You have this exactly backwards. For instance, you could have made the exact same argument about Walmart versus Amazon. What you're missing is that the investments that Tesla is making, which hurt short-term profitability, literally create new lines of business that power future revenue streams. The fact that car manufacturers are hoarding profits and failing to invest in the future is precisely why they are overvalued.

I would say there are better ways to make money than a 50 percent chance to make 20 percent more.

Also these predictions are 10+ years in the future. How often have people actually predicted that far from the future? Almost none. The only ones I can think of are bets on fragility: more downsides than upsides as time progresses.

Tesla is a slave to the Lithium Ion process of Panasonic. If a new chemistry breakthrough comes out tomorrow (ie: Redox Flow has huge potential in the utility space, even if it has little potential in the retail space)... Panasonic will be able to switch to the new chemistry but Tesla's battery tech is basically Lithium Ion only.

Tesla's battery technology is literally the battery electronics. Not the chemical cells. Tesla seems to employ chemical experts so that their battery-electronics can better predict the effects of the chemistry... but really... they're only putting together cells. Tesla doesn't make the 18650, Panasonic does. Tesla just puts a bunch of 18650 together, as well as have some sort of algorithm to make them charge / discharge at high efficiency.

Tesla is completely dependent on Panasonic's chemistry. The speed at which LG was able to build a "Silicon-Lithium Ion" battery pack of GM's Bolt only demonstrates how "easy" the battery-pack problem is.

Or that they will sell/license batteries and technology to the top 3 car companies in the world.

Tesla is expected to execute better because it hasn't just set up a department to prototype EVs. Tesla is dedicated to EVs. The company is built on the technology. That results in a lack of legacy distractions, faster iteration cycles, effective vertical integration, and a wholly different culture and brand.

It's a classic startup disrupting incumbent story. It isn't a sure thing, but it's enough to make Tesla very valuable.

So nobody deserves a return on risked capital? That's insane.

This here. BMW makes more in profit than Tesla is earning in revenue. BMW sells 2.5 million cars a year, 25 times as many as Tesla. And both companies are valued roughly the same? How? Totally overvalued. If Tesla catches up to BMW 25x output (and this is a big If) would it then be worth a trillion dollar? No this is already priced into the stock.

> Musk has said that making electric cars is easier than making internal combustion ones. So, if Musk shows that electric cars can be profitable, won't everyone else add a huge amount of competition?

CWhat is not easy to make is a self-driving car and Teslas battery-Gigafactory also an advantage. Still the statement that an electric car is simple is troubling for a luxury/premium brand. You generally don't want to be in a market where things are easy to make and there is disruption by a race-to-the-bottom. I think the big car makers are more at risk having their lunch eaten by upcoming cheap car makers in China or India than Tesla.

Tesla is like BMW + some BMW suppliers. In that way Tesla is really 4 companies right now, a car company, a component supplier to Toyota and others, a battery company, and a solar company. Energizer is worth 3.3B and has 5,000 workers. Solar city is 'worth' ~$6 billion.

Thus, directly comparing Tesla to BMW is missing the boat.

Are you familiar with how companies are valued? You only seem to be factoring in present considerations. What might happen in the future is a major factor in determining these prices, especially in an industry with so much potential upheaval not too far away. (e.g. what if Tesla profits are 10x BMW's in 20 years? Then they are probably undervalued right now.) If you are confident in your assessment though, you can always put money behind it and make yourself rich.

If there is a big shift overall to electric then the capital expenditures that BMW has already made aren't so valuable.

Yes, they (BMW) are indeed making money now. But have they invested in the right direction? I don't know. Allegedly the market does (as reflected in the relative stock prices)... but the market is often stupid. It is often smart too, but it can sometimes be hard to tell.

isn't BMW behind the proposed european standard for electric vehicle charging?

But will it justify its stock price?

No amount of metrics can or will justify a company like Tesla's current stock price. At this juncture, you are mostly getting into a wild ride. I state this for the following reasons:

1. Tesla is not a car company. Not anymore. It's an energy company. So all comparisons to existing car companies are void. You need to make new comparisons with energy companies. But then, there is no energy company like Tesla. Exxon is probably a good comparison but heck by that measure, Tesla is super cheap.

2. Tesla is run by a Maverick CEO. Admittedly, none of the car or energy company CEOs fit that bill. Tillerson probably came close but he is not with Exxon anymore. What Musk can or will do, is hard to predict. Simply put, there isn't enough data to support such predictions. Tesla's past has been very volatile. So basically it's very hard to model Musk's future plans. He has started digging tunnels now.

One can just go wild imagining the possibilities for Tesla.

They could become a utility company. They could be the storage backbone of many utility companies.

The supercharger network in itself can be highly valuable. Imagine if all cars were to go electric and Musk strikes a deal with all the automakers to make their cars compatible with the supercharger network.

We are just getting started with Tesla and it's super difficult to put a future value on them. Even a 12 month projection is pretty hard.

So analysts are doing the best they can. Draw projections based on tangible raw numbers. Gigafactory growth and Model 3 growth. This growth will not be linear by any measure. So expect dips in the stock price accordingly.

As an investor but not a fan of Tesla, I share his view. "Maverick CEO" just means that he's unpredictable and has made several major pivots before, so expecting Tesla to follow the trajectory of existing car manufacturers is quite imperceptive.

And my post is about how these things are just said, without any evidence. I thought this is a forum of critical thinkers? And yet we have people saying that "well, it's not really a car company" or "but Elon!" trumps actual data.

>so expecting Tesla to follow the trajectory of existing car manufacturers is quite imperceptive

This isn't about the path to get there. At the end of the day, cars are cars, and Tesla isn't the only one building EVs now. To think that they are going to, somehow, have margins in the multiples of existing companies in both the automobile, solar or battery business requires explanation. "Elon is unpredictable" isn't one.

The commenter above is right on this one and it is not a subjective statement. This is a fact.

Of course, most of the revenue today is generated from selling cars. But we were talking about the value of the company. And this includes expected _future_ returns. And, obviously, Tesla has more than just aspirations. They have built a large part of the Gigafactory already.

Honda certainly is not a car company - but much more than this as well. This was not a good example for your case. Same with GM. I am not sure if your intention was to list companies that are much more than car companies? You were just making my case.

You were talking about what Tesla is. Despite its aspirations, Tesla is a car company right now.

> I am not sure if your intention was to list companies that are much more than car companies?

That was my intention. The discussion was about how we can't compare Tesla to GM or Honda because Tesla "isn't a car company". My point is that those other companies are not either, and so that is not an argument to reject the comparisons out-of-hand.

It often feels like the people discussing Tesla have zero experience with some of these other companies.

> No amount of metrics can or will justify a company like Tesla's current stock price. At this juncture, you are mostly getting into a wild ride.

FWIW, as a "fan" I've made a great return on my investment in the wild ride.

And this is incorrect. It's very easy to model things like "What if every person on the planet buys a Model S every year at X price and X margins.", and create a valuation model from there. Then make more reasonable projections.

This dismissal of numbers here is disturbing. Believe it or not, Tesla isn't the most original company ever to grace the earth; it has to do business in the business world like everyone else.

And here's the thing: TSLA is priced to become one of the biggest car companies on the planet. Anything short of that, from an investment standpoint, is a failure. If Tesla achieves that..your returns will be mediocre, even though the company has been wildly successful. What is the difficulty in understanding that?

If I were a Tesla stockholder, I'd want Tesla to focus harder on manufacturing and scaling production of electric cars instead self-driving technology.

Strength I see for Tesla is unlike the other car companies they don't have capital tied up in the legacy car business. Granted legacy is 97% of the market right now, but it won't be in ten years.

According to this link[2] gas peaker plans were 50% of energy installs in 2013, the best link I could find from a quick search.

[1] Interesting talk on this topic: https://www.youtube.com/watch?v=Kxryv2XrnqM

[2] http://www.eia.gov/todayinenergy/detail.php?id=15751

Yeah, I'd say it would not be unfair to compare future Tesla to a company like GE ($270B mkt cap).

Optimistic, but not irrational.

GE Healthcare alone employs >40 000 people and does >4x the revenue of Tesla today.

Maybe if Tesla merged with SpaceX and also with five-six other large companies you'd be about right.

Fair enough (though I'd think the oil & gas you mention would count), but look at any energy company today and you'll see similar numbers. Another poster in this thread compares to Exxon; similarly favorable.

You may not think Tesla will make it there, and you might turn out to be right. But those that do are optimistic; not stupid.

Perhaps that sounds like a lot. But consider that Uber is valued at $68B.

But consider that future Tesla will probably be owning/running a service like Uber. Add to that grid storage, solar power installation (from which it makes interest on loans to the consumer), powerwalls, battery production for other industries (including possibly every other car manufacturer), and whatever else Tesla branches out into once those markets are established.

Excessive vertical integration is over-valued, unless you holds a monopoly position in at least one of the component of the vertical.

They're going to own about half of the world's battery production capacity at ~30% reduction in cost per kwh over current production. Plus they're planning three more factories.

Selling core tech to other car companies seems like a lucrative long term move.

How would it do that? And why are self-driving cars a separate category when it comes to battery suppliers?

> They're going to own about half of the world's battery production capacity

There should be about 200 GWh of worldwide production capacity by the time GF1 is fully ramped up. That means they'll have about 17% of it, not half. BYD alone will match that. So will Foxconn and Boston Power. Then there's LG Chem, Samsung SDI, SK Innovation, etc.

These names have committed over $20 billion to additional battery factories over the next 2-3 years, many of which have already broken ground. They're also largely ahead of Tesla's position in the battery business already, are better capitalized, and have no intention of dropping out of the market rather than expanding to meet the expected future demand.

It's easy to get roped in by Tesla's press releases and marketing materials, where they do things like compare the GF's expected production rate at the end of 2018 to worldwide production numbers from 2013. The rest of the market isn't standing still.

I don't think that's going to happen. It might happen on some roads, in order to reduce congestion or whatever, but there's no reason to ban human drivers in general.

That's because "autopilots" can run in passive/safety mode, ready to take over and prevent you doing anything really stupid. This is already starting to happen, in fact, with AEB to be installed in all new cars by 2022.

Yes, there is considerable risk and other players might get there faster than Tesla, but they are certainly in the running and their existing cars collecting real-world data could give them a leg up against the competition. I would also factor in the fact that car manufacturer's and their culture are not used to building and iterating on software services like this quickly. Think about how Microsoft tried to make phone operating systems for years before the iPhone or Android phones launched, and they are now completely side-lined in that space because they just couldn't innovate or copy fast enough before network effects kicked in and locked them out. Similarly, many of those same network effects can exist with cars.

I can see a world where consumer decide to purchase cars based on their technology and charger networks alone. This could even include an App store where a large number of apps available for the car become an important deciding factor.

Once you get out ahead, I think it will be really hard for others to catch up.

Note: I'm note an owner in Tesla, but I'm bullish on their ambitious long-term prospects.

Once there's an autonomous driver it's really just about the cabin accoutrements.

* using clever techniques to stretch the life of batteries

* keeping them in good condition in extreme weather

* keeping them cool

* keeping them safe in an accident

Telsa is figuring all this out much earlier and at bigger scale than most other manufacturers. They can sell their knowledge to other car companies once the Gigafactories start churning out large quantities of batteries.

BMW is the next BMW; they are fully capable of ramping up their EV line, it just does not make sense at the moment, since they generate more profit producing gas guzzlers. Tesla has done tremendous things related to the charging infrastructure, but their exclusivity regarding high-end EV vehicles itself is just imaginary.

I have been hearing the same argument for the last 3 years now.

Instead of looking at the situation through the lens of "Tesla vs other car companies", let's take a step back and look at the battle of "electric vs gasoline". The better EVs do, the more charging infrastructure gets built, and the more receptive people are to buying EVs in general. These kinds of effects disproportionately help Tesla; their whole business is electric cars, whereas EVs are only a tiny slice of the pie for every other established car company.

Because there is so much room for growth in the EV market, we're also not necessarily dealing with a zero-sum game right now. Helping other companies sell more electric cars does not necessarily mean Tesla will suffer reduced demand; it may actually have the opposite effect. Even simple lack of awareness is still a big obstacle for EVs: https://electrek.co/2017/01/03/electric-vehicle-adoption-awa...

And as others have said, this is just about the EV market. But there's also the extremely high growth potential battery storage market as well as the solar market.