I find it funny that crypto supporters will cite the fact that the stock market is acting like a pyramid scheme these days to justify the fact that crypto is no different.
Yeah, that's not the defense of crypto that you think it is...
just want to add point that Tesla is not just the car company, they are into energy (battery, panels etc), AI, robotaxi etc areas as well, that could be one of the factor in higher valuation.
They never showed the fundamentals. There are famous money losses throughout the 20th century. [You can google the charts, or check Graham's book or the biography of Buffett, where he went around avoiding such traps or buying failing companies on the cheap and turning them around by cash infusion.] And of course the infamous example of the Tulip Bulb in 17th century.
Companies need to take risk to innovate. A lot as you indicate, and I totally agree, take it too much and doom themselves by never figuring out how to be profitable.
These days simply everything that innovates is "Tech." (Now it's turning similarly to sustainability.) How is Tesla "Tech?" It brands itself as that. By that thinking a lot of other automakers should -- and the autopilot doesn't cut it -- just people don't want to see Toyota stock as "Tech."
The other thing with "Tech" is that if you don't keep pouring your revenue to take more risks until you dominate over others you will die. So fundamentally, all "Tech" stocks strive towards domination via innovation and growth. Amazon (book seller I know) spend the first part of this century with a pretty bad stock and getting tax credits by investing everything in itself and being cheap extremely aggressively. A lot of "Amazons" did not make it.
P.S. If they gave me a 10 year put on Tesla on a sane price I would take it. Alas nobody is taking that bet on the cheap.
P.S.2. The funny thing is it is a self full-filled prophesy. Tesla has the market capital to control debt to try a bunch of stuff until it makes it.
P.S.3. Fundamentals can be used to increase dividends or do buybacks s.t. the stock price will stay/go up. That is the correlation.
P.S.4/tl;dr: The stock market and any commodity market are pyramid schemes -- people get in to make money.
Tell me you know nothing about investing without telling me you know nothing about investing. Tesla is very undervalued ATM. Just look at their P/E, growth rate and PEG. Trailing is already below 100 and they are growing profits close to 100% annually.
Back in the day, there was an inherent understanding that a stock price is supposed to reflect "the fundamentals" - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least tried to be profitable.
But if you look at the share price of like, Tesla - it's completely insane. There is no way your slice of the company is worth that much. The stock market has been behaving like a pyramid scheme, where everyone assumed there will be more money entering than leaving any given stock.
Tech is a pretty egregious sector because of how many business models basically boil down to "we don't actually need to make money if we have a desirable stock". In the long run, I don't think we'll be worse off if the next generation of software companies actually focuses on making products people want to buy rather than play games with DAU and user acquisition and etc.