Tesla becomes most valuable car company in the world

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

Post by Normchad » Thu Jul 16, 2020 1:55 pm

garlandwhizzer wrote:
Thu Jul 16, 2020 1:46 pm
Valuethinker wrote:

The stock terrifies me. Both in its valuation, its financial fundamentals, the company's tendency to slip deadlines, and the retail enthusiasm for the company. Also in the short squeezes.

But the company has been very successful.
1+

What I am concerned about is not so much the car/battery company itself which is a great company, but the herd of investors who have been driving its skyrocketing price. Mindless MOM investing, buying only because of the stock price graph, and add to that the euphoric expectations of many investors about TSLA's future. Usually at some unpredictable point, MOM price action reverses and euphoria hits reality. There are exceptions like AMZN which has been outrageously over-priced IMO for a decade and currently has a PE of 144. For every AMZN there are many innovative companies who promised to create a new future and wound up in the junk heap. MOM and sentiment can be extremely volatile and their price action works in both directions. We've certainly seen the upside. When will the downside hit? I certainly don't know but I strictly limit how much money I bet on sweet dreams.

Garland Whizzer
I’m down with all that. Full disclosure, I own 30 shares.

But as I learned a long time, anything built on the “greater fool theory”:will blow up. I.e. I’ll buy it today, because a greater fool will come along tomorrow and pay more for it.

https://en.m.wikipedia.org/wiki/Greater_fool_theory

I think the stock is definitely in greater fool territory. Just like Bitcoin was....

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

Post by Elysium » Thu Jul 16, 2020 2:03 pm

Valuethinker wrote:
Thu Jul 16, 2020 8:27 am

The stock terrifies me. Both in its valuation, its financial fundamentals, the company's tendency to slip deadlines, and the retail enthusiasm for the company. Also in the short squeezes.

But the company has been very successful.
They are pretty fine as a company, and the product is good, no questions about that, but my comments were about stock price and value of the company in relation to that. They are not a mass product yet, not at these gasoline prices, while fully understand situation elsewhere is different. Even in Europe with high Gasoline prices, can people really afford to purchase a high priced EV car like Tesla in mass numbers? I doubt it. Given all that, stock price is massively overpriced, although it pains me to say that the market has got the pricing wrong. I wonder why that is. Anyhow, I think the real value of stock is somewhere half of what it is today.

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

Post by garlandwhizzer » Thu Jul 16, 2020 8:30 pm

Normchad wrote:

But as I learned a long time, anything built on the “greater fool theory”:will blow up. I.e. I’ll buy it today, because a greater fool will come along tomorrow and pay more for it.
1+

The greater fool theory can work very well if you time correctly when to buy and when to sell. I suspect there are a few investors who are adept at playing this game--buying an outrageously valued but very attractive stock early and getting out before the tide turns. I am not one of them so I avoid it. I missed the boat with AMZN and TSLA, but on the positive side I missed a lot of other boats with seemingly bright future prospects that never materialized. Wide diversification never finishes first in the investment return race, but neither does it ever finish last. As a general rule when you concentrate your investment assets in a single stock or a very narrow slice of the market, you may do very well or very poorly relative to the market. It's interesting in this regard to look at year end stock selections by acknowledged experts when they pick which stocks are going to outperform best next year. They are often wrong, sometimes laughably so. I suspect that most underperform the market.

Garland Whizzer

iamlucky13
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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 » Thu Jul 16, 2020 8:44 pm

hagridshut wrote:
Thu Jul 16, 2020 6:53 am
Extrapolating today's actual production capacity based on past Q4 '19 and Q1 '20 results doesn't make any sense, for the following reasons:
Yes, those are valid points, but it is still the case that what Tesla has stated their production capacity to be has never been a very informative number.
hagridshut wrote:
Thu Jul 16, 2020 6:53 am
The Munro & Associates teardown on YouTube revealed that Model Y's production cost is lower than Model 3, and many of the techniques used to reduce cost in Model Y can eventually be backported to Model 3.
This matches my expectations that over time they will continue to reduce production costs.

As a related but distinct observation, from what I understand of the method, it sounds like their cost analysis should be treated as indicating achievable costs, not current costs. If I remember right, their analysis of the Model 3 production cost was $28,000. This would be without overhead, where as the $48,000 number I estimated is with overhead, but I think their estimate is still lower than the actual current labor + materials cost.

By the way, some of the overhead that would have been captured in my estimate really is development costs for other automotive segment projects like the pickup and semitruck. My estimate likely errs a little high.
hagridshut wrote:
Thu Jul 16, 2020 6:53 am
I think they're capable of accomplishing that, but it's not a given, and eventually, they will have meaningful direct competition. I have zero interest in speculating on their stock as a result.
People have been raising the competition issue since 2012. 8 years later, that argument hasn't played out well. Tesla's Model Y has much longer range and better performance than similarly sized crossovers like the Jaguar I-Pace and Audi E-Tron, and the Model Y costs substantially less than either. The I-Pace and E-Tron start at $70,000 and $75,000 respectively, while the Model Y starts at $50,000 and has 35% more range than the Jag and 50% more range than the Audi.

Tesla also isn't standing still as their competitors try to catch up. If anything, they are accelerating away from the competition.
The competition is still barely simmering. Certainly no one else has the $75+ billion into it that Tesla does, and given uncertainty how big the market is for the current price points, I can understand that. Volkswagen/Audi is perhaps where Tesla was in 2014, doesn't seem to be rushing to accelerate very rapidly, and doesn't appear to be very interested so far in prioritizing efficiency in the compromise between layout and drag coefficient. Other EV's like the Chevrolet Bolt do just fine efficiency-wise.

Eventually, the others will conclude the cost and demand are at a point where the market can grow faster than Tesla can ramp, or worst case, Tesla can start to take a significant part of their market share, and the incumbent manufacturers will get serious about EV's.

oragne lovre
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Re: Tesla becomes most valuable car company in the world

Post by oragne lovre » Fri Jul 17, 2020 12:27 am

Should we look at the author's subject heading "Tesla becomes most valuable CAR company in the world" through techies' lenses so that it would become
"Tesla becomes most valuable TECHNOLOGY-IN-DISGUISE-IN-THE-SHAPE-OF-A-CAR company in the world?" :wink:
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 » Fri Jul 17, 2020 1:51 am

oragne lovre wrote:
Fri Jul 17, 2020 12:27 am
Should we look at the author's subject heading "Tesla becomes most valuable CAR company in the world" through techies' lenses so that it would become
"Tesla becomes most valuable TECHNOLOGY-IN-DISGUISE-IN-THE-SHAPE-OF-A-CAR company in the world?" :wink:
Their revenue is 85% automotive.

It doesn't help me understand the stock price to call them a tech company that makes cars, because that still doesn't provide an understandable and especially a quantifiable way of predicting the future net revenue that justifies today's stock price.

And if we look at their value as predicated more on their tech development than their automative revenue potential, then it seems to me we should think of them less in terms of introducing a disruptive technology to compete with Ford, GM, BMW, Toyota, etc, and more in terms of competing with companies already used to disrupting markets like Google, Amazon, Apple, Samsung, etc. To be honest, that sounds even more daunting than competing with relatively slow-moving manufacturing companies.

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

Post by guyinlaw » Tue Jul 21, 2020 3:53 pm

The bond market doesn't trust that Tesla will make much money anytime soon. They can surely sell more shares with high stock price.

Image

In context, Tesla will sell around 400k vehicles this year. In comparison, Mercedes, BMW and Lexus each sell 2.5 - 3M vehicles per year.

In the past Musk has said Tesla will produce 3 million cars in 2021. Another time he said the date to be 2025. Either way it is not going to be easy..
-- It is much more difficult to scale up EV production because of the battery manufacturing bottleneck.
-- The margin of $40K Gas vehicle is much >> an EV at that price. (most people cannot afford >$60K vehicles)

IMO, there is a long way for reality to catch up to current stock valuations.
Time is your friend; impulse is your enemy. - John C. Bogle

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

Post by Forester » Tue Jul 21, 2020 4:43 pm

The other companies will catch up. When it's a choice of a VW with all the established VW customer support & "2019 Tesla tech", versus a 2021 Tesla, the case for Tesla's uniqueness begins to crumble.

Topic Author
Jags4186
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Re: Tesla becomes most valuable car company in the world

Post by Jags4186 » Tue Jul 21, 2020 4:56 pm

Valuethinker wrote:
Thu Jul 16, 2020 8:27 am
Elysium wrote:
Thu Jul 16, 2020 7:15 am
Don't see it becoming a leader in sales until they produce a sub $30k car that functions well, something that can match the Camrys and Corollas of the world. I wouldn't buy a $50k car that is so small as Model 3 with so limited range. Too little value to me for the price. We are far far away from EVs becoming main stream. Not with Gasoline at these prices. I just filled premium for $2.30 at Costco in my large $55k SUV yesterday.

That said, I am all for EV, our other car is a plug-in Prius which we purchased close to $20k with all discounts in. I would buy a Model 3 or Y for sub $30k price if offered today, no more. There is a price to value ratio for the cost conscious car buyer, for those who simply wants to own a Tesla to get associated with a name brad perhaps it doesn't matter, but that will only make it a niche market.
In the words of the James Bond villain "the world is not enough". There is a world outside the USA and in particular Europe & Japan where distances tend to be shorter and the environmental urgency is greater. In fact if Tesla were a Japanese car company I am sure the EV market would be much more developed there.

Gasoline is probably more expensive than in the USA in every developed country. Even in middle income & less developed countries, it is at least as much (with the exception of oil producing countries).

I agree re EVs & price point. But I have also been totally wrong so far. EVs (Tesla) have come in at the high end of price & performance, and ate the market. I expected EVs to come in at the low end performance/ price, and gradually take over the market from below.

The stock terrifies me. Both in its valuation, its financial fundamentals, the company's tendency to slip deadlines, and the retail enthusiasm for the company. Also in the short squeezes.

But the company has been very successful.
If distance and environmental concerns were that important then Japan and Europe would have developed electric cars long ago.

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

Post by CycloRista » Tue Jul 21, 2020 4:57 pm

Normchad wrote:
Thu Jul 16, 2020 1:55 pm
garlandwhizzer wrote:
Thu Jul 16, 2020 1:46 pm
Valuethinker wrote:

The stock terrifies me. Both in its valuation, its financial fundamentals, the company's tendency to slip deadlines, and the retail enthusiasm for the company. Also in the short squeezes.

But the company has been very successful.
1+

What I am concerned about is not so much the car/battery company itself which is a great company, but the herd of investors who have been driving its skyrocketing price. Mindless MOM investing, buying only because of the stock price graph, and add to that the euphoric expectations of many investors about TSLA's future. Usually at some unpredictable point, MOM price action reverses and euphoria hits reality. There are exceptions like AMZN which has been outrageously over-priced IMO for a decade and currently has a PE of 144. For every AMZN there are many innovative companies who promised to create a new future and wound up in the junk heap. MOM and sentiment can be extremely volatile and their price action works in both directions. We've certainly seen the upside. When will the downside hit? I certainly don't know but I strictly limit how much money I bet on sweet dreams.

Garland Whizzer
I’m down with all that. Full disclosure, I own 30 shares.

But as I learned a long time, anything built on the “greater fool theory”:will blow up. I.e. I’ll buy it today, because a greater fool will come along tomorrow and pay more for it.

https://en.m.wikipedia.org/wiki/Greater_fool_theory

I think the stock is definitely in greater fool territory. Just like Bitcoin was....
Nice play and yes, it is in high order jester/fool territory for sure! This reminds me of the dotcom craziness. So many companies never made a profit and had high flying days on Wall St. MicroStrategy was a macro tragedy in the early 2000's and didn't do too bad rising from the ashes in the long run.

I got in and out multiple times when TSLA was "roller-coastering" in the 300-600 range. I recently got in on NIO as well. Bought at <7 and sold @16 and I may play again as it oscillates.

Note: none of these activities involves retirement funds. I keep a separate trading account for speculation.

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

Post by Semantics » Tue Jul 21, 2020 4:58 pm

guyinlaw wrote:
Tue Jul 21, 2020 3:53 pm
The bond market doesn't trust that Tesla will make much money anytime soon. They can surely sell more shares with high stock price.

Image

In context, Tesla will sell around 400k vehicles this year. In comparison, Mercedes, BMW and Lexus each sell 2.5 - 3M vehicles per year.

In the past Musk has said Tesla will produce 3 million cars in 2021. Another time he said the date to be 2025. Either way it is not going to be easy..
-- It is much more difficult to scale up EV production because of the battery manufacturing bottleneck.
-- The margin of $40K Gas vehicle is much >> an EV at that price. (most people cannot afford >$60K vehicles)

IMO, there is a long way for reality to catch up to current stock valuations.
I suspect this valuation may be driven in part by fund managers buying into the robotaxi lie. Catherine Wood, for instance, has a 5-year price target of something like $7000 that hinges on the assumption they'll have a giant fleet doing autonomous ride-sharing in a few years, which anyone who knows that industry will tell you is preposterous. It's not looking like anyone will pull that off in that time frame, and TSLA is far from a leader in the space. That said, I'm bullish on them, and don't think it's crazy for them to be the most valuable car company. I think they're poised to be the iPhone of cars, where they'll have a relatively small market share but be wildly profitable because their product is a status symbol and perceived as superior to all other offerings. They already are that in the Bay Area. They can probably also make a lot of money simply selling their "self" (human supervised) driving features, perhaps via subscription in the future. I own the stock, and am enjoying the ride, but imagine it will get a lot bumpier before too long.

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4nursebee
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Re: Tesla becomes most valuable car company in the world

Post by 4nursebee » Tue Jul 21, 2020 5:58 pm

There have been a lot of people very very wrong about Tesla for a long time.
Pale Blue Dot

240U
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Re: Tesla becomes most valuable car company in the world

Post by 240U » Tue Jul 21, 2020 8:09 pm

I try not to respond to a lot of the folks that are critical of Musk/Tesla. In many ways it winds up as useless as discussing one's views on the president. But for those that say but Tesla only sells xxxx number of cars while Toyota, BMW ... sells millions. Tesla is building factories to build cars, trucks, semis and CUVs regardless of what you may feel about Musk or the vehicles he makes he is backing up his statements even if his timelines may be off.

The 2nd phase of the Shanghai factory is already assembling the production line. If past performance is an indicator of future expectations They will be building Model Y for the Chinese markets by the end of the year and this is a factory 3 times the size of Phase 1 for the Model 3. It also has buildings for building batteries.

Judging from the reservations on the SEMI and the CT the market exists. He is building the factories to build the cars and the batteries to make sure they can support the cars. We will see what is announced on September 22nd as to what is happening on the battery front.

The future will be interesting.

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

Post by Valuethinker » Wed Jul 22, 2020 3:44 am

Jags4186 wrote:
Tue Jul 21, 2020 4:56 pm
Valuethinker wrote:
Thu Jul 16, 2020 8:27 am
Elysium wrote:
Thu Jul 16, 2020 7:15 am
Don't see it becoming a leader in sales until they produce a sub $30k car that functions well, something that can match the Camrys and Corollas of the world. I wouldn't buy a $50k car that is so small as Model 3 with so limited range. Too little value to me for the price. We are far far away from EVs becoming main stream. Not with Gasoline at these prices. I just filled premium for $2.30 at Costco in my large $55k SUV yesterday.

That said, I am all for EV, our other car is a plug-in Prius which we purchased close to $20k with all discounts in. I would buy a Model 3 or Y for sub $30k price if offered today, no more. There is a price to value ratio for the cost conscious car buyer, for those who simply wants to own a Tesla to get associated with a name brad perhaps it doesn't matter, but that will only make it a niche market.
In the words of the James Bond villain "the world is not enough". There is a world outside the USA and in particular Europe & Japan where distances tend to be shorter and the environmental urgency is greater. In fact if Tesla were a Japanese car company I am sure the EV market would be much more developed there.

Gasoline is probably more expensive than in the USA in every developed country. Even in middle income & less developed countries, it is at least as much (with the exception of oil producing countries).

I agree re EVs & price point. But I have also been totally wrong so far. EVs (Tesla) have come in at the high end of price & performance, and ate the market. I expected EVs to come in at the low end performance/ price, and gradually take over the market from below.

The stock terrifies me. Both in its valuation, its financial fundamentals, the company's tendency to slip deadlines, and the retail enthusiasm for the company. Also in the short squeezes.

But the company has been very successful.
If distance and environmental concerns were that important then Japan and Europe would have developed electric cars long ago.
This is a classic chicken-and-egg technology. No one will trust an electric car without the infrastructure. No one will build the infrastructure without the demand.

One factor in both Europe & Japan is the power of the domestic auto industry. What banking is as a lobby group in the UK, automotive companies are in Germany - no speed limits on certain autobahns, etc. Japan also has a huge car industry.

Industry incumbents tend not to be adopters of new technology - the EV is a radical departure in drivetrain etc from existing vehicles.

But we are at a number of important tipping points:

- countries like the UK & Netherlands are seriously discussing stopping sale of new petrol-engined cars post 2030 - it is already the case that this will happen in the UK by 2035. As more countries commit to Net Zero, this will become an increasing driver of demand

- given European fuel prices, the crossover point for Total Cost of Ownership has been reached between EVs & conventional engined cars. EVs are still more expensive but have lower lifetime costs

So you've got the push to build the infrastructure, and you've got the demand. The migration will be quite fast.

Anecdotally I had probably only seen 1-2 EVs in London (other than UPS vans) up to about 4 years ago. In the last 2 years I have lost count of the number - particularly BMW i3s (perhaps because of their distinctive "Tron" shape, I recognise them more?). Teslas are rare, still - but I have seen a few. It's happening despite all kinds of problems with the charger infrastructure, etc.

There are also some large scale hydrogen projects being planned in Europe (see The Green Recovery, below). That does open up the route to Toyota's preferred technology - hydrogen Fuel Cell Vehicles. I have been a sceptic, but I could see how they could take over in commercial vehicles, large lorries, intercity coaches etc. Once again a chicken-and-egg problem being solved.

I am not as clued up on Japan but Japan basically imports 100% of its oil. Efficiency in energy use is a national fetish. When Japan decides to go for EVs, the changeover can be incredibly rapid (country the size of California, 50%+ mountainous, 100m population etc).

PM 2.5 particles and below in size are the new frontier of urban air pollution. The knowledge of the health hazards is growing by leaps and bounds. Automobile exhaust is 20-40% of the problem. EVs are a way of cracking that. So that will become another driver (and an important influence on public opinion - we are literally choking ourselves).

I could see a big part of The Green Recovery plans in Europe being EV charging infrastructure. The political & the economic forces are aligned, for once.

Mr.BB
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Re: Tesla becomes most valuable car company in the world

Post by Mr.BB » Wed Jul 22, 2020 4:27 am

When Tesla first went public (about $20 a share). I thought about buying some shares and remember thinking I don't think an electric car company is going to do that well. Just add it to the list of my stock picking faux pas's.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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

Post by guyinlaw » Wed Jul 22, 2020 8:39 am

Mr.BB wrote:
Wed Jul 22, 2020 4:27 am
When Tesla first went public (about $20 a share). I thought about buying some shares and remember thinking I don't think an electric car company is going to do that well. Just add it to the list of my stock picking faux pas's.
One could have bought it in May last year for $170.
Time is your friend; impulse is your enemy. - John C. Bogle

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

Post by am » Wed Jul 22, 2020 11:56 am

Mr.BB wrote:
Wed Jul 22, 2020 4:27 am
When Tesla first went public (about $20 a share). I thought about buying some shares and remember thinking I don't think an electric car company is going to do that well. Just add it to the list of my stock picking faux pas's.
And if you stick with the boglehead crowd your chances of taking a risk like that are non existent. You’ll do it the slow way and get to financial independence when your old, gray and run out of fuel. Having said that, I’m doing it that way with 95% of my assets.

Mr.BB
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Re: Tesla becomes most valuable car company in the world

Post by Mr.BB » Wed Jul 22, 2020 11:59 am

am wrote:
Wed Jul 22, 2020 11:56 am
Mr.BB wrote:
Wed Jul 22, 2020 4:27 am
When Tesla first went public (about $20 a share). I thought about buying some shares and remember thinking I don't think an electric car company is going to do that well. Just add it to the list of my stock picking faux pas's.
And if you stick with the boglehead crowd your chances of taking a risk like that are non existent. You’ll do it the slow way and get to financial independence when your old, gray and run out of fuel. Having said that, I’m doing it that way with 95% of my assets.
I'm on the same path as you. We have a plan. I'll still have a little play money for the could of, should of moments of life.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Topic Author
Jags4186
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Re: Tesla becomes most valuable car company in the world

Post by Jags4186 » Wed Jul 22, 2020 3:04 pm

Valuethinker wrote:
Wed Jul 22, 2020 3:44 am
This is a classic chicken-and-egg technology. No one will trust an electric car without the infrastructure. No one will build the infrastructure without the demand.

One factor in both Europe & Japan is the power of the domestic auto industry. What banking is as a lobby group in the UK, automotive companies are in Germany - no speed limits on certain autobahns, etc. Japan also has a huge car industry.

Industry incumbents tend not to be adopters of new technology - the EV is a radical departure in drivetrain etc from existing vehicles.

But we are at a number of important tipping points:

- countries like the UK & Netherlands are seriously discussing stopping sale of new petrol-engined cars post 2030 - it is already the case that this will happen in the UK by 2035. As more countries commit to Net Zero, this will become an increasing driver of demand

- given European fuel prices, the crossover point for Total Cost of Ownership has been reached between EVs & conventional engined cars. EVs are still more expensive but have lower lifetime costs

So you've got the push to build the infrastructure, and you've got the demand. The migration will be quite fast.

Anecdotally I had probably only seen 1-2 EVs in London (other than UPS vans) up to about 4 years ago. In the last 2 years I have lost count of the number - particularly BMW i3s (perhaps because of their distinctive "Tron" shape, I recognise them more?). Teslas are rare, still - but I have seen a few. It's happening despite all kinds of problems with the charger infrastructure, etc.

There are also some large scale hydrogen projects being planned in Europe (see The Green Recovery, below). That does open up the route to Toyota's preferred technology - hydrogen Fuel Cell Vehicles. I have been a sceptic, but I could see how they could take over in commercial vehicles, large lorries, intercity coaches etc. Once again a chicken-and-egg problem being solved.

I am not as clued up on Japan but Japan basically imports 100% of its oil. Efficiency in energy use is a national fetish. When Japan decides to go for EVs, the changeover can be incredibly rapid (country the size of California, 50%+ mountainous, 100m population etc).

PM 2.5 particles and below in size are the new frontier of urban air pollution. The knowledge of the health hazards is growing by leaps and bounds. Automobile exhaust is 20-40% of the problem. EVs are a way of cracking that. So that will become another driver (and an important influence on public opinion - we are literally choking ourselves).

I could see a big part of The Green Recovery plans in Europe being EV charging infrastructure. The political & the economic forces are aligned, for once.
Maybe. Long distance car travel in the United States is a somewhat regular occurrence. Even if you typically only commute to work and the local shops, it is not unusual for a family to take a 300+ mile trip maybe once or twice a year — I recall drives from NJ to the Outerbanks as a child.

I don’t get the impression there is much long distance driving in Europe or Japan (trains work better than driving) so I would imagine most people don’t do so. I have no stats to back it up just a hunch. In that case, charging at home seems to be the best logic and requires no infrastructure build out.

Anyway, I think the success of Tesla has more to do with the cool factor than the technology. Yes the tech is great and coming down in price, but if the Tesla looked and drove like a Prius, I have doubts that it would have the success it has had.

iamlucky13
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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 » Wed Jul 22, 2020 3:56 pm

4nursebee wrote:
Tue Jul 21, 2020 5:58 pm
There have been a lot of people very very wrong about Tesla for a long time.
Elon Musk is one of them. :twisted:

I jest, but only in part.

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

Post by hagridshut » Wed Jul 22, 2020 4:57 pm

https://ir.tesla.com/static-files/f41f4 ... 23b00475a6

GAAP net income, in Millions:
Q3 '19:143
Q4 '19: 105
Q1 '20: 16
Q2 '20: 104

Tesla now meets all criteria for S&P 500 inclusion. With a market cap of close to $300 Billion, Index Funds that track the S&P 500 are likely going to be spending an unprecedented amount of $ on shares. Anyone benchmarking against the S&P has likely already stocked up.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio

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

Post by Millennial » Wed Jul 22, 2020 7:29 pm

Valuethinker wrote:
Wed Jul 22, 2020 3:44 am
This is a classic chicken-and-egg technology. No one will trust an electric car without the infrastructure. No one will build the infrastructure without the demand..
Tesla built it. Superchargers let you drive coast to coast. We took a 1200 mi international road trip in October of last year, and drove my wife's model 3 instead of my (very good) ICE car. I'm glad we did... Changes to our drive were minimal (we picked restaurants near superchargers for our meals), and the benefits in cost and autopilot were more than worth it IMO.

oragne lovre
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Re: Tesla becomes most valuable car company in the world

Post by oragne lovre » Wed Jul 22, 2020 9:51 pm

iamlucky13 wrote:
Fri Jul 17, 2020 1:51 am
oragne lovre wrote:
Fri Jul 17, 2020 12:27 am
Should we look at the author's subject heading "Tesla becomes most valuable CAR company in the world" through techies' lenses so that it would become
"Tesla becomes most valuable TECHNOLOGY-IN-DISGUISE-IN-THE-SHAPE-OF-A-CAR company in the world?" :wink:
Their revenue is 85% automotive.

It doesn't help me understand the stock price to call them a tech company that makes cars, because that still doesn't provide an understandable and especially a quantifiable way of predicting the future net revenue that justifies today's stock price.

And if we look at their value as predicated more on their tech development than their automative revenue potential, then it seems to me we should think of them less in terms of introducing a disruptive technology to compete with Ford, GM, BMW, Toyota, etc, and more in terms of competing with companies already used to disrupting markets like Google, Amazon, Apple, Samsung, etc. To be honest, that sounds even more daunting than competing with relatively slow-moving manufacturing companies.
Some of my observations:

When I place my Tesla next to my old-but-faithful Camry, open their front hoods, look inside, my immediate impression is that Camry car has a complex engine with many hoses, parts that the "Tesla car" does not have. If the Tesla does not have such engine, I naturally question if it still meets the proverbial definition of a car as we know for many decades? When I sit inside both cabins, I can see a striking difference between the two: I need to use various knobs, buttons to make the Camry "understand" what my "commands-to-drive" are, whereas the Tesla screen serves a control center for all similar commands. In addition, I can use Tesla screen to search the web, look for favorite Spotify tunes, remind myself daily tasks from calendar, watch favorite Netflix movies, etc. What's the difference between a company that used to make landline, dial-in phones and Apple that is currently making "iPhones?" We all know that Apple is definitely a tech company, not a phone company. What's the difference between legacy car companies and Tesla?

Amazon used to be considered as a company selling books. Is current Amazon a book-selling company still?
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Re: Tesla becomes most valuable car company in the world

Post by guyinlaw » Wed Jul 22, 2020 10:34 pm

hagridshut wrote:
Wed Jul 22, 2020 4:57 pm
https://ir.tesla.com/static-files/f41f4 ... 23b00475a6

GAAP net income, in Millions:
Q3 '19:143
Q4 '19: 105
Q1 '20: 16
Q2 '20: 104

Tesla now meets all criteria for S&P 500 inclusion. With a market cap of close to $300 Billion, Index Funds that track the S&P 500 are likely going to be spending an unprecedented amount of $ on shares. Anyone benchmarking against the S&P has likely already stocked up.
Image

This is pretty sarcastic note from Morgan Stanley.

Shorts are saying that SEC is(might be?) looking into how ZEV credits from other quarters were pooled together to be accounted on Q2.

Is this chart correct of the revenue being flat?

Image

Couldn't read this from WSJ as it is behind the paywall.
https://www.wsj.com/articles/tesla-char ... CLjDM7MMG
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Re: Tesla becomes most valuable car company in the world

Post by harikaried » Wed Jul 22, 2020 11:48 pm

guyinlaw wrote:
Wed Jul 22, 2020 10:34 pm
Is this chart correct of the revenue being flat?
Not only is it flat (+1% QoQ), it's down from last year -5% YoY. This is including significant regulatory credits of which were +21% QoQ and +286% YoY!

This is from their financial summary: "In Q2, total revenues remained relatively flat QoQ. The positive impact of higher vehicle deliveries, higher regulatory credit revenue and higher energy generation and storage revenue was somewhat offset by lower vehicle average selling price (ASP) and lower services and other revenue."

Also from their report:
Image

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Re: Tesla becomes most valuable car company in the world

Post by 1130Super » Thu Jul 23, 2020 12:30 am

Tesla isn’t only a car manufacturer. They also sell their cars directly so thart are also a dealer. They also sell and distribute a portion of the energy the cars use. They even sell insurance in California. So think of it this way FORD + All FORD dealerships + EXXON + FUEL Station + Allstate. People are betting on the TESLA ecosystem

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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 » Thu Jul 23, 2020 1:31 am

oragne lovre wrote:
Wed Jul 22, 2020 9:51 pm
iamlucky13 wrote:
Fri Jul 17, 2020 1:51 am
oragne lovre wrote:
Fri Jul 17, 2020 12:27 am
Should we look at the author's subject heading "Tesla becomes most valuable CAR company in the world" through techies' lenses so that it would become
"Tesla becomes most valuable TECHNOLOGY-IN-DISGUISE-IN-THE-SHAPE-OF-A-CAR company in the world?" :wink:
Their revenue is 85% automotive.

It doesn't help me understand the stock price to call them a tech company that makes cars, because that still doesn't provide an understandable and especially a quantifiable way of predicting the future net revenue that justifies today's stock price.

And if we look at their value as predicated more on their tech development than their automative revenue potential, then it seems to me we should think of them less in terms of introducing a disruptive technology to compete with Ford, GM, BMW, Toyota, etc, and more in terms of competing with companies already used to disrupting markets like Google, Amazon, Apple, Samsung, etc. To be honest, that sounds even more daunting than competing with relatively slow-moving manufacturing companies.
Some of my observations:

When I place my Tesla next to my old-but-faithful Camry, open their front hoods, look inside, my immediate impression is that Camry car has a complex engine with many hoses, parts that the "Tesla car" does not have. If the Tesla does not have such engine, I naturally question if it still meets the proverbial definition of a car as we know for many decades? When I sit inside both cabins, I can see a striking difference between the two: I need to use various knobs, buttons to make the Camry "understand" what my "commands-to-drive" are, whereas the Tesla screen serves a control center for all similar commands. In addition, I can use Tesla screen to search the web, look for favorite Spotify tunes, remind myself daily tasks from calendar, watch favorite Netflix movies, etc. What's the difference between a company that used to make landline, dial-in phones and Apple that is currently making "iPhones?" We all know that Apple is definitely a tech company, not a phone company. What's the difference between legacy car companies and Tesla?

Amazon used to be considered as a company selling books. Is current Amazon a book-selling company still?
Actually, your comparison parallels some of the thoughts I refrained from adding to my previous post. Consider Amazon's market cap back when they were just starting to demonstrate their market potential was bigger than books. Likewise for Apple's market cap back when they made up 0.5% of global mobile phone sales like Tesla does for car sales.

It is not out of the realm of possibility to me Tesla could not merely become a peer to the major automobile companies, but also expand into parallel markets that grow them beyond their automotive competitors. That is speculative, though - it is not possible at this time to quantify their future net revenue or even the odds of achieving certain net revenue levels, which is my main point.

Also, the level of change in the functionality of attaching a phone to a miniature computer is significantly greater than the level of functionality change from putting a computer in a car, especially since most people with cars these days already had another computer in their pocket. The differences under the hood affect cost of operation and driving experience, but they don't change the primary function of transportation.

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Re: Tesla becomes most valuable car company in the world

Post by 4nursebee » Thu Jul 23, 2020 2:34 am

1130Super wrote:
Thu Jul 23, 2020 12:30 am
Tesla isn’t only a car manufacturer. They also sell their cars directly so thart are also a dealer. They also sell and distribute a portion of the energy the cars use. They even sell insurance in California. So think of it this way FORD + All FORD dealerships + EXXON + FUEL Station + Allstate. People are betting on the TESLA ecosystem
Wow. I know of these things but never thought of them in such a way. Good stuff!

Thanks for all the owners stories here gang.

Tony Seba stuff pertaining to eLectric car future is interesting.

No mo ice cars for me.

Isn’t the Tesla hope- cars, solar, distributed energy- the way things should be?
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Re: Tesla becomes most valuable car company in the world

Post by mrspock » Thu Jul 23, 2020 2:38 am

1130Super wrote:
Thu Jul 23, 2020 12:30 am
Tesla isn’t only a car manufacturer. They also sell their cars directly so thart are also a dealer. They also sell and distribute a portion of the energy the cars use. They even sell insurance in California. So think of it this way FORD + All FORD dealerships + EXXON + FUEL Station + Allstate. People are betting on the TESLA ecosystem
+ Waymo (self driving tech) + Palantir (the data they collect & analyze off all these cars, and competency in the field is of huge value)

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Re: Tesla becomes most valuable car company in the world

Post by Valuethinker » Thu Jul 23, 2020 3:38 am

Millennial wrote:
Wed Jul 22, 2020 7:29 pm
Valuethinker wrote:
Wed Jul 22, 2020 3:44 am
This is a classic chicken-and-egg technology. No one will trust an electric car without the infrastructure. No one will build the infrastructure without the demand..
Tesla built it. Superchargers let you drive coast to coast. We took a 1200 mi international road trip in October of last year, and drove my wife's model 3 instead of my (very good) ICE car. I'm glad we did... Changes to our drive were minimal (we picked restaurants near superchargers for our meals), and the benefits in cost and autopilot were more than worth it IMO.
I was considering the question from a European/ Japanese perspective, since that was the point of the previous poster (that if EVs were better than ICE cars, they would have already taken over).

It's great that Tesla has built that infrastructure in America, the land of long distances. I don't know how much of that has reached here.

30% of UK cars are not parked at the owner's home - for example if you have a Victorian terrace house (row) you park on the street. That's a significant obstacle to adoption of EVs.

But I believe the tipping has, or is near to, being reached. The Lifecycle cost of ownership of an EV approximates that of an ICE car (comparing like for like ie Tesla in the luxury bracket)- -remembering that gasoline can cost 2-3x what it does in the USA. At the same time, government initiatives driving towards net zero carbon emissions by 2050 are live - that will drive conversions to EVs. We are more or less there.

When you throw in the problem of PM2.5 and smaller particles, which has become a very live issue in air pollution research and politically, then you start to see forward motion. I have been struck by how many more EVs I now see in suburban London compared to 3-4 years ago. And that's with all the problems of charging infrastructure etc.

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Re: Tesla becomes most valuable car company in the world

Post by hagridshut » Thu Jul 23, 2020 7:03 am

guyinlaw wrote:
Wed Jul 22, 2020 10:34 pm

Is this chart correct of the revenue being flat?
Yes.

The reason is because the main Tesla factory in Fremont, California was idle between March 23rd and May 13th, 2020, because of COVID-19 lockdown: https://www.cnn.com/2020/05/13/business ... index.html

Tesla's U.S. production was effectively zero for 50% of Q2 2020. Their sales operations were also significantly impacted due to Coronavirus lockdowns around the U.S.

The fact that Tesla managed to post a profit in Q2 is something of a miracle.

Phase 1 of their Shanghai, China plant running at 100% capacity, combined with sales of regulatory credits to other automakers, pushed them over the finish line.

Short sellers have consistently been wrong about the company because they generally don't look at the bigger picture of what is going on at the company. They point to some negative piece of information without explaining the context.

I believe that most investors should avoid TSLA as an individual stock. Most people will not be able to understand the company or the technology. Better to own it as part of an index fund and ignore the Mainstream Media noise, while enjoying the gains as part of the market.
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Re: Tesla becomes most valuable car company in the world

Post by aristotelian » Thu Jul 23, 2020 7:22 am

I can certainly buy them being the most valuable car company. The question is whether they will also be a renewable energy company, electric utility, insurer, and who knows what else. I listened to some of their earnings call and they really are impressive.

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Re: Tesla becomes most valuable car company in the world

Post by guyinlaw » Thu Jul 23, 2020 10:27 am

aristotelian wrote:
Thu Jul 23, 2020 7:22 am
I can certainly buy them being the most valuable car company. The question is whether they will also be a renewable energy company, electric utility, insurer, and who knows what else. I listened to some of their earnings call and they really are impressive.
In the call Musk said "world's first fully self-driving car will be ready this year." I am willing to bet any amount of money in the world that Tesla wont be making those or selling those. not is 2020, or 2021. They are stuck with a camera based system (due to cost as it is installed in all vehicles) that can not get to full self driving..

Tesla has thrown in the towel on developing truly innovative things, as they have been squeezing R&D spending..
Tesla is allegedly on the cusp of developing Level 5 autonomy, building a new electric semi/Roadster/Cybertruck, creating breakthrough solar technology, and developing a million mile battery. Yet, they've cut R&D to levels not seen since 2016.
Image
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Re: Tesla becomes most valuable car company in the world

Post by Semantics » Thu Jul 23, 2020 11:14 am

I would also bet any amount of money in the world: https://venturebeacom/2020/07/22/mit-ta ... -10-years/

A number of companies have been testing fully L4 cars (with safety drivers) on public roads for several years. Tesla hasn't even gotten to that point yet, let alone testing completely empty vehicles with no safety drivers, as a small handful have done. In other words, they're not even at the starting line yet. From there, testing and refinement alone will take years, even given the huge advantage they have in being able to easily scale. Unlimited data and real world testing bandwidth and the world's most sophisticated AI does not make it any less of an engineering project involving human R&D, which takes many years. Not to say that Tesla being first to deploy robo-taxis is impossible, e.g. they could pump their stock to $1 trillion and use it to buy Waymo.

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Re: Tesla becomes most valuable car company in the world

Post by harikaried » Thu Jul 23, 2020 1:00 pm

Semantics wrote:
Thu Jul 23, 2020 11:14 am
let alone testing completely empty vehicles with no safety drivers, as a small handful have done
Tesla's approach is different looking towards worldwide "level 5" which is not limited to certain parts of cities, e.g., San Francisco and Phoenix/Chandler. I do agree that testing Level 4 in a downtown setting like San Francisco is quite impressive as there's a very high density of complex situations. However Tesla is trying to get its camera-based Autopilot system to work on a scale that is 100x-1000x larger than these small regions, e.g., handling different styles of intersections and signs potentially in different languages or with various modifiers.

Sure, there's probably a good percentage of "easy" intersections that even some basic driving automation could probably handle, but Tesla's worldwide data collection gives them the ability to find the "hard" cases and determine if the behavior is improving or getting worse. Because Tesla drivers are responsible even when Autopilot is active, Tesla knows how well its system is doing even without "testing completely empty vehicles."

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Re: Tesla becomes most valuable car company in the world

Post by hagridshut » Thu Jul 23, 2020 1:10 pm

guyinlaw wrote:
Thu Jul 23, 2020 10:27 am

In the call Musk said "world's first fully self-driving car will be ready this year." I am willing to bet any amount of money in the world that Tesla wont be making those or selling those. not is 2020, or 2021. They are stuck with a camera based system (due to cost as it is installed in all vehicles) that can not get to full self driving..

Tesla has thrown in the towel on developing truly innovative things, as they have been squeezing R&D spending..
Again, you're using a piece of data, without looking at the context:

R&D spending fell. Why? In part because salaries at Tesla fell in Q2, by 10-30% as the company tightened its finances in the face of COVID-19. Engineers and managers took a big pay cut:

Salaried employees at the vice-president level and above will have their pay cut by 30 percent, according to the email, which was first reported by Electrek. Directors and above will have their pay cut 20 percent. Everyone else will receive a 10 percent pay cut, and Tesla said that workers outside the US will see “comparable reductions.” The pay cuts will last through the second financial quarter, which ends in June.

https://www.theverge.com/2020/4/7/21213 ... 9-pandemic



Tesla is allegedly on the cusp of developing Level 5 autonomy, building a new electric semi/Roadster/Cybertruck, creating breakthrough solar technology, and developing a million mile battery. Yet, they've cut R&D to levels not seen since 2016.
Image
This is a chart from a Twitter account that is KNOWN to bait TSLA bears and ply them with false or misleading information.

The account, "@TeslaCharts", even says in their description that they are "catnip" for TSLA bears.

Ask yourself how much money this malicious account has cost anyone who shorted TSLA based on their tweets over the past 3 years. This is IMO likely to be a troll account run by a sick person who enjoys seeing people lose money.
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Re: Tesla becomes most valuable car company in the world

Post by guyinlaw » Thu Jul 23, 2020 1:29 pm

hagridshut wrote:
Thu Jul 23, 2020 1:10 pm
Tesla is allegedly on the cusp of developing Level 5 autonomy, building a new electric semi/Roadster/Cybertruck, creating breakthrough solar technology, and developing a million mile battery. Yet, they've cut R&D to levels not seen since 2016.
Image
This is a chart from a Twitter account that is KNOWN to bait TSLA bears and ply them with false or misleading information.

The account, "@TeslaCharts", even says in their description that they are "catnip" for TSLA bears.

Ask yourself how much money this malicious account has cost anyone who shorted TSLA based on their tweets over the past 3 years. This is IMO likely to be a troll account run by a sick person who enjoys seeing people lose money.
Tesla R&D expenses are flat or down over the last 3 years. That's a fact. Do you think it is high enough for the innovations they want to be leading in?

Code: Select all

R&D expense in million 
2019	$1,343
2018	$1,460
2017	$1,378
https://www.statista.com/statistics/314 ... 20States.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Tesla becomes most valuable car company in the world

Post by Doc » Thu Jul 23, 2020 1:45 pm

hagridshut wrote:
Thu Jul 23, 2020 1:10 pm
This is a chart from a Twitter account that is KNOWN to bait TSLA bears and ply them with false or misleading information.
Saw on Fox business channel this morning that Tesla's 2nd quarter good performance was not because of increased sales but on reduced expense as the chart shows. The main reason for their lower 2nd quarter reduced expenses was largely due to it stopping rent payments on their pricey showrooms.

Google "tesla not paying rent"

Example: "Tesla pays half of $700K-a-month showroom rent during coronavirus pandemic" https://www.foxbusiness.com/markets/tes ... month-rent. That's $700,000 on just one showroom.

They needed 4 quarters of positive earnings to quality for the S&P 500. They made it. :mrgreen:
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Re: Tesla becomes most valuable car company in the world

Post by Normchad » Thu Jul 23, 2020 1:53 pm

guyinlaw wrote:
Thu Jul 23, 2020 1:29 pm
hagridshut wrote:
Thu Jul 23, 2020 1:10 pm
Tesla is allegedly on the cusp of developing Level 5 autonomy, building a new electric semi/Roadster/Cybertruck, creating breakthrough solar technology, and developing a million mile battery. Yet, they've cut R&D to levels not seen since 2016.
Image
This is a chart from a Twitter account that is KNOWN to bait TSLA bears and ply them with false or misleading information.

The account, "@TeslaCharts", even says in their description that they are "catnip" for TSLA bears.

Ask yourself how much money this malicious account has cost anyone who shorted TSLA based on their tweets over the past 3 years. This is IMO likely to be a troll account run by a sick person who enjoys seeing people lose money.
Tesla R&D expenses are flat or down over the last 3 years. That's a fact. Do you think it is high enough for the innovations they want to be leading in?

Code: Select all

R&D expense in million 
2019	$1,343
2018	$1,460
2017	$1,378
https://www.statista.com/statistics/314 ... 20States.
I don’t think need to achieve full autonomy to be successful.

Remember, when the iPhone came out, there were no 3rd party apps....

It’s completely fine to iterate.

And Tesla seems completely happy about pursuing a vision based system. As they say, people have proven you can drive a car just using 2 crummy eyes spaced 6 inches apart. We shall see.

Whoever wins in this space,the future will be exciting.

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Re: Tesla becomes most valuable car company in the world

Post by guyinlaw » Thu Jul 23, 2020 2:29 pm

Doc wrote:
Thu Jul 23, 2020 1:45 pm
hagridshut wrote:
Thu Jul 23, 2020 1:10 pm
This is a chart from a Twitter account that is KNOWN to bait TSLA bears and ply them with false or misleading information.
Saw on Fox business channel this morning that Tesla's 2nd quarter good performance was not because of increased sales but on reduced expense as the chart shows. The main reason for their lower 2nd quarter reduced expenses was largely due to it stopping rent payments on their pricey showrooms.

Google "tesla not paying rent"

Example: "Tesla pays half of $700K-a-month showroom rent during coronavirus pandemic" https://www.foxbusiness.com/markets/tes ... month-rent. That's $700,000 on just one showroom.

They needed 4 quarters of positive earnings to quality for the S&P 500. They made it. :mrgreen:
Its great Tesla was "profitable" in Q2. Historically Q2 has been a tough quarter for them to be net positive. So how did they do it?
- Not paying rent, reduced salaries, china fleet sales, accounting gymnastics AND
- Pooling together EV regulatory credits from other quarters and recording in in Q2. $428M recorded in Q2. (most ever)

Regulatory credits sale is great because they are pure profit. But is it sustainable? Other companies are ramping up EVs and there will be less demand and more supply or these credits.

See the chart below of profits when you exclude ZEV credits.

https://www.cnbc.com/2020/07/23/teslas- ... ility.html
Image

My beef with Tesla has been their inability to make money selling cars, even with average price >>$60,000.

PS. In my previous life I worked on EVs. Ramping up EV production is so difficult, because of the battery. Tesla EV battery costs >> $10k, production is incredibly difficult, costly. Tesla sold ~350k cars last year and likely <400k this year. In comparison BMW, Mercedes and Lexus all sold >2.5M cars. This will be a long slow road.
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut » Thu Jul 23, 2020 2:41 pm

guyinlaw wrote:
Thu Jul 23, 2020 1:29 pm

Tesla R&D expenses are flat or down over the last 3 years. That's a fact. Do you think it is high enough for the innovations they want to be leading in?

Code: Select all

R&D expense in million 
2019	$1,343
2018	$1,460
2017	$1,378
https://www.statista.com/statistics/314 ... 20States.
I'm assuming that you aren't an engineer and have no experience in complicated software development (like Tesla's Autopilot and FSD systems).

Technology and engineering problems often cannot be solved by spending more and hiring more people. Hiring more engineers can actually make things worse. Much worse. See Frederick Brooks' https://en.wikipedia.org/wiki/The_Mythical_Man-Month

"Brooks' observations are based on his experiences at IBM while managing the development of OS/360. He had added more programmers to a project falling behind schedule, a decision that he would later conclude had, counter-intuitively, delayed the project even further. He also made the mistake of asserting that one project—involved in writing an ALGOL compiler—would require six months, regardless of the number of workers involved (it required longer). The tendency for managers to repeat such errors in project development led Brooks to quip that his book is called "The Bible of Software Engineering", because "everybody quotes it, some people read it, and a few people go by it".[1] The book is widely regarded as a classic on the human elements of software engineering.[2]"

(1) Brooks's law: Adding manpower to a late software project makes it later.
(2) Complex programming projects cannot be perfectly partitioned into discrete tasks that can be worked on without communication between the workers and without establishing a set of complex interrelationships between tasks and the workers performing them. Example: 50 developers give 50 · (50 – 1) / 2 = 1225 channels of communication.

Asking whether Tesla is spending enough $ is the incorrect question to ask.

The correct question is whether Tesla has enough R&D budget to (1) hire the optimum team of scientists and engineers for their projects and (2) get those people the resources they need in terms of infrastructure and materials to complete their projects.

Getting the right expertise (like chip architect Jim Keller for the HW3.0 chip project, or Andrej Karpathy for Computer Vision), is far more important than spending more $ every quarter.

I don't know whether their budget is at the sufficient level. We'll get the answer in time, by observing how their innovation progresses in terms of new vehicles, energy products, and AI projects (like AutoBidder and FSD).
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Re: Tesla becomes most valuable car company in the world

Post by hagridshut » Thu Jul 23, 2020 6:32 pm

guyinlaw wrote:
Thu Jul 23, 2020 2:29 pm

Its great Tesla was "profitable" in Q2. Historically Q2 has been a tough quarter for them to be net positive. So how did they do it?
- Not paying rent, reduced salaries, china fleet sales, accounting gymnastics AND
- Pooling together EV regulatory credits from other quarters and recording in in Q2. $428M recorded in Q2. (most ever)
The Chinese State media actually tweeted that when asked, Tesla refuted the rumor about fleet sales: https://twitter.com/globaltimesnews/sta ... 56576?s=20

"#Tesla Tuesday refuted rumor that it cooperated with #Chinese car selling platform Yi Auto and e-commerce platform Pinduoduo

"Global Times" is the English-language edition of the "People's Daily"

Regulatory credits sale is great because they are pure profit. But is it sustainable? Other companies are ramping up EVs and there will be less demand and more supply or these credits.

See the chart below of profits when you exclude ZEV credits.

PS. In my previous life I worked on EVs. Ramping up EV production is so difficult, because of the battery. Tesla EV battery costs >> $10k, production is incredibly difficult, costly.
First you say that "other companies are ramping up EVs", but then you say that "ramping up EV production is so difficult", citing battery costs. If other companies are going to have a difficult time ramping up EV production, Tesla will continue to be able to sell regulatory credits.

An EV ramp up by other companies also means that there has to be demand for their EV products. That's going to be a tough sell against Tesla. In the hot compact crossover segment, Tesla's Model Y competes against the Jaguar I-Pace and Audi E-Tron. The Model Y AWD starts at $50,000 and has a range of 316 miles EPA. The I-Pace starts at $70,000 with a 234 EPA mile range. The E-Tron starts at $75,000 with a 204 EPA mile range. Neither the I-Pace nor the E-Tron have access to Tesla's Supercharger network for long distance travel. With the competition costing 40-50% more, for substantially less range, I doubt there will be many customers lining up. Tesla is also not standing still. They have been relentless in automation of battery production at high volume, meaning that they are pulling away from the competition in terms of being able to produce batteries at low cost.

Competitors are going to have a tough time against Model 3 and Model Y, meaning that those competitors may sell fewer EVs and will have more need of credits as governments tighten fleet emissions standards and raise penalties.

Tesla also has under construction: Phase 2 of Shanghai factory and Berlin Factory. A new factory is confirmed for Austin, TX. I believe these 3 facilities will add in total 1.8 million or more vehicles/year capacity. With huge economies of scale, the costs on Tesla's vehicles will fall lower than they are today.

Eventually, the sale of credits may be insignificant.

Sale of PowerPacks and MegaPacks, combined with Autobidder software, are another potential revenue stream. Full Self Driving is a reach, but I would not discount the possibility that it could work, however remote that possibility may be.
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Re: Tesla becomes most valuable car company in the world

Post by guyinlaw » Fri Jul 31, 2020 12:45 pm

Camera based auto pilot don't work worth 💩

Model 3 crash in Taiwan with a toppled truck from June this year. A similar accident happened when the cameras didn't see a turning truck on a highway that killed the driver.

https://www.youtube.com/watch?v=ZmHBA_vV39w

Doesn't matter how much BS Lord Musk spews
already "very close" to achieving the basic requirements of this "level-five" autonomy, which requires no driver input,
https://www.bbc.com/news/technology-53349313

Many experts say that they are barely at level 3. These technologies are fun to use, easy to get complacent, until the one time it doesn't work.
Time is your friend; impulse is your enemy. - John C. Bogle

Enzo IX
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Re: Tesla becomes most valuable car company in the world

Post by Enzo IX » Fri Jul 31, 2020 3:03 pm

Doc wrote:
Thu Jul 23, 2020 1:45 pm
hagridshut wrote:
Thu Jul 23, 2020 1:10 pm
This is a chart from a Twitter account that is KNOWN to bait TSLA bears and ply them with false or misleading information.
Saw on Fox business channel this morning that Tesla's 2nd quarter good performance was not because of increased sales but on reduced expense as the chart shows. The main reason for their lower 2nd quarter reduced expenses was largely due to it stopping rent payments on their pricey showrooms.

Google "tesla not paying rent"

Example: "Tesla pays half of $700K-a-month showroom rent during coronavirus pandemic" https://www.foxbusiness.com/markets/tes ... month-rent. That's $700,000 on just one showroom.

They needed 4 quarters of positive earnings to quality for the S&P 500. They made it. :mrgreen:
A company the size of Tesla would be on an accrual accounting basis not a cash basis method.

Not paying the rent unless with this pandemic it is legal not to do so, would not fly with the GAAP accounting firms attesting to the books.

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

Post by Doc » Fri Jul 31, 2020 4:39 pm

Enzo IX wrote:
Fri Jul 31, 2020 3:03 pm
A company the size of Tesla would be on an accrual accounting basis not a cash basis method.

Not paying the rent unless with this pandemic it is legal not to do so, would not fly with the GAAP accounting firms attesting to the books.
hhmmnn.
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PluckyDucky
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Re: Tesla becomes most valuable car company in the world

Post by PluckyDucky » Fri Jul 31, 2020 4:48 pm

If Tesla can make a $17,500 priced car that gets 300+ miles per charge (similar to Honda Civic or Toyota Corolla), it will destroy.

It's getting closer every day.

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

Post by guyinlaw » Sun Aug 02, 2020 10:21 pm

PluckyDucky wrote:
Fri Jul 31, 2020 4:48 pm
If Tesla can make a $17,500 priced car that gets 300+ miles per charge (similar to Honda Civic or Toyota Corolla), it will destroy.

It's getting closer every day.
:oops: They haven't made a profit on cars with average price over $50k (without EV credits).
Time is your friend; impulse is your enemy. - John C. Bogle

iamlucky13
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Re: Tesla becomes most valuable car company in the world

Post by iamlucky13 » Mon Aug 03, 2020 2:22 am

guyinlaw wrote:
Sun Aug 02, 2020 10:21 pm
PluckyDucky wrote:
Fri Jul 31, 2020 4:48 pm
If Tesla can make a $17,500 priced car that gets 300+ miles per charge (similar to Honda Civic or Toyota Corolla), it will destroy.

It's getting closer every day.
:oops: They haven't made a profit on cars with average price over $50k (without EV credits).
I mentioned upthread, along with my reasoning, that I think the Model 3 is probably in the $45-50,000 range for average selling price now, and they're hovering somewhere right around profitability. I'm not going to bother updating my estimate with the 2Q numbers, since the shutdown made everything so screwy, but I will probably take a closer look again at the end of the year.

There is fuel savings to be factored in, as well, but yes, the price is currently quite a bit higher - more in the Acura range than Honda.

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

Post by hagridshut » Mon Aug 03, 2020 4:16 pm

guyinlaw wrote:
Fri Jul 31, 2020 12:45 pm

Model 3 crash in Taiwan with a toppled truck from June this year. A similar accident happened when the cameras didn't see a turning truck on a highway that killed the driver.

https://www.youtube.com/watch?v=ZmHBA_vV39w
Local news reports of the incident reported this:

https://www.setn.com/News.aspx?NewsID=753860

Google Translate:
it is understood that the Tesla driver was unscathed, he confessed to the police, when there was an open auxiliary system, did not take full self-driving status, both sides have no drink-driving situation, has been completed the relevant transcripts, the next two sides are facing the follow-up compensation matters.
Based on this translation, it appears that the Autopilot system was not engaged. Even if it was engaged, Tesla is very clear in its sales materials about the fact that the driver needs to pay attention.

Nevertheless, while Tesla's camera-based AEB is not perfect, it was a top performer in the Euro NCAP tests as of the end of last year:

https://youtu.be/x7Hp2zACGmg?t=122
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guyinlaw
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Re: Tesla becomes most valuable car company in the world

Post by guyinlaw » Tue Aug 04, 2020 11:21 am

hagridshut wrote:
Mon Aug 03, 2020 4:16 pm

Nevertheless, while Tesla's camera-based AEB is not perfect, it was a top performer in the Euro NCAP tests as of the end of last year:

https://youtu.be/x7Hp2zACGmg?t=122
So when will Tesla be selling robo taxis? Musk has been saying that their system is near level 5 for many years. yet the cars keep crashing in the real world.
Time is your friend; impulse is your enemy. - John C. Bogle

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