TSLA: What Changed?

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Kookaburra
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TSLA: What Changed?

Post by Kookaburra »

I realize there are widely varying opinions as to whether Tesla stock is properly valued. Setting that aside, if we assume the market is efficient and prices in all known info about the future, what is the prevailing explanation for its all-of-sudden meteoric rise that started one year ago and continues? In other words, what suddenly changed or became known starting about a year ago that catalyzed this (if anything)?
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firebirdparts
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Re: TSLA: What Changed?

Post by firebirdparts »

People just like to own it. I think it's pretty obvious that is the case. They can justify it if they like, but I don't think anybody cares all that much. Maybe a few here and there.
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secondopinion
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Re: TSLA: What Changed?

Post by secondopinion »

Kookaburra wrote: Tue Feb 02, 2021 3:39 pm I realize there are widely varying opinions as to whether Tesla stock is properly valued. Setting that aside, if we assume the market is efficient and prices in all known info about the future, what is the prevailing explanation for its all-of-sudden meteoric rise that started one year ago and continues? In other words, what suddenly changed or became known starting about a year ago that catalyzed this (if anything)?
Extreme pricing implies possible extreme growth; that is, TSLA is suspected to possibly grow massive. It could crash if this expectation is not met; but making tons of money if it is met.
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Normchad
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Re: TSLA: What Changed?

Post by Normchad »

We now know they can build new manufacturing plants quickly, and deliver ever increasing amounts of cars.

For a long time, there was valid, serious doubt about whether or not they could do either. Could they transition from a company selling 10,000 cars a year to one selling a half million. So they’ve convinced the world they can do that now.

And they’ve opened a plant in China in record time. And are opening one in Germany this year.

So I think the new thing we learned, is that we can expect them to sell large numbers of vehicles. And that wasn’t always a given. It’s plausible to think they will ship 1.5M cars/year in the foreseeable future.

The stock is probably still overvalued though...... Markets may be efficient overall, but not necessarily efficient when you look at just one company.....
pasadena
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Re: TSLA: What Changed?

Post by pasadena »

They started posting profits a year ago, and 2020 is their first year of profitability across all quarters. They reached quite a few milestones during the year, despite COVID, as the same time as a lot of other automobile manufacturers got crippled by the pandemic. They're building giga factories (in record time) and expanding geographically (China, Europe), potentially reducing shipping and regulatory roadblocks in the near future.

There may be something about progress to renewable energy (or move from fossil fuels) that is becoming clearer every year.

So a lot of people who didn't believe in the company, or who didn't think they were anywhere close to be profitable, have changed their mind, I guess.
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Re: TSLA: What Changed?

Post by nisiprius »

At the very least, securities prices have some kind of chaotic or fractal property... as do things involving mass psychology and group dynamics.

Imagine something like sand or grain or dirt spilling out of a chute and piling up into a mound. The mound piles up higher and higher. The sides of the mound become steeper and steeper. When the slopes of the mount are steeper than the "angle of repose," the mound is unstable. At some point it will suddenly slump and become flatter. You can say why it happens. You can even say when it becomes unstable. But at the moment when it slumps, you usually can't say "what changed."
Last edited by nisiprius on Tue Feb 02, 2021 4:31 pm, edited 1 time in total.
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Samosa22
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Re: TSLA: What Changed?

Post by Samosa22 »

nisiprius wrote: Tue Feb 02, 2021 4:20 pm At the very least, securities prices have some kind of chaotic or property... as do things involving mass psychology and group dynamics.

Imagine something like sand or grain or dirt spilling out of a chute and piling up into a mound. The mound piles up higher and higher. The sides of the mound become steeper and steeper. When the slopes of the mount are steeper than the "angle of repose," the mound is unstable. At some point it will suddenly slump and become flatter. You can say why it happens. You can even say when it becomes unstable. But at the moment when it slumps, you usually can't say "what changed."
Does the same hold true for a total US stock market fund such as VTSAX?
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harikaried
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Re: TSLA: What Changed?

Post by harikaried »

Kookaburra wrote: Tue Feb 02, 2021 3:39 pmwhat suddenly changed or became known starting about a year ago that catalyzed this (if anything)?
Tesla had been increasing its global EV (including hybrid) market share in the last year even with a pandemic that generally slowed down sales for other auto makers. Although looks like the last couple quarters had significant growth of competitor EVs:

Image

But even just looking at 2019 Q4 -> 2020 Q4, total EV sales more than doubled while Tesla increased by more than 60% and intends to continue growing on average 50% each year. As others have mentioned, some do see that Tesla has shown its ability to build and ramp up factories quickly, so there is now recent expectation for that to happen for the next several coming online soon. Some of the valuation is probably associated to Tesla's progress in making Autopilot ready to drive on city streets (initially with human supervision and maybe not too much longer without humans) which has oversized benefit of larger production capabilities (more data collection and more robotaxis).
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Re: TSLA: What Changed?

Post by bberris »

My own explanation is that nothing is really different. Then there is the charismatic (to some, smarmy to me) CEO, the quixotic saving of the world technology, virtue-signaling, wealth-flaunting ownership of a 40 % coal powered vehicle.... but then all those things were there all along. Teslas are a great example of an inverse demand curve; people desire it because it is expensive.

Regarding profitability: this was achieved by selling epa mileage credits to other car companies. As they ramp up their own electrics, the other car manufacturers won't need to buy them.
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ipdiddly
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Re: TSLA: What Changed?

Post by ipdiddly »

Kookaburra wrote: Tue Feb 02, 2021 3:39 pm ... if we assume the market is efficient and prices in all known info about the future ...
There's your mistake!

The market eventually figures things out in the long term. But in the short term the market can be wildly incorrect. Hence, the corollary: "The market can stay irrational longer than you can stay solvent." There are numerous examples throughout history. Look at the lunacy surrounding GME recently. In my view (but others clearly disagree), TSLA is priced as if will sell every car in the future and all competitors go out of business. How else can you explain TSLA market cap being greater than the nine largest car companies commbined? Then again, it's likely that TSLA stock price will continue to be irrational until it isn't.
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Callisto
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Re: TSLA: What Changed?

Post by Callisto »

Judging by how it was shorted to hell for so long, I wonder if their success in cars has just changed people's minds. But rather than people joining team Tesla, I feel like there's a lot less anti-Tesla.

From a car owner's perspective, its absolutely insane how far things have gone in terms of general education. I got my 3 at the beginning, and even at that point, years after the S & X, people would come and ask about the typical perceived "disadvantages" of going electric. Nowadays, you've got electric cars everywhere. Its not a thing people will come and talk to you about anymore, because they are so familiar and how much more educated people are. Tesla has gone mass market, rather than being a fringe non-luxury car at luxury car price company.

I think people see where the wind's blowing.
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Re: TSLA: What Changed?

Post by hi_there »

Also because Elon keeps giving goals that seem unrealistic but somehow, they manage to hit those goals. Last year, it was 500k cars. This year, they are targeting a 50% increase. The hype is self feeding. Once you have a fan base, people forgive your product defects, give you capital to invest, work harder when you hire them, pay deposits for cars they won't receive in 2 years, and so on...

One thing that is hard to explain is how Tesla is plain and simple out-engineering other companies, particularly in terms of powertrain efficiency and performance. I don't want to say it's just Silicon Valley style "American innovation", but there doesn't seem to be much else.
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Re: TSLA: What Changed?

Post by BayStater »

I think it's more about cash flow than profits.

Sure the price is supposed to be discounted future cash flows. But until they posted positive figures, I think it was hard for active managers to project what the future would be for this otherwise "hope and dreams" and hugely capital intensive business.

https://www.macrotrends.net/stocks/char ... -cash-flow
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Re: TSLA: What Changed?

Post by mr_brightside »

people 'believe in' Elon Musk

say what you will -- he is a visionary and will likely put the first humans on Mars.

people can get behind a guy like that. TSLA is a by-product of that. great CEOs can make the public believe the whole is greater than the sum of its parts.

---------------------------
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Re: TSLA: What Changed?

Post by 1789 »

mr_brightside wrote: Tue Feb 02, 2021 5:52 pm people 'believe in' Elon Musk

say what you will -- he is a visionary and will likely put the first humans on Mars.

people can get behind a guy like that. TSLA is a by-product of that. great CEOs can make the public believe the whole is greater than the sum of its parts.

---------------------------
So as you know in most part of the world people vote for the man and not for the political party in elections. if something were to happen to him or he decides to step down what will happen to Tesla stock?

I agree no one cares about the company when they buy the stock, they just love the guy. :D He has a big fan club
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Re: TSLA: What Changed?

Post by 02nz »

Callisto wrote: Tue Feb 02, 2021 5:25 pm Judging by how it was shorted to hell for so long, I wonder if their success in cars has just changed people's minds. But rather than people joining team Tesla, I feel like there's a lot less anti-Tesla.
True, the "I'm going to get so rich off shorting TSLA" crowd here got very quiet, no doubt they're off spending their riches. Oh wait ...
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Re: TSLA: What Changed?

Post by andypanda »

"They started posting profits a year ago, and 2020 is their first year of profitability across all quarters."

What happens when they run out of environmental credits to sell?

From https://fortune.com/2020/09/30/tesla-pr ... elon-musk/

"Tesla’s fastest-growing business isn’t putting owners in its Model S and Model 3. It’s selling environmental credits that enable its SUV- and truckmaking rivals to avoid big emissions fines.

That sumptuous stream of earnings—accounting for all of Tesla’s operating profits in the first half of 2020, by Fortune’s estimate—has probably peaked, and will begin a long slide before pretty much vanishing in a few years."
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Re: TSLA: What Changed?

Post by hagridshut »

bberris wrote: Tue Feb 02, 2021 5:02 pm My own explanation is that nothing is really different. Then there is the charismatic (to some, smarmy to me) CEO, the quixotic saving of the world technology, virtue-signaling, wealth-flaunting ownership

Teslas are a great example of an inverse demand curve; people desire it because it is expensive.
Nothing could be further from the truth.

People desire Tesla vehicles because they are fun to drive. The overall experience (instant torque, handling, computer interface, futuristic interior) is unique and compelling. The base trim Model 3 costs 38k. That is not a low price, but hardly expensive to the point of exclusivity.

40 % coal powered vehicle.... but then all those things were there all along.


This is also factually incorrect. As of 2019, coal was down to 23% of U.S. electricity production. If you scroll down about 1/3 of the way, there's a chart showing electricity generation by source over time. Coal is in steep decline, replaced by natural gas and renewables. As the grid gets cleaner, so does the environment footprint of driving an electric car.

https://www.eia.gov/energyexplained/ele ... the-us.php

Regarding profitability: this was achieved by selling epa mileage credits to other car companies. As they ramp up their own electrics, the other car manufacturers won't need to buy them.
Most other car manufacturers don't have the battery capacity.

For example, Ford is targeting 50,000 Mustang Mach E crossovers per year for the global market. They are battery constrained.

https://insideevs.com/news/464723/ford- ... 000-month/

Tesla built more than 3 times that number of just Model 3 and Model Y in just 1 quarter, and that number will skyrocket once the Shanghai expansion is at full rate, and the Berlin Germany and Austin TX factories open late this year. Tesla is locking up battery supply from Chinese and Korean vendors, since they cannot build enough of their own cells in partnership with Panasonic.

With emissions regulations tightening worldwide, the credit market will not dry up soon. Even Volkswagen, which has decent EVs, cannot build enough to meet their own EU fleet emissions standards.
Last edited by hagridshut on Tue Feb 02, 2021 6:54 pm, edited 1 time in total.
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Re: TSLA: What Changed?

Post by alex_686 »

The market can be efficient and TSLA can have a meteoric rise.

Consider a fair coin toss. Heads you get $1.00, Tails gets you $0.00. What is the expected value of investment prior to the coin flip? $0.50. After the coin flip? $1.00.

Can Tesla move from a nitch provider of exotic cars to a major manufacturer. Tesla had multiple adventurous plans. New cars, new production techniques, new production plants. They have had issues will all of these in the past. If they have issues with any of these - well, big problems. This year has gone very well for them. These risky ventures now seem sound. Or at least manageable.

Then there is a whole host of other issues. Falling interest rates have pushed up stock prices in general. Countries seem to be pushing harder to zero emissions. The addition to the S&P 500 stimulated demand. etc.
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Re: TSLA: What Changed?

Post by alex_686 »

pasadena wrote: Tue Feb 02, 2021 4:08 pm They started posting profits a year ago, and 2020 is their first year of profitability across all quarters.
To extend on this a bit, I think they have been profitable for 2 years. However, the profits from 2 years ago were from some one time accounting changes plus cash from selling environmental credits to their gas guzzling competitors.

Last year was the first full year where they had positive earnings coming from their core operations.
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Re: TSLA: What Changed?

Post by alexander29 »

It may be overvalued, but I think investors (including my own small bet) are calculating that this could be the next Microsoft, Apple, or Amazon. It's a bunch of stuff to intrigue any speculator:

- They've moved from strictly luxury cars to upper middle class with the 3 and Y and are opening new plants in Berlin and Texas and expanding the one in China. EVs look to be the future.
- Their software, especially self-driving, is ahead of the competition. If self-driving ever works, it will be a huge profit center.
- They are planning to start selling an electric pickup and a semi freight truck soon.
- Their solar shingles, and solar roofs, are intriguing and competitive.
- They build huge storage batteries for homes and businesses. Another huge potential market.
- They are so ahead on battery development that they could dominate that component of EVs.
- Elon Musk is an eccentric (weird) genius who does amazing things in space, the Boring Company, etc. Who knows what he'll do next?
- They could spin off companies, merge, etc.

I expect plenty of growing pains - their car company is far from perfect - but for Tesla, not even the sky is the limit. Elon wants to go to Mars.
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Re: TSLA: What Changed?

Post by Normchad »

alex_686 wrote: Tue Feb 02, 2021 6:45 pm The market can be efficient and TSLA can have a meteoric rise.

Consider a fair coin toss. Heads you get $1.00, Tails gets you $0.00. What is the expected value of investment prior to the coin flip? $0.50. After the coin flip? $1.00.

Can Tesla move from a nitch provider of exotic cars to a major manufacturer. Tesla had multiple adventurous plans. New cars, new production techniques, new production plants. They have had issues will all of these in the past. If they have issues with any of these - well, big problems. This year has gone very well for them. These risky ventures now seem sound. Or at least manageable.

Then there is a whole host of other issues. Falling interest rates have pushed up stock prices in general. Countries seem to be pushing harder to zero emissions. The addition to the S&P 500 stimulated demand. etc.
Very good points. And part of it might be a growing realization of just how far behind the competition is.

I doubt this has impacted the recent run up, but Tesla maybe able to exploit other revenue streams as well.

They’ve said they will start a subscription for FSD. If that’s a $1000/year and a 200,000 people take it, that’s a lot of pure profit. No other manufacturer makes money after a sale. Their dealers might, but the manufacturer doesn’t.

I won’t be shocked if they don’t eventually end up licensing some if this stuff to other carmakers. Imagine if they could get a $500 license fee per car from GM, Toyota, VW in the future?

And of course, they’ve got their Solar business which seems to be picking up.......
Last edited by Normchad on Tue Feb 02, 2021 6:58 pm, edited 2 times in total.
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Re: TSLA: What Changed?

Post by hagridshut »

andypanda wrote: Tue Feb 02, 2021 6:31 pmWhat happens when they run out of environmental credits to sell?
It won't matter in the long run.

Tesla is rapidly driving down their production cost, using technologies that other companies have shunned.

For example, the Model Y uses a "Mega casting" to create the rear structure out of just 2 pieces.

https://youtu.be/KVGvwLnNyF0?t=126

The most recent versions of Model Y use only 1 piece.

This eliminates hundreds of robots in body assembly, but requires specialized casting machines and alloys that only Tesla currently has. Eventually, both front and rear body structures will be 1 piece each.

Tesla's economies of scale are also expected to drive down battery costs 56%, according to their plans revealed last year. Their custom manufacturing equipment in a pilot plant is far denser than what exists now at their main battery factory in Nevada.

There are also efforts underway to eliminate complexity in the electrical wiring, which is a major headache and expense to all automakers.

Basically, Tesla is re-inventing almost all aspects of conventional automobiles, in ways that should give them enormous cost savings 3-5 years down the road. Other automakers rely on suppliers for far more subsystems than Tesla, and do not have the flexibility to do what Tesla is doing.

This doesn't even get to what happens if the Full Self Driving software becomes operational, or their Utility Grid Storage hardware and software solutions, or Deep Learning training platform (Dojo). In the very long run, Tesla may be a competitor to nVidia, Amazon, and Google where Machine Learning solutions are concerned.

Most of what's published in the Mainstream Media about Tesla is either incorrect or shortsighted.

I started investigating Tesla in 2018 after reading much controversy here. This company is hugely misunderstood, and I think many investors have paid a steep price for listening to reporters and analysts who really had no idea what they were talking about.
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Re: TSLA: What Changed?

Post by learntoinvest123 »

Tesla has not made any money so far without credits. The current political climate is very conducive to EVs. Tesla is the market leader there and has brand power.

Nissan has had an EV close to a decade, but nobody pays any attention to it. If Tesla can drop the price of Model 3 around 30k , the expectation is with Federal support they could potentially grab a huge market share with Federal credit.

This is pure speculation, and if there is a meaningful shift to EVs, Tesla will have huge competition from Honda and Toyota.

On top of that Tesla has no dealerships, so it will face stiff opposition to growth.
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Re: TSLA: What Changed?

Post by harikaried »

It seems quite amazing that competitors paid Tesla $2 billion in regulatory credits in the last two years. That's enough to build a Gigafactory line, and Shanghai produced more than 150k Model 3s in its first year which is $8 billion revenue assuming roughly $50k average sales price. If Tesla can produce and sell all 250k expected production capacity from Shanghai Model 3 line this year, that would then mean first 2 years of operation generated $20 billion! Sounds like a pretty good deal to have your competitors build out your future revenue.
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Re: TSLA: What Changed?

Post by AquaBliss »

I put about 3% NW in TSLA in November at about $420, now represents about 5% of my NW. I told myself if it dipped under $800 after earnings I’d buy more, and it did but I couldn’t pull the trigger as I’m already in pretty heavy (for me anyhow).

I live in SoCal and all my neighbors are getting Tesla Solar (they talk about it on Nextdoor) and every other car on the street in my community seems to be a model S or X. I think with Semi’s / Cybertruck/ Uptick in Solar on the horizon, TSLA has a lot of potential for growth in the next 3-5 years.
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Re: TSLA: What Changed?

Post by benderbr »

learntoinvest123 wrote: Tue Feb 02, 2021 7:10 pm Tesla has not made any money so far without credits. The current political climate is very conducive to EVs. Tesla is the market leader there and has brand power.
True for now, but Tesla's 50% growth are producing economies of scale, improving profit per vehicle. They are building several massive factories simultaneously across the globe.
Nissan has had an EV close to a decade, but nobody pays any attention to it. If Tesla can drop the price of Model 3 around 30k , the expectation is with Federal support they could potentially grab a huge market share with Federal credit.
There is no more federal credit for Tesla cars. Nissans EV is like a Honda Fit. Tesla Model3 is like a BMW 3 series. Tesla model 3 starts at 38k, so close to your price. You can probably find a used one for 30k.
This is pure speculation, and if there is a meaningful shift to EVs, Tesla will have huge competition from Honda and Toyota.
As others have said, other manufacturers are far behind on EVs in terms of manufacturing capabilities. Ford's new ModelY competitor, the MachE, costs less than a Y. But Ford is only planning to build 50,000 annually. Tesla is going to do 10x or more with their 3/Y.
On top of that Tesla has no dealerships, so it will face stiff opposition to growth.
No private dealerships is one of Tesla's major advantages. Did you know car dealerships are not owned by the manufacturer? Dealerships are a huge drag on traditional manufacturers. There is no good way to get rid of them either. Tesla made a great move cutting out the middle man here and throughout their supply chain. Food for thought - most Tesla owners bought their car on Tesla's website. No haggling, no fuss - order what you want and they build it for you. I've done it both ways and I don't miss the dealership experience at all. That goes double for the service side of the dealership.
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Re: TSLA: What Changed?

Post by TropikThunder »

learntoinvest123 wrote: Tue Feb 02, 2021 7:10 pm On top of that Tesla has no dealerships, so it will face stiff opposition to growth.
That's not a bug, that's a feature. Do you know anyone who likes going to a car dealer to buy a car? How many people do you think would prefer buying a car without ever having to speak with a salesman? 80%? 90%?
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Re: TSLA: What Changed?

Post by fallingeggs »

One avenue slightly mentioned above is that the self-driving capabilities will allow Telsa to (finally) start a fleet of taxis and crush Uber/Lyft.

Between that and selling as many cars as VW in a decade...

Both seem like long shots, but that's the world we're in.
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Re: TSLA: What Changed?

Post by Normchad »

TropikThunder wrote: Tue Feb 02, 2021 8:27 pm
learntoinvest123 wrote: Tue Feb 02, 2021 7:10 pm On top of that Tesla has no dealerships, so it will face stiff opposition to growth.
That's not a bug, that's a feature. Do you know anyone who likes going to a car dealer to buy a car? How many people do you think would prefer buying a car without ever having to speak with a salesman? 80%? 90%?
Exactly. When GM and Chrysler went through bankruptcy, they fought tooth and nail to close down as many of their own dealerships as they could. Legacy automakers don’t see their dealer network as an advantage.

Tesla also doesn’t spend money on advertising. They don’t spend money on retiree benefits, etc. Legacy manufactures own lots of engine, transmission, and parts plants that will be very expensive to unwind. They have a lot of expensive labor right now to build complex vehicles; and it will cost a lot of money go shrink that workforce. (And the labor unions are very concerned about EVs, and might be a hindrance to a changeover).

Tesla has some great, enduring structural, advantages there.

None of this means that they will survive. They might, or they might not. They’re off to a great start, but it’s still the first inning.
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Re: TSLA: What Changed?

Post by KandT »

One day having a polluting internal combustion engine will be like smoking in a restaurant. People have come to this realization in the last year. Also, with all the Tesla's on the road can you imagine how many people have now been in one and realize most of what they have been told about EV's are lies?
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Re: TSLA: What Changed?

Post by srt7 »

Don't mistake TSLA price for just Tesla Motors. It is a LOT more than just that and includes solar roof panels, SpaceX (kicked NASA's lazy expensive butt), boring company and so many more.

Plus don't forget that it's not a run of the mill CEO at the helm but someone who consistently questions the status quo, sets an ever raising bar of self-expectations and consistently (or in some cases eventually) hits them. It must be irritating for those run of the mill CEOs and their investors :D

Finally, most people are caught up on measuring the stock price with traditional rules of the game while the game itself has changed.

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Re: TSLA: What Changed?

Post by srt7 »

Normchad wrote: Tue Feb 02, 2021 8:39 pm
TropikThunder wrote: Tue Feb 02, 2021 8:27 pm
learntoinvest123 wrote: Tue Feb 02, 2021 7:10 pm On top of that Tesla has no dealerships, so it will face stiff opposition to growth.
That's not a bug, that's a feature. Do you know anyone who likes going to a car dealer to buy a car? How many people do you think would prefer buying a car without ever having to speak with a salesman? 80%? 90%?
Exactly. When GM and Chrysler went through bankruptcy, they fought tooth and nail to close down as many of their own dealerships as they could. Legacy automakers don’t see their dealer network as an advantage.

Tesla also doesn’t spend money on advertising. They don’t spend money on retiree benefits, etc. Legacy manufactures own lots of engine, transmission, and parts plants that will be very expensive to unwind. They have a lot of expensive labor right now to build complex vehicles; and it will cost a lot of money go shrink that workforce. (And the labor unions are very concerned about EVs, and might be a hindrance to a changeover).

Tesla has some great, enduring structural, advantages there.

None of this means that they will survive. They might, or they might not. They’re off to a great start, but it’s still the first inning.
Agreed. So many were loyal to these car brands and saw dealerships close and eventually rot away during the 2008 recession. It was tough to watch.
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Re: TSLA: What Changed?

Post by MinnGuyInvesting »

I think there are several factors.

1. Musk had that issue with the SEC that he overcame.

2. Became profitable.

3. Example of rapid ability to scale.

4. I think people are just starting to understand Elon's vision that it's more than a car company.

5. People now understand how Tesla is far better positioned than any other US automaker for the future.

6. I watch a lot of videos of smart people. Elon Musk might be the most brilliant man on the planet right now. I'd like to hear who others would suggest.
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Re: TSLA: What Changed?

Post by abuss368 »

1789 wrote: Tue Feb 02, 2021 6:00 pm
mr_brightside wrote: Tue Feb 02, 2021 5:52 pm people 'believe in' Elon Musk

say what you will -- he is a visionary and will likely put the first humans on Mars.

people can get behind a guy like that. TSLA is a by-product of that. great CEOs can make the public believe the whole is greater than the sum of its parts.

---------------------------
So as you know in most part of the world people vote for the man and not for the political party in elections. if something were to happen to him or he decides to step down what will happen to Tesla stock?

I agree no one cares about the company when they buy the stock, they just love the guy. :D He has a big fan club
I would agree. I would also think back to Apple when Steve Jobs was in control as well as Warren Buffett with Berkshire Hathaway.

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Re: TSLA: What Changed?

Post by alex_686 »

srt7 wrote: Tue Feb 02, 2021 9:16 pm Don't mistake TSLA price for just Tesla Motors. It is a LOT more than just that and includes solar roof panels, SpaceX (kicked NASA's lazy expensive butt), boring company and so many more.
No and No. SpaceX and the Boring Company are not part of TSLA.

And on that note - are you not even a little worried that the CEO has moved out of CA to TX to be closer to his space launch center? Not even a little bit worried that he is going to take his eye off of the TSLA ball and devote more energy to his side project?
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Re: TSLA: What Changed?

Post by benderbr »

Tesla has always been Musk's side project. SpaceX is his real project.
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Re: TSLA: What Changed?

Post by srt7 »

alex_686 wrote: Tue Feb 02, 2021 9:32 pm
srt7 wrote: Tue Feb 02, 2021 9:16 pm Don't mistake TSLA price for just Tesla Motors. It is a LOT more than just that and includes solar roof panels, SpaceX (kicked NASA's lazy expensive butt), boring company and so many more.
No and No. SpaceX and the Boring Company are not part of TSLA.

And on that note - are you not even a little worried that the CEO has moved out of CA to TX to be closer to his space launch center? Not even a little bit worried that he is going to take his eye off of the TSLA ball and devote more energy to his side project?
I could have done a better job explaining what I meant. While on paper TSLA might not fund Elon's other companies or initiatives but he has openly mentioned several times on how that was always the plan. TSLA funds his SpaceX program.

Worried? Why? He's building a Gigafactory in Austin, TX. Between that one and the expansion in to China and Germany I'd say he's making it in to a proper global brand.
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Re: TSLA: What Changed?

Post by srt7 »

benderbr wrote: Tue Feb 02, 2021 9:38 pm Tesla has always been Musk's side project. SpaceX is his real project.
Exactly!
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Re: TSLA: What Changed?

Post by fennewaldaj »

alexander29 wrote: Tue Feb 02, 2021 6:50 pm It may be overvalued, but I think investors (including my own small bet) are calculating that this could be the next Microsoft, Apple, or Amazon. It's a bunch of stuff to intrigue any speculator:
The problem with that line of reasoning is that their current market cap isn't even that far from Microsoft Amazon or Apple. Yeah when the market cap was 100 million it made sense as a possible 20-30x play but its not going to grow 20-30x in market cap from here.
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Re: TSLA: What Changed?

Post by benderbr »

fennewaldaj wrote: Tue Feb 02, 2021 10:25 pm
alexander29 wrote: Tue Feb 02, 2021 6:50 pm It may be overvalued, but I think investors (including my own small bet) are calculating that this could be the next Microsoft, Apple, or Amazon. It's a bunch of stuff to intrigue any speculator:
The problem with that line of reasoning is that their current market cap isn't even that far from Microsoft Amazon or Apple. Yeah when the market cap was 100 million it made sense as a possible 20-30x play but its not going to grow 20-30x in market cap from here.
I'm an owner of a Tesla and big fan of the company, but I also completely agree with you that potential upside is very limited in the stock. It's seems hard for many people on both sides to understand these as separate things.

Musk has even stated the stock is overvalued on a few occasions last year when the price was much lower than today.
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Re: TSLA: What Changed?

Post by susze »

Market or stonks has become less about valuations and some of these ratios that are either stale or obsolete and more of a traditional basic supply and demand market. Seems like people are unwilling to sell their tesla shares and more want to buy.

But search on youtube and you will see crazy FSD claims, takeover of the utility grid to neuralink(which is not even tesla)to make people want the stock.
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Re: TSLA: What Changed?

Post by BayStater »

TSLA is already a sweeping conglomerate from cars, to energy, to software/IT:
  • automaker: I think they're barely Top 20 by revenue. Not even Top 20 by # units produced. Currently, they'd be close to Subaru in revenue.
  • car retailer: If they sell 500k that's more than AutoNation, the largest new-car retailer. 3x Carvana.
  • battery manufacturer: Close to size of BYD. But Tesla supplies itself. I guess one day it could use excess capacity as a revenue stream.
  • solar manufacturer, retailer & installer: no idea on the current scale of this. But the future value is creating a "moat" or "Apple-like ecosystem" for energy with your car+home.
  • service station operator: 1,826 supercharger stations about tied with Circle K for the second largest network of any "fuel" retailer.
  • autonomous driving software company: I'm not sure on any publicly-traded company that's specifically and only in this space. But Tesla is the leader for level-2 driving that the public has access to right now.
Tesla may still be overpriced than the combined capitalization of their peers in these verticals. But I can see why it's tough to just value them against most other automakers.

I think it's really autonomous driving that captures most of the future value people price in. Every other competitor is trying to skip to level-3, 4, 5 with LIDAR and mapping.... but it's unclear if that approach is really scalable. If it is, how long it will take to develop before consumers will see those systems.

If the higher-level autonomous driving can be solved with the hardware Tesla already equips... and it's "simply" a data game (as they hope): Tesla will win.
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Re: TSLA: What Changed?

Post by learntoinvest123 »

TropikThunder wrote: Tue Feb 02, 2021 8:27 pm That's not a bug, that's a feature. Do you know anyone who likes going to a car dealer to buy a car? How many people do you think would prefer buying a car without ever having to speak with a salesman? 80%? 90%?
I am not a fan of dealerships. Love the direct selling concept. What I am saying is Tesla the company will face (already faces) significant opposition from dealerships that will lobby in every state and make it hard for them to grow. It is a headwind for the stock.
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Re: TSLA: What Changed?

Post by learntoinvest123 »

benderbr wrote: Tue Feb 02, 2021 7:55 pm As others have said, other manufacturers are far behind on EVs in terms of manufacturing capabilities. Ford's new ModelY competitor, the MachE, costs less than a Y. But Ford is only planning to build 50,000 annually. Tesla is going to do 10x or more with their 3/Y.
I have nothing against Tesla. What I am saying is the valuation of Tesla is bigger than next 10 automobile companies combined. Yet you do not see Honda or Toyota panicking and putting out one EV after another. The market for EVs as it stands is very tiny, and none of these companies feel there is a fundamental shift of consumers to EVs yet.

Can Tesla put Honda or Toyota out of existence? it is possible, but you don't see the market betting on it yet. Take a look at Honda and Toyota stock (those are not bankruptcy valuations).

Once market shifts to EVs, Tesla will have tons of competition. There are 10 other established automakers, 2 Japanese that have a faithful following.
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Re: TSLA: What Changed?

Post by Nathan Drake »

BayStater wrote: Tue Feb 02, 2021 10:46 pm TSLA is already a sweeping conglomerate from cars, to energy, to software/IT:
  • automaker: I think they're barely Top 20 by revenue. Not even Top 20 by # units produced. Currently, they'd be close to Subaru in revenue.
  • car retailer: If they sell 500k that's more than AutoNation, the largest new-car retailer. 3x Carvana.
  • battery manufacturer: Close to size of BYD. But Tesla supplies itself. I guess one day it could use excess capacity as a revenue stream.
  • solar manufacturer, retailer & installer: no idea on the current scale of this. But the future value is creating a "moat" or "Apple-like ecosystem" for energy with your car+home.
  • service station operator: 1,826 supercharger stations about tied with Circle K for the second largest network of any "fuel" retailer.
  • autonomous driving software company: I'm not sure on any publicly-traded company that's specifically and only in this space. But Tesla is the leader for level-2 driving that the public has access to right now.
Tesla may still be overpriced than the combined capitalization of their peers in these verticals. But I can see why it's tough to just value them against most other automakers.

I think it's really autonomous driving that captures most of the future value people price in. Every other competitor is trying to skip to level-3, 4, 5 with LIDAR and mapping.... but it's unclear if that approach is really scalable. If it is, how long it will take to develop before consumers will see those systems.

If the higher-level autonomous driving can be solved with the hardware Tesla already equips... and it's "simply" a data game (as they hope): Tesla will win.

Tesla may “win” on autonomous driving, but since when does that preclude other auto companies from developing their own data-intensive software solution?

I don’t think a first mover advantage means much here given the regulation and how much competition there is. I don’t see a particularly large moat
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Valuethinker
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Re: TSLA: What Changed?

Post by Valuethinker »

bberris wrote: Tue Feb 02, 2021 5:02 pm My own explanation is that nothing is really different. Then there is the charismatic (to some, smarmy to me) CEO, the quixotic saving of the world technology, virtue-signaling, wealth-flaunting ownership of a 40 % coal powered vehicle.... but then all those things were there all along. Teslas are a great example of an inverse demand curve; people desire it because it is expensive.

Regarding profitability: this was achieved by selling epa mileage credits to other car companies. As they ramp up their own electrics, the other car manufacturers won't need to buy them.
I imagine most Teslas are sold in US coastal states? So heavily California and the North East (perhaps also Colorado?).

Coal is less than 25% of US generation share, and that is highly concentrated in certain Midwestern states and the South East. So a Tesla in Ohio, yes.

In Europe I doubt most Tesla sales are in Poland? :wink: I am not sure Germany is still 40% coal, and there's no other western European nation that is anywhere close.

China. Yes. Teslas in China will be mostly coal powered (still 80% of their electricity, from memory).

Just on "signaling". Almost all car buying is signaling -- people like us, people who share our values**, people we want to signal to about our values and our relative success. Otherwise we'd all drive Dacias (Romanian built Renault, v. popular in eastern Europe, no frills cars)***. Ford's leading vehicle sale is a truck? For sure they are not all being bought by general contractors. Buying a big truck or SUV is also a signaling.

Yes Tesla is a luxury good and perceived brand cachet is important.

I don't disagree re Musk, he is a loose cannon, calling a British cave rescuer in Thailand who rescued all those boys "a pedo". Summarises a guy who cannot turn his mouth off.


*** perhaps a Kia in the USA.
Last edited by Valuethinker on Wed Feb 03, 2021 6:27 am, edited 1 time in total.
fennewaldaj
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Re: TSLA: What Changed?

Post by fennewaldaj »

Valuethinker wrote: Wed Feb 03, 2021 4:11 am

Just on "signaling". Almost all car buying is signaling -- people like us, people who share our values**, people we want to signal to about our values and our relative success. Otherwise we'd all drive Dacias (Romanian built Renault, v. popular in eastern Europe, no frills cars)***. Ford's leading brand is a truck? For sure they are not all being bought by general contractors. Buying a big truck or SUV is also a signaling.
I suppose even my driving a 15 year old Nissan Sentra on an upper middle class income is a type of signaling.
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Re: TSLA: What Changed?

Post by Valuethinker »

fennewaldaj wrote: Wed Feb 03, 2021 4:43 am
Valuethinker wrote: Wed Feb 03, 2021 4:11 am

Just on "signaling". Almost all car buying is signaling -- people like us, people who share our values**, people we want to signal to about our values and our relative success. Otherwise we'd all drive Dacias (Romanian built Renault, v. popular in eastern Europe, no frills cars)***. Ford's leading brand is a truck? For sure they are not all being bought by general contractors. Buying a big truck or SUV is also a signaling.
I suppose even my driving a 15 year old Nissan Sentra on an upper middle class income is a type of signaling.
:happy

Because Tesla manages to neatly encapsulate both environmental themes, but also is the "hot rod" for a tech generation, it attracts particular opprobrium.

If you go back here and other places, in 2003-08, similar gibes were once laid at driving a Toyota Prius. Nowadays everyone has become much more comfortable with hybrid vehicles, and Prius is the taxicab of choice in many cities that I have visited. So the accusation just does not come up. Electric Vehicles will be so universal in 5-10 years time that the same thing will occur. Most lines of car will have an EV version in some form.

I admire very much what Elon Musk has done. I do not necessarily admire his personality & behaviour.

The reality is there is a signal in every consumption decision one makes. I would not have paid the price of a Tesla, but everyone I know who has one seems to love it. My point is that we can't single out one particular buyer, allege their motivations, and generalise.

People buy Tesla because of its acceleration. Or its whizzy electronic features. Not just for environmental reasons. Or not at all for those reasons. Or to impress their neighbours, or their clients.
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Re: TSLA: What Changed?

Post by andypanda »

I haven't even finished my first cup of coffee and I've already seen two interesting items. First, Tesla has been forced to recall 135,000 vehicles due to a failure prone chip in the screen. They'd been charging owners to fix them, but the feds say it's a safety issue because the backup camera won't work and neither will the defrost/defogger. Tesla insists it's not really a problem.

Second, that was some explosion Starship SN9 made when it hit the ground. Reports state that it "aced the test."

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