Tesla becomes most valuable car company in the world

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rhornback
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Re: Tesla becomes most valuable car company in the world

Post by rhornback »

I am fascinated by Tesla. It is my old guy fantasy. I read about their full self driving beta and how they are driving down the cost of materials and installation costs of roof solar I am fascinated. I guess I am a Tesla groupie.

Now I have no idea what the fundamentals are for Tesla. Frankly I doubt they matter. On one hand I doubt Tesla Bulls are looking at PE rations for Tesla and on the other hand the growth rate is impressive so it puts into question the future rate of return.

But... I was thinking the other day that if I had a few thousand or ten thousand of mad money which I was just willing to risk that I would buy Tesla.

Hey it is probably a better value then a lottery ticket. The result would be the same, "Dream a Little Dream With Me".
guyinlaw
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Re: Tesla becomes most valuable car company in the world

Post by guyinlaw »

Brief history of Tesla and Elon Musk's Full Self Driving(FSD) promises.

Image

And I am still a believer. He will deliver! (SI)
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hagridshut
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut »

The FSD beta did start to roll out around October 21st, 2020:
Tesla's long-promised Full Self-Driving mode reached its first customers in beta form a week and a half ago and we've already received a look at how the system operates on local roads, thanks to people on social media. Some report flawless activity, as seen below, while others documented inconsistencies and some scary moments.
- https://www.cnet.com/roadshow/news/tesl ... usk-price/

The software system as a whole has to be trained. That is the nature of Machine Learning, and more specifically, the Deep Learning approach Tesla is using to develop a generalized self-driving vehicle.

Basically, the car returns data to Tesla on how the Neural Nets performed, and when driver intervention was necessary. Tesla uses that data to re-train the Neural Nets and then pushes the updated Nets back out to the cars. This is a simplified description of how it works, but people should understand that it is not too different than teaching a new driver how to drive.

An automated training computer system called "Dojo" is supposed to help accelerate the Neural Net training process sometime next year.
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oragne lovre
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Re: Tesla becomes most valuable car company in the world

Post by oragne lovre »

guyinlaw wrote: Tue Nov 10, 2020 4:02 pm Brief history of Tesla and Elon Musk's Full Self Driving(FSD) promises.

Image

And I am still a believer. He will deliver! (SI)
Looking at your motto, I agree that time is Bogleheads' friend, impulse to impulsively endorse or reject is Bogleheads' enemy. We get some time and will revisit this discussion.
The finest, albeit the most difficult, of all human achievements is being reasonable.
iamlucky13
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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 »

rhornback wrote: Sun Oct 25, 2020 5:59 pm But... I was thinking the other day that if I had a few thousand or ten thousand of mad money which I was just willing to risk that I would buy Tesla.

Hey it is probably a better value then a lottery ticket. The result would be the same, "Dream a Little Dream With Me".
In that case, buy the car, rather than the stock. You'll have a more clear idea what you're getting. Maybe the stock will grow 10x, or maybe it will decline 90%, and the CEO will probably continue to try to mislead you along the way.

The car, on the other hand, will depreciate at a fairly predictable rate, and depending what your alternative option is, will have an overall cost or savings that can be estimated and constrained to a much narrower range.

For the current position of the company, buying the car will almost certainly do more to promote increased electric vehicle adoption than supporting the share price.
masrepus
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Re: Tesla becomes most valuable car company in the world

Post by masrepus »

I think the Tesla cars are cool and I hope the technology is here to stay. I think there is still a way to go. My father-in-law purchased one a while back. We went to pick it up. The one thing that stood out? When the sales guy said you have to read and agree to this screen. I cannot hit the accept option. The agreement was a screen describing the software as beta and you use it at your own peril.
herbert_21
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

rhornback wrote: Sun Oct 25, 2020 5:59 pm I am fascinated by Tesla. It is my old guy fantasy. I read about their full self driving beta and how they are driving down the cost of materials and installation costs of roof solar I am fascinated. I guess I am a Tesla groupie.

Now I have no idea what the fundamentals are for Tesla. Frankly I doubt they matter. On one hand I doubt Tesla Bulls are looking at PE rations for Tesla and on the other hand the growth rate is impressive so it puts into question the future rate of return.

But... I was thinking the other day that if I had a few thousand or ten thousand of mad money which I was just willing to risk that I would buy Tesla.

Hey it is probably a better value then a lottery ticket. The result would be the same, "Dream a Little Dream With Me".
I suggest to look at 2022 forward P/E. Now we need to value the growth. At first sight, TSLA seems expensive and overvalued. It's probably not.
Rather use 2022 PEG ratios to compare growth. Use P/S or vehicle sales to get a good feeling for the price movement.

Here is a very good example. The author is bullish and has a $720 price target, and had a $600 target some time ago. But this does not matter, what matters is how to value growth:
Image

Discount 50% growth rate to today. Think of profitability while they are still building factories. Think of China EV incentives. Europe CO2 emissions. Demand in US as well.
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Re: Tesla becomes most valuable car company in the world

Post by LadyGeek »

FYI - herbert_21 is asking for portfolio help here: I took a 10yr loan to buy TSLA shares
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iamlucky13
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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 »

herbert_21 wrote: Tue Nov 17, 2020 10:58 am
Here is a very good example. The author is bullish and has a $720 price target, and had a $600 target some time ago. But this does not matter, what matters is how to value growth:
48% annual growth is really ambitious. Tesla not only has to build that many, but they have to convince buyers to take them at such a rapidly increasing rate. At least his selling price estimate is in a credible ballpark (20% decrease from today). His operating margins seem stunning. Not Apple level stunning, but still huge.

I'm struggling to believe 11% of the world's new car buyers will be going for $45,000 vehicles. Maybe in the US. Bloomberg thinks China will dominate the EV demand.
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4nursebee
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Re: Tesla becomes most valuable car company in the world

Post by 4nursebee »

Adoption rates of old tech and tesla here: http://www.rapidshift.net/transition-to ... xt-decade/

I've seen other discussions, this was just easiest to find this am.
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herbert_21
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

iamlucky13 wrote: Tue Nov 17, 2020 7:18 pm
herbert_21 wrote: Tue Nov 17, 2020 10:58 am
Here is a very good example. The author is bullish and has a $720 price target, and had a $600 target some time ago. But this does not matter, what matters is how to value growth:
48% annual growth is really ambitious. Tesla not only has to build that many, but they have to convince buyers to take them at such a rapidly increasing rate. At least his selling price estimate is in a credible ballpark (20% decrease from today). His operating margins seem stunning. Not Apple level stunning, but still huge.

I'm struggling to believe 11% of the world's new car buyers will be going for $45,000 vehicles. Maybe in the US. Bloomberg thinks China will dominate the EV demand.
Sorry, this does not have anything to do with believing.

What strikes me is, did you never ask yourself why the stock went up in value? Have you ever heard of declining costs in manufacturing? S-curve rate of adaption of EVs? What if we have sth like 40% of all new vehicles being EVs in 2025, and 80% of vehicles electric in 2030? What if this happens just because this technology is just cheaper, has way less parts, is less maintenance-intensive than internal combustion engine (ICE) cars?
herbert_21
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

iamlucky13 wrote: Tue Nov 17, 2020 7:18 pm 48% annual growth is really ambitious.
No, it isn't.

https://www.statista.com/statistics/502 ... eliveries/
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Schlabba
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Re: Tesla becomes most valuable car company in the world

Post by Schlabba »

herbert_21 wrote: Wed Nov 18, 2020 5:34 am
iamlucky13 wrote: Tue Nov 17, 2020 7:18 pm 48% annual growth is really ambitious.
No, it isn't.

https://www.statista.com/statistics/502 ... eliveries/
48% of 40000 is much easier than 48% of 139300
pseudoiterative
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Re: Tesla becomes most valuable car company in the world

Post by pseudoiterative »

Jim Chanos interview - re: Tesla [youtube]

paraphrasing...
We're still short. Poster child for this bull market.

This is the stock on which TAM [total addressable market] investors, retail investors, algorithm investors, everybody is putting their hopes and dreams on this one company. Its not just EVs its the whole ESG mania [...]

When you tell somebody it's a car company they'll tell you it's a tech company, but then they'll point at the car sales in china - it's like this piece of mercury that constantly moves around. Every time you try to say "look it doesn't make money selling fifty thousand dollar cars, it never has" then people will transition to "oh well it's an energy company".

Now I love the latest one, now "it's a battery company". When you point out that battery companies trade at 8x earnings in Japan and Korea "you don't get it 'cause they've reinvented the battery" - I joked when they had battery day a few weeks ago there were no batteries at battery day, they literally didn't show anything.

This is a narrative, it's a four hundred and fifty billion dollar narrative. You can't justify it in any way shape or form on in terms of the fundamentals at this point. It's hopes and dreams.

On Twitter about a month ago there was an analyst who raised his price target [...] when you looked at his discounted cash flow analysis he hadn't increased the capex spending for factories to get to that revenue number.
herbert_21
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

What does it mean if you make 20% profit while building a new factory?
You can build another factory while making 20% profit. Rinse and repeat.

What if EVs won't cost $45.000 but $40.000? What about $25.000? What if Tesla really achieves their long term goal of selling 20mn cars ?

You are quoting a famous short seller. How much money did Jim Chanos make? What does it mean to quote him? Can you afford to lose so much money as well? FUD.
Last edited by herbert_21 on Wed Nov 18, 2020 7:43 am, edited 1 time in total.
herbert_21
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

48% of 40000 is much easier than 48% of 139300
Q4 2020 sales will either be 181k and reach 500k yearly vehicles. Looking at October sales in China, probably more. You can do the math on your own.

Q1 2020 88,400
Q2 2020 90,650
Q3 2020 139,300
Q4 2020 TBD

Some people believe Tesla will stop to grow at 40-50% a year. No, sorry, it won't stop. They are building three factories, have room to double their capacity on the sites.
Last edited by herbert_21 on Wed Nov 18, 2020 7:39 am, edited 1 time in total.
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

Click on this link to see Tesla Unit Vehicle Sales Table: https://upload.wikimedia.org/wikipedia/ ... _Sales.jpg

Code: Select all

	Sales	QoQ 	YoY
Q1 2013	5000+		
Q2 2013	N/A		
Q3 2013	N/A		
Q4 2013	6587		
Q1 2014	7535	14,39%	
Q2 2014	8763	16,30%	
Q3 2014	7075	-19,26%	
Q4 2014	11627	64,34%	76,51%
Q1 2015	11160	-4,02%	48,11%
Q2 2015	12807	14,76%	46,15%
Q3 2015	13091	2,22%	85,03%
Q4 2015	14037	7,23%	20,73%
Q1 2016	15510	10,49%	38,98%
Q2 2016	18345	18,28%	43,24%
Q3 2016	25185	37,29%	92,38%
Q4 2016[d]	24882	-1,20%	77,26%
Q1 2017	25418	2,15%	63,88%
Q2 2017	25708	1,14%	40,14%
Q3 2017	25336	-1,45%	0,60%
Q4 2017	24565	-3,04%	-1,27%
Q1 2018	34494	40,42%	35,71%
Q2 2018	53339	54,63%	107,48%
Q3 2018	80142	50,25%	216,32%
Q4 2018	86555	8,00%	252,35%
Q1 2019	77100	-10,92%	123,52%
Q2 2019	87048	12,90%	63,20%
Q3 2019	96155	10,46%	19,98%
Q4 2019	104891	9,09%	21,18%
Q1 2020	102672	-2,12%	33,17%
Q2 2020	82272	-19,87%	-5,49%
Q3 2020	145036	76,29%	50,84%

Please note: these are real numbers. I used the wikipedia numbers, and you can go there and find the references. The table is also from Wikipedia on Tesla.

The real growth rate of vehicle sales was:
14,40% QoQ
64,06% YoY
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firebirdparts
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Re: Tesla becomes most valuable car company in the world

Post by firebirdparts »

iamlucky13 wrote: Tue Nov 17, 2020 7:18 pm
herbert_21 wrote: Tue Nov 17, 2020 10:58 am
Here is a very good example. The author is bullish and has a $720 price target, and had a $600 target some time ago. But this does not matter, what matters is how to value growth:
48% annual growth is really ambitious. Tesla not only has to build that many, but they have to convince buyers to take them at such a rapidly increasing rate. At least his selling price estimate is in a credible ballpark (20% decrease from today). His operating margins seem stunning. Not Apple level stunning, but still huge.
It’s laughable. But that’s okay. The car business is cruel. If I was going to convince you, I’d rely on trying to convince you cars weren’t their real business.
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GT99
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Re: Tesla becomes most valuable car company in the world

Post by GT99 »

herbert_21 wrote: Tue Nov 17, 2020 10:58 am
I suggest to look at 2022 forward P/E. Now we need to value the growth. At first sight, TSLA seems expensive and overvalued. It's probably not.
Rather use 2022 PEG ratios to compare growth. Use P/S or vehicle sales to get a good feeling for the price movement.

Here is a very good example. The author is bullish and has a $720 price target, and had a $600 target some time ago. But this does not matter, what matters is how to value growth:
Image

Discount 50% growth rate to today. Think of profitability while they are still building factories. Think of China EV incentives. Europe CO2 emissions. Demand in US as well.
Just background on me, I'm a Tesla owner, big fan of the company, and a former stockholder (I admittedly sold too early - not because I didn't see the vision or potential, but because I didn't believe the market did and I intended to buy the next drop, which didn't happen - support for not market timing!!). They've already put in so much of the cost into Full Self Driving that the incremental cost once it's fully operational will make it a huge profit driver down the road. Not to mention skyrocketing EV demand globally. I also worked in the car business on the manufacturer side for a long time and still follow it closely.

All that said, if I still owned my Tesla stock, I'd sell in a heartbeat. I'm very bullish on the company, and I'd still sell. There are 2 glaring issues in this spreadsheet.
1. There are some unrealistic production capacity assumptions baked in. For example, 840k deliveries in 2021. 2021 production capacity for the 2 currently operating factories (Fremont and Shanghai) is about 775k. Fremont is not yet at 500k but will be soon, and Shanghai appears to have just hit 250-275k production rate, which is going to be their max for a while. . So 840k is basically dependent on the Berlin and Texas factories opening close to on schedule, as they will have ramp up time - i.e. 840k is basically the best case scenario for 2021. Similar problem for 2022. While all 4 factories are planned for 500k production, the only one that will be there before the start of 2022 is Fremont. The others are unlikely to average over 275k each (Shanghai will likely be more, but not Berlin and Texas). 1325k vehicles in 2022 is the best case scenario. To get to 3500k vehicles by 2025, Tesla will have to complete 3 as yet unannounced factories AND get them to full 500k capacity. I wouldn't put it past them to get 3 more factories running by 2025, but it's highly unlikely any would be above 250k production in 2025. Their realistic max capacity for 2025 is in the 2250k to 300k range.
2. Continuous 22% market share totally ignores the 20x+ increase in competition over the next few years. Tesla has been so successful because they haven't had any competition close to their products (there is no car on the market right now under $50k I would choose over my $40k Model 3). Companies like Rivian and Lucid have so much financial backing thanks to the success of Tesla, they're going to hit the ground running with deliveries next year. It will take them several years to make a big dent, but even If they're only taking 60k/year in sales from Tesla in 2023, it's not trivial. Not to mention VW, who has plans to produce 1 million EVs per year by 2023. Hyundai, Nissan, Volvo/Polestar, and GM are all making huge EV pushes in the next 2 years. There is maybe a 5% chance that Tesla still has a 22% EV market share in 2025. On the plus side, I think 20% EV market penetration in 2025 is conservative. A by product of this competition is going to be lower vehicle prices which will mean lower margins and lower EPS. And Tesla may actually have to start spending money on advertising at some point.

All in all, I think the 2024 numbers in your spreadsheet might be realistic for 2025, but not 2024. Still aggressive, but realistic. So, at the current share price of $486, you have a P/E on 2025 numbers of just shy of 30. With aggressive numbers. It's entirely possible that Tesla is "only" selling 2M cars in 2025. Probably more likely than 3.5M. And for a large company to quadruple sales in 5 years is amazing. 2M would be fantastic. But 2M cars in 2025 would support a current stock price closer to $300. And that includes my personal very bullish opinion of their Solar and energy storage products.

Where's the upside?
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Re: Tesla becomes most valuable car company in the world

Post by harikaried »

GT99 wrote: Wed Nov 18, 2020 1:48 pmFremont is not yet at 500k but will be soon, and Shanghai appears to have just hit 250-275k production rate, which is going to be their max for a while. . So 840k is basically dependent on the Berlin and Texas factories opening close to on schedule, as they will have ramp up time
Shanghai also has the Model Y line that is nearly done construction and appears to have made some Model Y test vehicles already. Assuming the Model Y Shanghai production in 2021 matches that of Model 3 including 2020 covid shutdown, that would be about 150k added to total 2021 production. And yes there's the unknowns of Berlin and Texas schedules.
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hagridshut
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut »

This is probably not accurate:
GT99 wrote: Wed Nov 18, 2020 1:48 pm 1. There are some unrealistic production capacity assumptions baked in. For example, 840k deliveries in 2021. 2021 production capacity for the 2 currently operating factories (Fremont and Shanghai) is about 775k. Fremont is not yet at 500k but will be soon, and Shanghai appears to have just hit 250-275k production rate, which is going to be their max for a while.
The operational part of the Shanghai plant is 250,000 units of Model 3 sedans annually, but that's only Phase I. Tesla has been constructing Phase II over the past year, which will be producing Model Y crossovers.

InsideEVs conservatively estimates Shanghai Model Y production of at least +150,000 units in 2021: https://insideevs.com/news/450292/tesla ... ober-2020/. A license to begin production for sale should happen well before the beginning of the year, and there are already spy drone photos of a pre-production Model Y leaving the facility.

Look at earlier pictures of the Shanghai expansion under construction: https://electrek.co/2020/05/04/tesla-gi ... e-model-y/. The Model 3 factory in the background is small compared to Phase II. My estimate based on this, is that Shanghai Model Y capacity will be somewhere in the neighborhood of 500,000 units/year when fully operational, with combined Model 3 and Model Y capacity of 750,000 units/year.

For 2021, Fremont at 500k and Shanghai at 400k conservatively, makes 840k deliveries well within reach.

2. Continuous 22% market share totally ignores the 20x+ increase in competition over the next few years. Tesla has been so successful because they haven't had any competition close to their products (there is no car on the market right now under $50k I would choose over my $40k Model 3). Companies like Rivian and Lucid have so much financial backing thanks to the success of Tesla, they're going to hit the ground running with deliveries next year. It will take them several years to make a big dent, but even If they're only taking 60k/year in sales from Tesla in 2023, it's not trivial. Not to mention VW, who has plans to produce 1 million EVs per year by 2023. Hyundai, Nissan, Volvo/Polestar, and GM are all making huge EV pushes in the next 2 years. There is maybe a 5% chance that Tesla still has a 22% EV market share in 2025. On the plus side, I think 20% EV market penetration in 2025 is conservative. A by product of this competition is going to be lower vehicle prices which will mean lower margins and lower EPS. And Tesla may actually have to start spending money on advertising at some point.
Absolute market share does not matter.

What matters is taking high margin market share from the most profitable product segments. This means stealing customers from the likes of BMW and Lexus, not Volkswagen, Honda, and Ford.

I think Apple has less than 20% of smartphone market share worldwide, but they are raking in the profits.

Based on the pace of innovation I'm seeing, Tesla's products are pulling away from the likes of VW, Nissan, Polestar, and Ford, in terms of efficiency, performance, and technology.

Where's the upside?
Transport Autonomy and Machine Learning training.

This is to Tesla, what AWS is to Amazon. People focus on Tesla's automotive business because it is tangible. What is less known is that Tesla has made substantial progress in its Full Self Driving (FSD) software, which went to Beta release last month. This is highly speculative, but if it can be made to work, the monthly subscription revenue could drive margins through the roof.

The infrastructure to train that software, codenamed "Dojo", is a machine learning platform running on Tesla's custom silicon, that has applications beyond training FSD. Imagine other companies in other industries training their machines using Tesla's platform.
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TheoLeo
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Re: Tesla becomes most valuable car company in the world

Post by TheoLeo »

hagridshut wrote: Wed Nov 18, 2020 2:24 pm Transport Autonomy and Machine Learning training.

This is to Tesla, what AWS is to Amazon. People focus on Tesla's automotive business because it is tangible. What is less known is that Tesla has made substantial progress in its Full Self Driving (FSD) software, which went to Beta release last month. This is highly speculative, but if it can be made to work, the monthly subscription revenue could drive margins through the roof.
I really don´t think fully autonomous cars will ever will be able to drive safer than the average human on the roads we have today. I can imagine it being possible on roads that are equipped and maintained specifically for the purpose of autonomous driving. Maybe these roads will even have specific rules for other drivers using them next to autonomous vehicles. This may be possible on some highways. So FSD is a cool (marketing) gimmick that will allow Tesla to increase its profit margin a little, but I think it is highly unlikely that there will be "robotaxis".

Crystal ball scenario:
All auto makers in aggregate ,ex-Tesla, have an EBIT margin of 4,3 %. So lets give Tesla a generous EBIT margin of 15 % because of vertical integration and its cooleness factor that customers are willing to pay extra for. Yearly revenue for all automakers combined ex-Tesla is around 2 Trillion. So if Tesla at some point captures 20 % of all yearly auto sales (Daimler and Volkswagen combined capture 25 % of world wide sales), it might have an EBIT of 60 billion per year. So maybe 42 billion net income per year at this point. Also, at this point it might have the PE of a maturer company, maybe 25. So the market cap should by then be 1 Trillion. I think this scenario is not unreasonable within the next 10 years. What do you think?
GT99
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Re: Tesla becomes most valuable car company in the world

Post by GT99 »

hagridshut wrote: Wed Nov 18, 2020 2:24 pm This is probably not accurate:
GT99 wrote: Wed Nov 18, 2020 1:48 pm 1. There are some unrealistic production capacity assumptions baked in. For example, 840k deliveries in 2021. 2021 production capacity for the 2 currently operating factories (Fremont and Shanghai) is about 775k. Fremont is not yet at 500k but will be soon, and Shanghai appears to have just hit 250-275k production rate, which is going to be their max for a while.
The operational part of the Shanghai plant is 250,000 units of Model 3 sedans annually, but that's only Phase I. Tesla has been constructing Phase II over the past year, which will be producing Model Y crossovers.

InsideEVs conservatively estimates Shanghai Model Y production of at least +150,000 units in 2021: https://insideevs.com/news/450292/tesla ... ober-2020/. A license to begin production for sale should happen well before the beginning of the year, and there are already spy drone photos of a pre-production Model Y leaving the facility.

Look at earlier pictures of the Shanghai expansion under construction: https://electrek.co/2020/05/04/tesla-gi ... e-model-y/. The Model 3 factory in the background is small compared to Phase II. My estimate based on this, is that Shanghai Model Y capacity will be somewhere in the neighborhood of 500,000 units/year when fully operational, with combined Model 3 and Model Y capacity of 750,000 units/year.

For 2021, Fremont at 500k and Shanghai at 400k conservatively, makes 840k deliveries well within reach.

2. Continuous 22% market share totally ignores the 20x+ increase in competition over the next few years. Tesla has been so successful because they haven't had any competition close to their products (there is no car on the market right now under $50k I would choose over my $40k Model 3). Companies like Rivian and Lucid have so much financial backing thanks to the success of Tesla, they're going to hit the ground running with deliveries next year. It will take them several years to make a big dent, but even If they're only taking 60k/year in sales from Tesla in 2023, it's not trivial. Not to mention VW, who has plans to produce 1 million EVs per year by 2023. Hyundai, Nissan, Volvo/Polestar, and GM are all making huge EV pushes in the next 2 years. There is maybe a 5% chance that Tesla still has a 22% EV market share in 2025. On the plus side, I think 20% EV market penetration in 2025 is conservative. A by product of this competition is going to be lower vehicle prices which will mean lower margins and lower EPS. And Tesla may actually have to start spending money on advertising at some point.
Absolute market share does not matter.

What matters is taking high margin market share from the most profitable product segments. This means stealing customers from the likes of BMW and Lexus, not Volkswagen, Honda, and Ford.

I think Apple has less than 20% of smartphone market share worldwide, but they are raking in the profits.

Based on the pace of innovation I'm seeing, Tesla's products are pulling away from the likes of VW, Nissan, Polestar, and Ford, in terms of efficiency, performance, and technology.

Where's the upside?
Transport Autonomy and Machine Learning training.

This is to Tesla, what AWS is to Amazon. People focus on Tesla's automotive business because it is tangible. What is less known is that Tesla has made substantial progress in its Full Self Driving (FSD) software, which went to Beta release last month. This is highly speculative, but if it can be made to work, the monthly subscription revenue could drive margins through the roof.

The infrastructure to train that software, codenamed "Dojo", is a machine learning platform running on Tesla's custom silicon, that has applications beyond training FSD. Imagine other companies in other industries training their machines using Tesla's platform.
Yep, you're right on Y in Shanghai. Not sure why I had it in my head that 250k included the Y line.

Unfortunately, upmarket is where they're likely to be hit hardest. That's where Rivian and Lucid start hitting them next year and if you think Tesla has a big innovation lead over them, you need to do some homework. And VW Group includes Audi and Porsche.

Your comment about Tesla expanding their lead is baffling to me. They had a mind boggling lead 2 years ago. That lead is closing. I don't think you know what other companies have been doing. Definitely still a lead, but not what it was 2 years ago.

Also, I mentioned the FSD potential in my post. I agree in general, but unfortunately there's going to be a lot of regulatory roadblocks to get through before it can fully realize it's potential (i.e. driverless vehicles). I doubt that will be before 2030.

As for other applications of their ML...I know enough to know that's probably too speculative vs what Google and others are working on to be much of a factor in current pricing.

My point isn't that Tesla is going to get "beat". It's that they aren't going to be able to grow as fast because the competitive landscape isngrowing by an order of magnitude. If the best case scenario happens, then current valuation will make sense. The problem is the the downside risk is much higher than the upside potential.
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

@GT99

You are getting so many things wrong that I don't know where to start. The only thing that you get right is 3,5mn in 2025. So, with 46% growth and 50% growth, starting with 500k this year you get to that number.

Note: Tesla's historic growth rate is over 60% / year. You can check historic QoQ and calculate it. And no, they won't stop. There are three, if not 4 new models in the Pipeline. Model Y , Cybertruck, Model 2 (the $25.000 car) and the Semi.

840k for 2021 is not high. No, it's realistic. Very little to argue about numbers. Elon Musk was asked about 1mn cars next year. While I mean this is too optimistic, let's not forget: October was a recotd month in China. November will be bigger. And they will reach 181k for Q4, maybe even 200k.

FSD: don't want to discuss it in detail, but a lot of people are paying it already, with Model Y adoption rate will also go up. Good for gross margin.

You simply shouldn't sell.your TSLA shares. This thing will go to $600, and next year might also reach $720. I meany with current sentiment what is your expectation?

S&P Inclusion: 15% of free float will be bought by index funds and probably held forever. That more than $50bn.

And remember, they habe batteries, energy storage, vertical Integration.

And regarding competition, they will decrease prices with or without competition. And Tesla is the only company that can cut prices, while still remain profitable.
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hagridshut
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut »

GT99 wrote: Wed Nov 18, 2020 4:29 pm
Unfortunately, upmarket is where they're likely to be hit hardest. That's where Rivian and Lucid start hitting them next year and if you think Tesla has a big innovation lead over them, you need to do some homework. And VW Group includes Audi and Porsche.

Your comment about Tesla expanding their lead is baffling to me. They had a mind boggling lead 2 years ago. That lead is closing. I don't think you know what other companies have been doing. Definitely still a lead, but not what it was 2 years ago.
The lead isn't closing. I've watched Lucid, Rivian, and VW closely.

The technology that Lucid starts to ship next year is good, but only roughly on par with what Tesla delivers today. The battery pack design they revealed earlier this year ( https://youtu.be/zgbde-SgWGM) is still a cell/module/pack setup similar to Tesla's current pack design. Tesla is moving to integrate the battery into the frame of their vehicles next year, using a next-generation tabless design starting with Model S Plaid Mode in 2021.

Page 12 is a summary of their Battery Day update from earlier this year: https://tesla-cdn.thron.com/static/4E7B ... ate.pdf%22. Projected 54% increase in range, 56% reduction in cost, and 69% reduction in capex for battery production lines. The dry cell production technology they acquired from the Maxwell buyout a few years ago should be responsible for much of the lower cost in capex. A 10 GWh/year pilot production facility is already ramping up in another facility in Fremont.

The dry cell production technology won't be available to Lucid or Rivian, as they don't own the IP and won't have the same in-house manufacturing that Tesla has. Tesla will still continue to buy 2170 cells from Panasonic and Chinese vendors for older products, but going forward, they have a big advantage here. Lucid and Rivian would also have to completely redesign their vehicles for a battery-in-frame vehicle platform. Tesla has already completed the redesign for Model S and Model Y (Gigafactory Berlin's Model Y is already confirmed to use the new platform, and is much different than the U.S. and China Model Y).

There are other critical pieces of technology that Tesla uses to reduce costs: machines that make large single-cast pieces, which nobody else uses, and custom aluminum alloys specifically created for those manufacturing processes.

Lucid's other problem is styling. The car likely has better performance and vastly better range than a Porsche Taycan, but the Lucid Air frankly doesn't look very good. At the 150-200k price point, it's going to be a hard sell.

Rivian is in a better position. Their pickup is well designed and should attract many customers who like the styling of a conventional pickup. Rivian's R1S SUV also looks great, and the company has a big contract with Amazon for delivery vans. However, like Lucid, they are at a severe disadvantage because they're buying battery cells from outside vendors, while Tesla is moving on to more advanced cells where it controls key technology. Rivian will have a tough time competing on cost with Tesla's Cybertruck.

Companies like VW, Ford, and Nissan have adequate EV technology, but they are behind Lucid and Rivian. If you look at VW's strategy, they aren't going after Tesla. The ID.3 hatch and ID.4 are solid, good EVs, but designed to take on mainstream hatchbacks and crossovers like the Subaru Forester. VWAG family members Porsche and Audi are mostly betting on better cabin refinement as a selling point against Tesla, as their tech just isn't as good.

Also, I mentioned the FSD potential in my post. I agree in general, but unfortunately there's going to be a lot of regulatory roadblocks to get through before it can fully realize it's potential (i.e. driverless vehicles). I doubt that will be before 2030.

As for other applications of their ML...I know enough to know that's probably too speculative vs what Google and others are working on to be much of a factor in current pricing.

My point isn't that Tesla is going to get "beat". It's that they aren't going to be able to grow as fast because the competitive landscape isngrowing by an order of magnitude. If the best case scenario happens, then current valuation will make sense. The problem is the the downside risk is much higher than the upside potential.
I've heard the issue of regulatory roadblocks brought up, but nobody has pointed to any specific regulation that is preventing deployment of Tesla's software. The FSD beta began deployment on October 21 of this year, with no regulatory objections.

There's more competition, but that competition isn't catching up.

I agree that there's still plenty of risk. Each investor will have to decide for themselves whether they could tolerate that risk for the potential rewards.
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Re: Tesla becomes most valuable car company in the world

Post by z3r0c00l »

Walmart has over 500 billion in annual revenue from over 11,000 stores and a strong online business. Walmart has over 75,000 acres of land, 6,000 tractors and 60,000 trailers, total assets just short of 250 billion.

It now has a lower market cap than Tesla.
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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 »

herbert_21 wrote: Wed Nov 18, 2020 5:34 am
iamlucky13 wrote: Tue Nov 17, 2020 7:18 pm 48% annual growth is really ambitious.
No, it isn't.

https://www.statista.com/statistics/502 ... eliveries/
There's different possible takeaways depending where I look at on that graph, and they are arguably all supply-side take-aways.

Full graph: 42% annualized growth rate
Q3 2017 to present (targeted start of Model 3 volume production): 51% growth rate
Q3 2018 to present (demonstrated start of Model 3 high volume production): 23% growth rate

As another posted noted, growth is easier when you're a small part of the market than a large part. I do expect some step changes as they open additional production facilities, but 48% sustained average growth is something I will believe when I see it.

A big part of what confuses me about Tesla's valuation is that it is based on future growth and improving margin, as you point out, but is already getting relatively close to where it should be according to forecasts like the one you shared - basically in line with what would be a desired return for an alternative equity investment. In other words, it looks to me like there is very little risk being considered for achieving such growth targets.
herbert_21 wrote: Wed Nov 18, 2020 5:32 am Sorry, this does not have anything to do with believing.

What strikes me is, did you never ask yourself why the stock went up in value? Have you ever heard of declining costs in manufacturing? S-curve rate of adaption of EVs? What if we have sth like 40% of all new vehicles being EVs in 2025, and 80% of vehicles electric in 2030? What if this happens just because this technology is just cheaper, has way less parts, is less maintenance-intensive than internal combustion engine (ICE) cars?
Yes, naturally I asked myself why, which is why I'm in this conversation. Yes, I'm familiar with declining costs in manufacturing. In fact, my day job is largely about making those declining costs happen in a different industry. I noted the cost improvement estimates in the source you highlighted, which are in line with estimates I've made.

Indeed, what if? Are you in the habit of putting your money at risk based on "what if," or do you prefer evidence of a concrete plan and substantiation of costs and revenue forecasts? The battery day presentation was an example of substantiation for a part of the plan, but it's an incremental improvement, not a major shift in their costs, and it was remarkably similar in magnitude to other forecasts about the battery industry. It was faster paced than the rest of the industry's expectations, but as I noted elsewhere, the schedule is in Musk time.

Also, I don't know if it was intentional, but your 40% and 80% market share hypotheticals for 2025 and 2030 are contrasted with 20% and 50% in the forecast you linked. Bloomberg's forecast is 10% and 28%. Other forecasts from sources like the IEA or Deloitte appear generally similar to Bloomberg's.

Another part that troubles me about Tesla's valuation is that every time the topic of competition comes up, everyone waves their hand and says, more or less, "the competition is behind and will never catch up."

Maybe I'm old fashioned, but I have never been satisfied with plans that are based on the assumption the opponent is not only incompetent, but incapable of remedying that fault.
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut »

iamlucky13 wrote: Wed Nov 18, 2020 7:49 pmAnother part that troubles me about Tesla's valuation is that every time the topic of competition comes up, everyone waves their hand and says, more or less, "the competition is behind and will never catch up."

Maybe I'm old fashioned, but I have never been satisfied with plans that are based on the assumption the opponent is not only incompetent, but incapable of remedying that fault.
That flaw in this reasoning is that Tesla never operated under the assumption that the competition was incompetent or incapable of improvement. The entire premise of the company was to push the automotive industry to electrification -- to draw out competition, not crush it.

The competition IS behind and they are not catching up, at the moment. It is possible that this may change in the future, but as things currently stand, Tesla's pace of innovation in automobiles and energy systems is unparalleled.

As I outlined earlier, even smart, nimble newcomers like Rivian and Lucid are basically moving to where Tesla is now. Their upcoming battery pack architectures are substantially similar to Tesla's current hardware. They aim to do what Tesla has done, but in a more refined manner. Tesla isn't aiming to do what they've done before. They're moving ahead, fast: battery-in-frame rather than battery packs; manufacturing their own custom tabless dry cells rather than 2170 cells made by partners; their own custom AI microprocessors for Neural Nets (at the car level) and Machine Learning (for training NNs), while everyone else is buying off-the-shelf hardware from nVidia and Intel/Mobileye.

The competition is not incompetent or incapable of improvement. GM made a perfectly competent EV in the form of the Bolt, and Volkswagen has some very good EV products in the ID.3 hatchback and ID.4 crossover.

But the pace of product development at GM and VW simply does not match the pace of Tesla. This is not hand waving. I've looked at the hardware and software development at Tesla as well as the new manufacturing methods they use. The culture of the company company fosters a lot of re-thinking old assumptions and rulebreaking. Yes, this infuriates outside observers, but this unique willingness to take risks that others won't take, is the reason it may be extremely difficult for others to accelerate to Tesla's level.

I'd encourage people to listen to Lex Fridman's interview with microprocessor architect Jim Keller https://www.youtube.com/watch?v=Nb2tebYAaOA. Mr. Keller's comparison of the culture at Tesla with the culture at Intel, illustrates much better than I can, why Tesla innovates quickly while a company like Intel just cannot move at the same pace.

Independently, we can observe that Intel's culture has lead to a situation where they are being outmaneuvered by AMD and replaced at Apple by Apple's in-house silicon development team. 10 years ago, Apple's A-series chips were just good enough to power an iPhone 4 or 4s. Today, the Apple M1 wrecks Intel's best mobile CPUs in single threaded performance by a wide margin. Pace of innovation matters.
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Normchad
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Re: Tesla becomes most valuable car company in the world

Post by Normchad »

Well, nobody knows nothing.....

I've got.a Tesla, and I love it. It's awesome. I think Tesla has room to grow.

But, a lot of this hyperventilating over their potential is way over-blown in my estimation. Not everybody wants one. Not everybody can afford one. Some people who have them now, wouldn't want them if they were too common.

They do a lot of things well, but also do some things not very well. And a lot of the things they do well, just are of no interest to a lot of people. This thread is proof that there are lots of people with the financial ability to have these things, and are just not interested in it.

So for a great number of people in the world, a fully electric Camry is all they want or need.

Although the Tesla has a lot of stuff that the ID.3 doesn't, that doesn't mean that the ID.3 isn't very serious competition. Again, as a Tesla super fan, I'm disappointed that they can't get some simple things right, like initial build quality. If they had a service network and build quality like Hyundai, that would be one thing. But it still feels like they are just winging it......

So I do think they will grow. and grow substantially. But I don't envision a future in which they display a major automaker. If the market place really wanted "just one thing", we'd either all be driving Camry's, or we would all be driving a BMW or an F150.

Now none of that can really be used to justify or predict the stock price of the company. They might turn out to be like an Apple, where they don't dominate the smart phone market, but they get the lions share of the profits. They have figured out ways to generate recurring revenue streams, which is a big plus for them.,, so I guess we will see.

FWIW, I owned Tesla stock, and sold it, because I thought it couldn't go higher.... but nobody knows nothing, and that certainly includes me....
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Re: Tesla becomes most valuable car company in the world

Post by GT99 »

hagridshut wrote: Wed Nov 18, 2020 5:47 pm
The lead isn't closing. I've watched Lucid, Rivian, and VW closely.

The technology that Lucid starts to ship next year is good, but only roughly on par with what Tesla delivers today. The battery pack design they revealed earlier this year ( https://youtu.be/zgbde-SgWGM) is still a cell/module/pack setup similar to Tesla's current pack design. Tesla is moving to integrate the battery into the frame of their vehicles next year, using a next-generation tabless design starting with Model S Plaid Mode in 2021.

Page 12 is a summary of their Battery Day update from earlier this year: https://tesla-cdn.thron.com/static/4E7B ... ate.pdf%22. Projected 54% increase in range, 56% reduction in cost, and 69% reduction in capex for battery production lines. The dry cell production technology they acquired from the Maxwell buyout a few years ago should be responsible for much of the lower cost in capex. A 10 GWh/year pilot production facility is already ramping up in another facility in Fremont.

The dry cell production technology won't be available to Lucid or Rivian, as they don't own the IP and won't have the same in-house manufacturing that Tesla has. Tesla will still continue to buy 2170 cells from Panasonic and Chinese vendors for older products, but going forward, they have a big advantage here. Lucid and Rivian would also have to completely redesign their vehicles for a battery-in-frame vehicle platform. Tesla has already completed the redesign for Model S and Model Y (Gigafactory Berlin's Model Y is already confirmed to use the new platform, and is much different than the U.S. and China Model Y).

There are other critical pieces of technology that Tesla uses to reduce costs: machines that make large single-cast pieces, which nobody else uses, and custom aluminum alloys specifically created for those manufacturing processes.

Lucid's other problem is styling. The car likely has better performance and vastly better range than a Porsche Taycan, but the Lucid Air frankly doesn't look very good. At the 150-200k price point, it's going to be a hard sell.

Rivian is in a better position. Their pickup is well designed and should attract many customers who like the styling of a conventional pickup. Rivian's R1S SUV also looks great, and the company has a big contract with Amazon for delivery vans. However, like Lucid, they are at a severe disadvantage because they're buying battery cells from outside vendors, while Tesla is moving on to more advanced cells where it controls key technology. Rivian will have a tough time competing on cost with Tesla's Cybertruck.

Companies like VW, Ford, and Nissan have adequate EV technology, but they are behind Lucid and Rivian. If you look at VW's strategy, they aren't going after Tesla. The ID.3 hatch and ID.4 are solid, good EVs, but designed to take on mainstream hatchbacks and crossovers like the Subaru Forester. VWAG family members Porsche and Audi are mostly betting on better cabin refinement as a selling point against Tesla, as their tech just isn't as good.

I've heard the issue of regulatory roadblocks brought up, but nobody has pointed to any specific regulation that is preventing deployment of Tesla's software. The FSD beta began deployment on October 21 of this year, with no regulatory objections.

There's more competition, but that competition isn't catching up.

I agree that there's still plenty of risk. Each investor will have to decide for themselves whether they could tolerate that risk for the potential rewards.

Good info on batteries in there, thanks. If Berlin starts churning out Model Ys with range of 450+ next year, I'll eat my words. :D Here's simplistically what I meant - 2 years ago, Tesla had pretty much everybody doubled up in range (the Bolt being the only real exception). 2 years from now, there will be lots of vehicles with 300+ mile range out there. The Model S Plaid is likely the only Tesla that will have 500 mile range. 300 is the number Musk himself has cited as the baseline. I think there are significantly diminishing returns above 300 miles. Personally, as an EV driver for the last 6 years, I think diminishing returns start more in the 225 to 250 range, but it will take the general public a long time to realize they don't need as much range as they think (obviously, there are exceptions).

I agree Rivian is better positioned. I'm a big fan of Rivian's and I think they will be a huge player in 5 years.

I think you overestimate the consumer perception of the differences we'll see in a couple years. We'll find out. If Tesla can make the Model 2 work, that will be a game changer, but "3 years" in Tesla parlance means 5+ years in real world time.

As for regulatory roadblock, I believe there are only 6 states in the US that currently allow truly autonomous (no driver) vehicles. But the real concern is what happens in our regulatory happy society when there is a high profile accident. It's inevitable. And we have many state and local government that are hyper-reactive to highly publicized perceived dangers. Reality doesn't matter much in those cases. That's my concern. Not to mention, you'll have driver unions lobbying like crazy against it. There are millions of people who stand to lose jobs because of autonomous vehicles (I'm not saying that as an argument against, I'm saying that because I expect the government to respond).
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Re: Tesla becomes most valuable car company in the world

Post by GT99 »

herbert_21 wrote: Wed Nov 18, 2020 4:33 pm @GT99

You are getting so many things wrong that I don't know where to start. The only thing that you get right is 3,5mn in 2025. So, with 46% growth and 50% growth, starting with 500k this year you get to that number.

Note: Tesla's historic growth rate is over 60% / year. You can check historic QoQ and calculate it. And no, they won't stop. There are three, if not 4 new models in the Pipeline. Model Y , Cybertruck, Model 2 (the $25.000 car) and the Semi.

840k for 2021 is not high. No, it's realistic. Very little to argue about numbers. Elon Musk was asked about 1mn cars next year. While I mean this is too optimistic, let's not forget: October was a recotd month in China. November will be bigger. And they will reach 181k for Q4, maybe even 200k.

FSD: don't want to discuss it in detail, but a lot of people are paying it already, with Model Y adoption rate will also go up. Good for gross margin.

You simply shouldn't sell.your TSLA shares. This thing will go to $600, and next year might also reach $720. I meany with current sentiment what is your expectation?

S&P Inclusion: 15% of free float will be bought by index funds and probably held forever. That more than $50bn.

And remember, they habe batteries, energy storage, vertical Integration.

And regarding competition, they will decrease prices with or without competition. And Tesla is the only company that can cut prices, while still remain profitable.
Lesson for everyone. If you're this certain about an investment, it's time to step back and reassess.

I'm not going to argue - it's clear with you it would be like arguing politics. I will say...do you think the addition to the S&P wasn't priced in at all? Everyone knew it was coming, just not exactly when. Many existing investors were counting on it. There will be a lot of profit taking in the next month.

The funny thing here is the a year and a half ago, when the stock was in the low $200s pre-split, I was selling a good friend who is a fund manager on Tesla stock because I saw the vision and the market clearly didn't. I wasn't viewing Tesla as a car company. I gave him a $500 price target for end of this year (I obviously vastly undershot that). I sold in the high $300s because I didn't believe the market had come around - I was wrong (case for boglehead approach here). But the current valuation is extremely optimistic. Pretty much everything has to fall into place for it to hold up. And everything might. But there is a very good chance Tesla will do very well and still come nowhere near what you laid out.
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Re: Tesla becomes most valuable car company in the world

Post by smalliebigs »

I think I come at this from a different perspective as I'm an engineer at an automotive OEM. Our view of Tesla is more of a battery tech company that just happens to make vehicles. Tesla also plays a very important role (that is being phased out) as a seller of CO2 credits to many OEMs.

So the strong valuation of Tesla is not just in itself, but also the role it plays in the industry as a whole. Though, I think most people buy it because they think it's cool.
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Re: Tesla becomes most valuable car company in the world

Post by Prettyfrtnt »

@hagridshit and @herbert_21 you guys have great info and are so correct. I’ve been trying to share this type of DD (deep dive) here since 2017-8. The arguments are the exact same against the valuation where it was 200 or 2000 presplit prices.

Tesla is a collection of 12 of the worlds best technologies that are all years ahead and have huge moats, they take time and billions to invest in, Tesla and spacex have brain drained the best engineers in the USA for 5-7 years. Look guys it’s a wrap. Competition lol. Ask anyone who owned an an ipace or etron. Past tense on purpose. GM doing insurance like Tesla lol. After their hummer doesn’t need to be plugged in. Rivians weekly factory output is... oh yeah zero. Nio check them if you want a crazy valuation. Based on their numbers Tesla China alone is $500B.
Boeing outsourced $8 code lol. Volkswagen one decent competitor who cares had 50k id3s in parking lots for months trying to get decent software. Comp has no charging network or over the air updates. I’ll log back in in three years here when 5M cars a year and the worlds largest energy utility etc. Obviously this is all too hard for Jim Chanos to get. Buy and hold forever. Just remember Forrest Gump was an Apple millionaire in 1994 and he’d be an Apple multibillionaire now.
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Re: Tesla becomes most valuable car company in the world

Post by herbert_21 »

Guys,
we are all not analysts.

Maybe we should just listen to Morgan Stanley, who did a 67-pager analysis. Here are some key arguments why they updated their base case to $540 Overweight. Remember, they also have a base case >$1000.
Morgan Stanley said it sees a budding opportunity in Tesla's high-margin software-and-services business, which it expects to represent up to 20% of total profit by 2030.
"To only value Tesla on car sales alone ignores the multiple businesses embedded within the company, and ignores the long term value creation arising from monetizing Tesla's core strengths," Morgan Stanley said.

Morgan Stanley's sum-of-the-parts analysis is divided into six distinct businesses:

Tesla Auto: valued at $254 a share, assuming 3.8 million annual unit sales by 2030.
Tesla Energy: includes the solar and storage businesses and is valued at $12 a share.
Tesla Insurance: a relatively new offering from the company that is valued at $15 a share.
Tesla Mobility/Ride-sharing: a business that has not officially launched yet but is valued at $38 a share.
Tesla Network Services: includes software upgrades like full-self-driving mode and is valued at $164 a share.
Tesla as a third-party supplier: involves supplying parts to other electric-auto manufacturers and is valued at $58 a share.
So I got in, because I saw an opportunity
- Wallstreet Media was not including network effect into valuation
- As long as there are people who "don't get it" and we here people believing Tesla would be and should be valued as a car company, I am still buying.
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hagridshut
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut »

GT99 wrote: Wed Nov 18, 2020 10:21 pmAs for regulatory roadblock, I believe there are only 6 states in the US that currently allow truly autonomous (no driver) vehicles. But the real concern is what happens in our regulatory happy society when there is a high profile accident. It's inevitable. And we have many state and local government that are hyper-reactive to highly publicized perceived dangers. Reality doesn't matter much in those cases. That's my concern. Not to mention, you'll have driver unions lobbying like crazy against it. There are millions of people who stand to lose jobs because of autonomous vehicles (I'm not saying that as an argument against, I'm saying that because I expect the government to respond).
An Uber autonomous vehicle killed a person in 2018. There has been no substantial backlash against the industry from regulators, despite heavy media coverage and the fact that Uber is one of the most famous (and simultaneously most reviled) companies in the tech industry.

https://www.economist.com/the-economist ... pedestrian

I keep hearing arguments that regulators prohibit or will prohibit self driving systems, but I don't see any hard evidence of this occurring. The grisly tragedy of the Uber incident should have spurred more action if this had become a major public concern.
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hagridshut
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut »

TheoLeo wrote: Wed Nov 18, 2020 3:10 pmI really don´t think fully autonomous cars will ever will be able to drive safer than the average human on the roads we have today. I can imagine it being possible on roads that are equipped and maintained specifically for the purpose of autonomous driving. Maybe these roads will even have specific rules for other drivers using them next to autonomous vehicles. This may be possible on some highways. So FSD is a cool (marketing) gimmick that will allow Tesla to increase its profit margin a little, but I think it is highly unlikely that there will be "robotaxis".
I don't claim to know for sure, but I can't dismiss the possibility that autonomous cars could actually become better than people at driving at some point in the next few years. Machine Learning technology has resulted in language recognition and facial recognition technology that was unthinkable just 2 decades ago.

PBS Frontline has a lengthy but accessible documentary overview of the tech and its implications: https://www.youtube.com/watch?v=5dZ_lvDgevk

Crystal ball scenario:
All auto makers in aggregate ,ex-Tesla, have an EBIT margin of 4,3 %. So lets give Tesla a generous EBIT margin of 15 % because of vertical integration and its cooleness factor that customers are willing to pay extra for. Yearly revenue for all automakers combined ex-Tesla is around 2 Trillion. So if Tesla at some point captures 20 % of all yearly auto sales (Daimler and Volkswagen combined capture 25 % of world wide sales), it might have an EBIT of 60 billion per year. So maybe 42 billion net income per year at this point. Also, at this point it might have the PE of a maturer company, maybe 25. So the market cap should by then be 1 Trillion. I think this scenario is not unreasonable within the next 10 years. What do you think?
It's difficult to say how autonomous driving would change margins. The energy grid and Machine Learning sides of the business are also big unknowns at this point.

As much as I've researched Tesla over the years, I really just don't know how big the company could get. I can only guess, based on what I do know, that the company's trajectory is currently towards increasing importance in modern industrialized societies. I sort of got the same feeling when the iPhone became to become commonplace in the late 2000's, and when everyone seemed to be getting an Amazon Prime subscription.
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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 »

hagridshut wrote: Thu Nov 19, 2020 1:15 pm I keep hearing arguments that regulators prohibit or will prohibit self driving systems, but I don't see any hard evidence of this occurring. The grisly tragedy of the Uber incident should have spurred more action if this had become a major public concern.
There's been a few deaths attributed to failures of automated systems. I don't know how many.

Coming from an aerospace background, I find the regulatory situation for self-driving cars confusing.

I think Tesla exposes themselves to quite a bit of potential liability. If I approached my job the way Tesla is approaching the release of self-driving features to the public, and somebody died due to a mistake I made, there is a really good chance I would find myself facing a trial for negligent manslaughter. It doesn't even directly matter that self-driving cars are probably safer than the average driver. After all, keep in mind a negligent driver also can easily be tried for manslaughter, but if Tesla takes control, they should assume liability shifts to them.

On the financial side, while an individual driver can seldom be held responsible for much more than the value of their insurance coverage, precedence already has held automakers liable for in some cases hundreds of millions of dollars per incident. In at least one case, this occurred even when there was no objective defect. The jury seemed to have based their decision on relative stability of one SUV to its peers, even though it met all safety standards.

I've assumed for decades that self-driving cars will be coming eventually, but from an investment perspective, I'd be more comfortable with it if there was a certification process in place before they enter use, in order to help define reasonable functionality and diligence on the part of the manufacturer.
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Re: Tesla becomes most valuable car company in the world

Post by harikaried »

There was recent speculation sparked by Elon Musk's response during the Axel Springer award interview. He was specifically asked about buying a rival carmaker given that Tesla's market cap is nearing $600 billion (~6x market cap of Volkswagen), and his response was that Tesla wouldn't launch a hostile takeover but is open to have a conversation about merging. Some people were saying Tesla could do this as part of the larger mission to accelerate the world's transition to sustainable energy by directly having acquired companies focus exclusively on EVs with a Tesla supply chain.

A report from Reuters suggests maybe Daimler https://www.reuters.com/article/us-tesl ... SKBN28D2ER but then again a report from Barron's suggests any merger is unlikely https://www.barrons.com/articles/elon-m ... 1607360878
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Re: Tesla becomes most valuable car company in the world

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iamlucky13 wrote: Thu Nov 19, 2020 6:45 pm I think Tesla exposes themselves to quite a bit of potential liability. If I approached my job the way Tesla is approaching the release of self-driving features to the public, and somebody died due to a mistake I made, there is a really good chance I would find myself facing a trial for negligent manslaughter. It doesn't even directly matter that self-driving cars are probably safer than the average driver. After all, keep in mind a negligent driver also can easily be tried for manslaughter, but if Tesla takes control, they should assume liability shifts to them.
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare." As you've pointed out, with regular cars, the driver, who is usually the owner, is liable for accidents. But when the 'driver' is software produced by company X and used in a vehicle manufactured by company Y and owned by the car's occupant, all of those parties can be sued on both sides of the accident. So instead of 1 vs. 1, it could be 3 vs. 3 with as many as 27 different suits. And if you introduce a third vehicle to the mix, that number goes up to 81.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Tesla becomes most valuable car company in the world

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willthrill81 wrote: Mon Dec 07, 2020 2:16 pm
iamlucky13 wrote: Thu Nov 19, 2020 6:45 pm I think Tesla exposes themselves to quite a bit of potential liability. If I approached my job the way Tesla is approaching the release of self-driving features to the public, and somebody died due to a mistake I made, there is a really good chance I would find myself facing a trial for negligent manslaughter. It doesn't even directly matter that self-driving cars are probably safer than the average driver. After all, keep in mind a negligent driver also can easily be tried for manslaughter, but if Tesla takes control, they should assume liability shifts to them.
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare." As you've pointed out, with regular cars, the driver, who is usually the owner, is liable for accidents. But when the 'driver' is software produced by company X and used in a vehicle manufactured by company Y and owned by the car's occupant, all of those parties can be sued on both sides of the accident. So instead of 1 vs. 1, it could be 3 vs. 3 with as many as 27 different suits. And if you introduce a third vehicle to the mix, that number goes up to 81.
I was a young lawyer I'd specialize in this. You could make a whole career out of it.
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willthrill81
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Re: Tesla becomes most valuable car company in the world

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GaryA505 wrote: Mon Dec 07, 2020 5:04 pm
willthrill81 wrote: Mon Dec 07, 2020 2:16 pm
iamlucky13 wrote: Thu Nov 19, 2020 6:45 pm I think Tesla exposes themselves to quite a bit of potential liability. If I approached my job the way Tesla is approaching the release of self-driving features to the public, and somebody died due to a mistake I made, there is a really good chance I would find myself facing a trial for negligent manslaughter. It doesn't even directly matter that self-driving cars are probably safer than the average driver. After all, keep in mind a negligent driver also can easily be tried for manslaughter, but if Tesla takes control, they should assume liability shifts to them.
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare." As you've pointed out, with regular cars, the driver, who is usually the owner, is liable for accidents. But when the 'driver' is software produced by company X and used in a vehicle manufactured by company Y and owned by the car's occupant, all of those parties can be sued on both sides of the accident. So instead of 1 vs. 1, it could be 3 vs. 3 with as many as 27 different suits. And if you introduce a third vehicle to the mix, that number goes up to 81.
I was a young lawyer I'd specialize in this. You could make a whole career out of it.
Possibly. However, it seems to be an area where legislatures at the state and/or national level will be basically forced to step in and set up some bounds on who can be sued for what and when. Otherwise, the entire legal system could grind to a halt with all the suits.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Tesla becomes most valuable car company in the world

Post by Trader Joe »

Jags4186 wrote: Wed Jul 01, 2020 9:53 am So this morning Tesla has officially overtaken Toyota as the worlds most valuable car manufacturer. I have sat on the sidelines while several friends of mine have made buckets on money on this company. I understand that stocks are valued based on expected future earnings. My question is at what point does a company need to actually achieve these earnings? Toyota profitably sells over 10,000,000 vehicles a year. Tesla sells 500,000. It seems that the expectation is that Tesla will be making more than Toyota.

When do earnings need to catch up to valuations?
Great news and fully expected.
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Re: Tesla becomes most valuable car company in the world

Post by z3r0c00l »

Trader Joe wrote: Mon Dec 07, 2020 7:09 pm
Jags4186 wrote: Wed Jul 01, 2020 9:53 am So this morning Tesla has officially overtaken Toyota as the worlds most valuable car manufacturer. I have sat on the sidelines while several friends of mine have made buckets on money on this company. I understand that stocks are valued based on expected future earnings. My question is at what point does a company need to actually achieve these earnings? Toyota profitably sells over 10,000,000 vehicles a year. Tesla sells 500,000. It seems that the expectation is that Tesla will be making more than Toyota.

When do earnings need to catch up to valuations?
Great news and fully expected.
Fully expected that a company selling 1/20th as many cars has nearly 3x the market cap? Why is this great news for anyone but those gambling on Tesla stock or those who work there?
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Re: Tesla becomes most valuable car company in the world

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willthrill81 wrote: Mon Dec 07, 2020 2:16 pm
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare."
I am thinking it'll be more like a legal bonanza. I guess we'll see.
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Re: Tesla becomes most valuable car company in the world

Post by willthrill81 »

firebirdparts wrote: Tue Dec 08, 2020 9:37 am
willthrill81 wrote: Mon Dec 07, 2020 2:16 pm
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare."
I am thinking it'll be more like a legal bonanza. I guess we'll see.
Great news....if you're an attorney.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Tesla becomes most valuable car company in the world

Post by GaryA505 »

So, let's say you're a software engineer and you have to program the vehicle's speed (and maximum speed) for a particular location. Given that the flow of traffic is often over the speed limit, do you program the vehicle's maximum speed to the exact speed limit (the legally-safe thing to do), or do you program it to match the speed of the flow (probably safer in practical terms, but opens you to legal liability)?
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Re: Tesla becomes most valuable car company in the world

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willthrill81 wrote: Mon Dec 07, 2020 2:16 pm
iamlucky13 wrote: Thu Nov 19, 2020 6:45 pm I think Tesla exposes themselves to quite a bit of potential liability. If I approached my job the way Tesla is approaching the release of self-driving features to the public, and somebody died due to a mistake I made, there is a really good chance I would find myself facing a trial for negligent manslaughter. It doesn't even directly matter that self-driving cars are probably safer than the average driver. After all, keep in mind a negligent driver also can easily be tried for manslaughter, but if Tesla takes control, they should assume liability shifts to them.
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare." As you've pointed out, with regular cars, the driver, who is usually the owner, is liable for accidents. But when the 'driver' is software produced by company X and used in a vehicle manufactured by company Y and owned by the car's occupant, all of those parties can be sued on both sides of the accident. So instead of 1 vs. 1, it could be 3 vs. 3 with as many as 27 different suits. And if you introduce a third vehicle to the mix, that number goes up to 81.
A few things:

1. The self driving car industry will lobby for, and *get* changes to the law to account for self-driving cars. Money talks, always has, always will.
2. Self driving car companies might be suing and winning many lawsuits of their own against primitive human controlled cars. In many (most?) cases, they will have iron clad evidence of the mistakes humans have made, and being able to play them back for judges or juries second by second. Insurance costs for humans may ultimately force most of them into self-driving car services due to the insurance expense.
3.Self driving cars will kill many people, but the bar is absurdly low, 1.25M die each year globally, and 38k in the US alone. Let that sink in for a moment. There's just no way self-driving cars will come anywhere *near* this adjusted per mile driven.
4. Who do you think is going to win in a case where Joe-shmoe with a strip mall lawyer is fighting a 500B+ corporate legal team? This isn't strip mall lawyer vs. insurance lawyer. These are companies armed to the teeth with lawyers, they can run cases so long as to bankrupt the other party if they wanted, they will look at State Farm's legal team and be like "Oh, that's cute".

Long story short, I have my money on the self driving cars all day long. We "meat bags" (I think that's what the AI's refer to us as) should enjoy the driving while it lasts, we can tell tales to our grandkids one day about what it was like, and they will no doubt be horrified that anyone was allowed to drive a hulking 3.5-5 ton piece of steel around. They will look at us like we look at doctors in the 1820's blood letting as a cure. Injury lawsuits won't even be a "thing" once the industry sufficiently matures.
Last edited by mrspock on Tue Dec 08, 2020 10:57 pm, edited 2 times in total.
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Re: Tesla becomes most valuable car company in the world

Post by Prettyfrtnt »

mrspock wrote: Tue Dec 08, 2020 7:21 pm
willthrill81 wrote: Mon Dec 07, 2020 2:16 pm
iamlucky13 wrote: Thu Nov 19, 2020 6:45 pm I think Tesla exposes themselves to quite a bit of potential liability. If I approached my job the way Tesla is approaching the release of self-driving features to the public, and somebody died due to a mistake I made, there is a really good chance I would find myself facing a trial for negligent manslaughter. It doesn't even directly matter that self-driving cars are probably safer than the average driver. After all, keep in mind a negligent driver also can easily be tried for manslaughter, but if Tesla takes control, they should assume liability shifts to them.
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare." As you've pointed out, with regular cars, the driver, who is usually the owner, is liable for accidents. But when the 'driver' is software produced by company X and used in a vehicle manufactured by company Y and owned by the car's occupant, all of those parties can be sued on both sides of the accident. So instead of 1 vs. 1, it could be 3 vs. 3 with as many as 27 different suits. And if you introduce a third vehicle to the mix, that number goes up to 81.
A few things:

1. The self driving car industry will lobby for, and *get* changes to the law to account for self-driving cars. Money talks, always has, always will.
2. Self driving car companies might be suing and winning many lawsuits of their own against primitive human controlled cars. In many (most?) cases, they will have iron clad evidence of the mistakes humans have made, and being able to play them back for judges or juries second by second. Insurance costs for humans may ultimately force most of them into self-driving car services due to the insurance expense.
3.Self driving cars will kill many people, but the bar is absurdly low, 1.25M die each year globally, and 38k in the US alone. Let that sink in for a moment. There's just no way self-driving cars will come anywhere *near* this adjusted per mile driven.
4. Who do you think is going to win in a case where Joe-shmoe with a strip mall lawyer is fighting a 500B+ corporate legal team? This isn't strip mall lawyer vs. insurance lawyer. These are companies armed to the teeth with lawyers, they can run cases so long as to bankrupt the other party if they wanted, they will look at State Farm's legal team and be like "Oh, that's cute".

Long story short, I have my money on the self driving cars all day long. Enjoy the we "meat bags" (I think that's what the AI's refer to us as) should enjoy the driving while it lasts, we can tell tales to our grand-kids one day about what it was like, and they will no doubt be horrified that any was allowed to drive a hulking 3.5-5 ton piece of steel around. They will look at us like we look at doctors in the 1820's blood letting as a cure. Injury lawsuits won't even be a "thing" once the industry sufficiently matures.
Best discussion and reply on this topic that I have ever seen. You are absolutely correct. Fantastic response.
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Re: Tesla becomes most valuable car company in the world

Post by willthrill81 »

mrspock wrote: Tue Dec 08, 2020 7:21 pm
willthrill81 wrote: Mon Dec 07, 2020 2:16 pm
iamlucky13 wrote: Thu Nov 19, 2020 6:45 pm I think Tesla exposes themselves to quite a bit of potential liability. If I approached my job the way Tesla is approaching the release of self-driving features to the public, and somebody died due to a mistake I made, there is a really good chance I would find myself facing a trial for negligent manslaughter. It doesn't even directly matter that self-driving cars are probably safer than the average driver. After all, keep in mind a negligent driver also can easily be tried for manslaughter, but if Tesla takes control, they should assume liability shifts to them.
An attorney who specializes in consumer protection law has said that self-driving cars will be a "legal nightmare." As you've pointed out, with regular cars, the driver, who is usually the owner, is liable for accidents. But when the 'driver' is software produced by company X and used in a vehicle manufactured by company Y and owned by the car's occupant, all of those parties can be sued on both sides of the accident. So instead of 1 vs. 1, it could be 3 vs. 3 with as many as 27 different suits. And if you introduce a third vehicle to the mix, that number goes up to 81.
A few things:

1. The self driving car industry will lobby for, and *get* changes to the law to account for self-driving cars. Money talks, always has, always will.
2. Self driving car companies might be suing and winning many lawsuits of their own against primitive human controlled cars. In many (most?) cases, they will have iron clad evidence of the mistakes humans have made, and being able to play them back for judges or juries second by second. Insurance costs for humans may ultimately force most of them into self-driving car services due to the insurance expense.
3.Self driving cars will kill many people, but the bar is absurdly low, 1.25M die each year globally, and 38k in the US alone. Let that sink in for a moment. There's just no way self-driving cars will come anywhere *near* this adjusted per mile driven.
4. Who do you think is going to win in a case where Joe-shmoe with a strip mall lawyer is fighting a 500B+ corporate legal team? This isn't strip mall lawyer vs. insurance lawyer. These are companies armed to the teeth with lawyers, they can run cases so long as to bankrupt the other party if they wanted, they will look at State Farm's legal team and be like "Oh, that's cute".

Long story short, I have my money on the self driving cars all day long. We "meat bags" (I think that's what the AI's refer to us as) should enjoy the driving while it lasts, we can tell tales to our grandkids one day about what it was like, and they will no doubt be horrified that anyone was allowed to drive a hulking 3.5-5 ton piece of steel around. They will look at us like we look at doctors in the 1820's blood letting as a cure. Injury lawsuits won't even be a "thing" once the industry sufficiently matures.
Maybe so. Predictions are difficult, especially about the future.

However, if the average person gets railroaded by the auto makers in court too often, you can bet that lawmakers will hear about it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Tesla becomes most valuable car company in the world

Post by harikaried »

mrspock wrote: Tue Dec 08, 2020 7:21 pm3.Self driving cars will kill many people, but the bar is absurdly low, 1.25M die each year globally, and 38k in the US alone. Let that sink in for a moment. There's just no way self-driving cars will come anywhere *near* this adjusted per mile driven.
The types of deaths/causes will be different, so it'll be interesting to see how people react. A self-driving car is much less likely to cause a rear-end collision because it's not distracted by a text message and can much more accurately calculate position and speed. But a self-driving car might predict a human behavior incorrectly, e.g., believing it has space but causing the human to swerve. I'm sure some people will also learn to abuse self-driving cars leading to various people getting upset.
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