No doubt execution has been an issue in the past, but recent sales trends, completion of gigafactory, and Chinese expansion show that they are on the right trend.
Tesla's were confined to the luxury market, but the Model 3 is doing well and Tesla is being allowed to come out with more and more SKUs while the other big auto's are still finding their footing.
The branding is on point without the need to advertise, like the iPhone, Tesla's are becoming just a feature of everyday life (at least in large metro's). Finally, and this is absolutely non-empirical, I just believe in Elon. Tesla might be one of those companies that simply fades away once a galvanizing leader leaves, but as long as his heart is beating I'll hold.
It's a lot of things, really. Range, performance, the hope of self-driving, the supercharging network (Which is much bigger than people think!), and of course, the fact that they look like normal cars. Most other EVs like the Leaf are either incredibly lacking in range and performance, or they're incredibly ugly like the BMW i3.
Then you've got cars like the Mullen Qiantu K50 [0] that try to be something special, but other than looks are incredibly lackluster and overpriced. $125K, and its performance and range are on par with a $48K Model 3 LR AWD. They're trying to brand it like a supercar, but it's only a supercar in the looks.
It's crazy to me that other makers can't even get charging done well. Most public CHAdeMO or CCS chargers are only up to 50 kW, while Tesla superchargers are usually 72 kW and sometimes up to 150 kW. Being able to charge quickly is a must when one of your biggest barriers to getting customers is overcoming their range anxiety.
This is while Telsa is building out a charging network and fighting for a direct to consumer sales model and also possessing a knowledge base of every fault that's ever occurred in it's entire fleet and every Tesla Sale increases the return on Tesla's deployed capital plus a highly dedicated creative resilient workforce that are at the point of smoothing variability and product refinement.
So for BMW to win they have to bet the factory that they will take enough market share while Tesla's quality and brand strengthen. Hence the current share valuation.
Now a lot of people say Elon is a manipulative exaggerator but the fact remains he has built car sensor database company with a carbon advantage that has BMW on the ropes while reigniting a space race. If machine learning can sort the data and it seems to be improving year on year then alot of people who haven't built nearly as much will probably be taking a Tesla to work.
Why do people want Tesla to fail. Economies of scale, improving battery technology and a global charging network and everyone eventually has a cheaper travel option. How revered the founder was is a quite irrelevant.
The self-driving bit is a risk either way, but I think Tesla is dangerously close to losing out on both the “looking like a normal car” and potentially the performance factor if they’re serious about Cybertruck.
This was my first thought during the Cybertruck unveil. It no longer looks like a normal truck. Rivian was far out originally, but this blew it out the park.
So the question is really, would people want an electric pickup truck that looks like nothing before it?
I'm leaning towards yes, but we have to wait for the market to make its choice to find out for sure.
Also, we are many to love the i3 look. It's a matter of tastes.
Also, Supercharger v3 goes up to 250kW
7 kW.
Seven! What is the point of that?
To justify their current valuation, the “bull case” is for them to dominate the entire automative industry (not just the EV segment) and do an Amazon-like turnaround of losses into profitability.
Anything short of that, their valuation is ludicrous.
Toyota has over twice the market cap that Tesla has (230 billion vs 105 billion) and considering how big the auto industry is outside of just these 2 companies, I don't know how you think an automotive company at 105 billion is vastly overvalued.
> the “bull case” is for them to dominate the entire automative industry (not just the EV segment)
Is Tesla's market valuation highest than the highest valued automakers?
“No-one wants a touch screen keyboard” etc, the CEOs said as their business evaporated.
Tesla are still at iPhone 3G point I reckon, having just released their first affordable car.
Also consider that while they are so far ahead - they are still accelerating. And the traditional car makers haven’t even realised they’re in a race to the death yet.
Most countries have barred the sale on non-EV cars in couple of decades. That’s not actually that far away. Or self driving could make all other cars seem like Nokia 3310s.
Cheers!
Well aware of the difference in sales figures, but having driven both, I prefer it to the Model S.
I think battery tech will end up deciding the market, though, and GM would have to pivot harder that I think they are able to in order to beat Tesla. I am very curious about their internal R&D pipeline for the Maxwell technology.
From my perspective the Bolt is: -Ugly -Less safe -Slower -Doesn't drive itself, or will be capable in the future
Worst of all the Bolt's infotainment system is horrible.
https://www.chevrolet.com/content/dam/chevrolet/na/us/englis...
https://www.theverge.com/2019/12/5/20996866/gm-lg-ev-electri...
And recently an ounced a $2.2 billion investment to turn a plant into one that will produce only electric vehicle
https://www.freep.com/story/money/cars/general-motors/2020/0...
GM has the EV knowledge from Bolt and Volt. It has autonomous tech from Cruise Automation.
GM is planning 20 all electric vehicle models by 2023.
IMHO they would be the clear leader in the pack of traditional manufacturers.
I also don't think anyone needs to beat anyone. Everyone will have their market share sooner or later as the tech becomes a commodity. I just want my self driving EV cheaply, and reliability. I've never owned a GM vehicle but I'm an keeping an eye on what they come out with.
*Daimler, Volkswagon, Audi
In what way are they treating EV like the enemy?
> Same thing happened with Kodak.
No it did not. What happened to Kodak was that its primary source of profit, film, was threatened by new technological developments. That is in no way comparable with the situation of car manufacturers.
> You spend decades, centuries even, perfecting the internal combustion engine. Your pride and joy is now obsolete. You can see why it was so hard for everyone to switch over.
It was hard to switch over because it was thought that it wasn't profitable. Now that it is apparent that it is profitable nobody has any problems switching over at least not any problems of the kind you are talking about.
> Almost all your cumulative knowledge, obsolete.
Almost all knowledge is obsolete... wtf. Are EVs not vehicles and haven't we been making vehicles for a long time?
> It is why Toyota, with their insanely successful Prius, who knew full an well how transformative the EV side is, dragged their heals until to this very day.
Because they were concentrating on hydrogen cars.
> Most of the Germans have delayed their EVs for mass market in the US from 2021 to 2022. Even Hyundai, who is the closets to Tesla in efficiency, is frought with delays. "We are X* we will have no problem making an EV" they said!
And how many delays did Tesla have?
From that document in the FINANCIAL SUMMARY section there are these quarterly profit/loss number:
Income (loss) from operations
Q1-2019 Q2-2019 Q3-2019 Q4-2019
-522 -167 261 359
But for the whole year that was only a loss of 69 million dollars.
I think what the market likes is the Tesla cash position.
If you look at those it would appear Tesla is no longer burning cash.
Cash and cash equivalents
Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 QoQ YoY
3,686 2,198 4,955 5,338 6,268 17% 70%
If the Tesla cars start throwing off profit and make the company self-sustaining, their vertically-integrated energy thing opens the kind of insanely huge global energy market. They're not just going to eat Ford's lunch - but also Chevron, Saudi Aramco and your local energy company.
I think Tesla might run into issues around energy regulation. They are working on energy storage and solar, but we'll have to wait and see how that turns out in the market. Energy companies are highly regulated and generally provide highly reliable service. This comes with costs like running higher than you can actually charge for so you don't get outages, employing a lot of people for emergency response and storms, etc. What happens when solar roofs get covered with snow and don't work as well? If the utility company is tasked with making sure they have enough generation power to cover that, then we'll still need to pay them for the investment even if we're using our solar roofs 90% of the time. We're already seeing net metering going out of fashion as the unpredictability of it doesn't help utility companies lower their costs enough.
Would Tesla be willing to also go into the generation and transmission side of things? It's definitely possible, but that's also difficult. Generation is easier since they could just set up solar arrays and batteries and sell into the grid. However, that still means customers paying the transmission company. It's possible that you're talking about the generation side and Tesla could tackle that a lot easier. In terms of the transmission side, they'd probably have to start buying utility companies which don't come cheap.
I think it's more likely that Tesla will sell tech to transmission companies and solar roofs and small batteries to individuals. I think there's still a lot of money and environmental benefit there, but I think transmission companies are going to stick around. It's a good business if you're just looking for standard return-on-investment, but it also requires dealing with a lot of regulation and communities that end up hating on you.
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In terms of Tesla being up so much, it's a bit surprising. Automotive revenue is basically flat year-over-year. Total revenue is up only 2%. So, Tesla isn't really growing. By contrast, Apple's revenue was up 9% year-over-year and Apple is solidly profitable today. Assuming that Tesla continues having profitable quarters, their PE ratio would be around 250 which would be fine if they were growing revenue rapidly.
On the plus side, Model 3 production and sales are up over 40% YoY which is excellent, but it's clear why revenue is flat: Model S/X sales are down significantly and they carry a high price tag. For every three Model 3 sales, they lost a Model S/X sale. That's certainly to be expected. The Model 3 is really nice. However, it does mean that revenue is flat.
As a car offering, I like the Model 3. However, I don't know if demand will continue to increase. How many people want to spend $40k on a car - and specifically a Tesla Model 3? Will there be some hockey-stick like growth in revenue? Probably not. Profits? Maybe. Tesla's vertical integration might pay long-term dividends. Maybe they can spend less developing things they've already paid for or maybe they can keep spending on R&D and really outpace the industry.
Still, it seems unlikely that they will grow more than 10x their current size in the automotive industry. That's not a dig at Tesla. If they're pushing out around 600k cars this year, becoming 10x the size would put them in the same place as Ford and GM. A 17x increase would make them larger than Toyota. But that's going to take time. It looks like Tesla is looking to increase production capacity by 15.6% in 2020 (from their slides). At that rate, it would take 20 years to match Toyota's capacity (starting from 640k production capacity and compound expanding at 15.6% per year for 20 years).
Maybe Tesla can expand faster than that, but that would also likely require moving into lower cost/margin vehicles, many more types of vehicles, etc. Toyota has 17 US vehicles not including variants like hybrid vs non-hybrid not to mention many more for other markets and not including things like Lexus - Lexus adds another 12 models, not counting variations like hybrid vs non-hybrid.
And I'm not saying that Tesla isn't going to do that. However, I think it's going to take a long time and a 20-year horizon (and the risk involved in money that might materialize in 20 years) deserves a discount compared to money that's actually being earned today.
You might totally be right that Tesla will not only eat Ford and GM's lunch, but also energy companies. However, that future is likely 20 years away with a lot of risk between now and then. Musk has been very upfront that electric vehicles are easier to make than ICE cars. Other auto makers are creating good electric vehicles except they won't offer enough range because batteries are expensive. When batteries become cheaper, will competition limit Tesla's automotive expansion? I think they'll still be highly successful, but what happens when Toyota or Volkswagen puts their full weight behind battery-powered cars? Some people will surely buy them instead of Teslas. At some point, if battery-powered cars are our future, Tesla will clash head-on with Toyota. Toyota is so good at manufacturing. Even if Tesla is good, Toyota is likely to find ways to capture a lot of the market. Heck, if electric cars are more reliable as Musk touts, what happens when people double the lifespans of their cars? That's a much smaller customer base to be selling to.
Again, I want to emphasize that Tesla is doing well, but anything with a long time horizon has all sorts of things that can happen in the interim and Tesla is playing a long game and going up against a lot of established incumbents and that means risk. I don't think it means risk of bankruptcy or anything like that, but there's a big difference between Tesla's current market cap (around $115B in after-hours trading) and ending up as the next Mazda (a solid, profitable, and well-respected auto maker) that's only worth $6B. Even if they're the next VW (the second largest auto maker sitting just behind Toyota), VW is only a $95B company - and there's a lot of risk between now and Tesla selling 10M cars per year. Likewise, there's a lot of incumbents, competition, and risk between Tesla's current solar and storage deployments and eating energy companies' lunch.
At the very least Tesla (and any similar 'electricity' co) already benefits from policies geared toward limiting greenhouse gases (and various 'pollutants') emissions, and as those will probably ramp up, will benefit more and more from them.
But there may be more, maybe even much more.
The gorilla in the room is the fact that solar (nor wind) energy cannot deliver 100% of the time.
Any intermittent energy source has to be compensated. On a grid in order to provide the necessary 'baseload'. On most autonomous locations because people don't want or cannot wait for power, they want to switch it ON and immediately enjoy the ride.
At any moment delivering power to a non-producing geographical zone may be done thanks to power produced in other areas, or (this not a XOR!) by storing energy.
From a practical viewpoint a mix of sources (windfarms, geothermal...) and interconnecting grids (forming a continental-scale supergrid) are mandatory, and in many nations there are massive investments towards all this, boosting 'distributed generation' (mainly wind energy, various other forms of renewables, long-distance transmission (see high-voltage, direct current (HVDC)))...
Tesla ability to deploy supercharger networks in many countries ties them with local folks in charge of the gridpower. They know about local energy storage (batteries, which will not be only useful for the car). They also explore distributed generation (Solarglass roof). The necessary smartgrid is mainly tied to operational research and IT (Tesla knows about those)...
In summary Tesla knows about a fair part of many pertinent domains, at worse as an integrator.
Moreover Tesla stands nearby the consumer (mindshare).
Therefore Tesla may become the most prominent ultimate link to the customer when it comes to electric power (which will become more and more pervasive as policies geared toward limiting effects of climate change will phase out fossil fuel), enabling them to rack-up a fair part of the benefits from more and more massive infrastructure-oriented investments.
This is excluding any other growth opportunities (self driving, solar, battery storage, drive train). just plain car sales...
The market did not expect the company to cease operations and that was particularly not the expectations baked into this quarterly result (the bar Tesla had to jump over this quarter). A small group of agitator shorts pushed that narrative, which very little of the market actually believed as witnessed by Tesla's persistently outsized market value (pre rally it was still worth more than Ford).
Companies the size of Tesla don't trade with $40-$50 billion market caps when the market actually thinks they're going to stop operating soon.
I remember years ago reading that although the "please don't squeeze the charmin" commercials were annoying, people remembered the name. Maybe a really weird truck announcement works the same.
Or it could be that "normal" people are starting to see model 3s showing up (outside of california for once)
It sounds like they may have backed away from some of the more extreme high end projections for the Y. It looks like worldwide production may double within 1-2 years, though.
[0] https://www.treehugger.com/bikes/want-buy-high-tech-low-carb...
Those things basically look like a rehash of the Twike, which has been around since the 80s: https://en.wikipedia.org/wiki/Twike
Tesla cars are nice cars. Polluting that brand with a cheap bicycle is a mistake IMO.
Read the numbers on page 21-22 first, of course.
After the big FB rally, the report was mostly underwhelming.
Entirely different expectations on the shoulders of FB vs Tesla at this juncture of their operational histories.
I forsee an ingress-style mobile game and "pay 1$ to outmuscle that guy on the highway/arrive faster at work" features.
This difference you're missing is the upside is asymmetric with options. Your losses are capped but your gains are essentially unlimited. In a typical casino game the house edge is >50%. If you're turning $500 into $1M at a blackjack or craps table you're cheating.
you can write off up to $3K in capital losses a year. people who jokingly bought $420 and $690 strike options just a few weeks ago are literally up six and seven figures each.