People have been predicting failure for Tesla since the beginning.

At each stage saying they’d fail and not be able to execute. Every time so far they’ve been wrong.

I like my model 3 a lot so I’d recommend one - I don’t think the people speculating on Tesla are particularly good at it.

The question is, can we see how Tesla can get yearly earnings of say $5 billion to justify the valuation?

Maintaining a high profit per car seems to depend on selling a premium product, or presuming that other car makers cannot compete. When shifting to the mass market (more than say 1 million vehicles per year), surely the profit per vehicle has to decrease sharply - even if Tesla can earn more than the industry $1k per vehicle (from the quote below).

From 2017: "Recently, Tesla’s valuation surpassed both Ford’s and General Motors’. BMW is among the other major carmakers in the rearview mirror. The logic of this is intriguing, given that Ford, for example, is coming off its second-best year in its 112-year history, earning $4.6 billion while selling more than 5.5 million cars worldwide. General Motors earned $9.4 billion selling 9.8 million vehicles." From article: https://www.vox.com/the-big-idea/2017/6/26/15872468/tesla-gm...

They’re seeing a future of fully autonomous electric vehicles.

To Elon’s point the Model S has been out since 2013 and there’s still nothing as good on the market from any other manufacturer.

They have a huge head start to say nothing of their charging network and the issues legacy brands will have fighting with dealers.

> Model S has been out since 2013 and there’s still nothing as good on the market from any other manufacturer.

Sales of the S are flat and the profits hardly make a dent towards my suggested $5 billion earnings.

> They have a huge head start

In some areas.

Hybrid cars have much of the same technology and no charging station limitations - they compete with full electrics. Hybrids sold 4 million in US 2016 compared to Japan's 5 million sold.

> To say nothing of their charging network and the issues legacy brands will have fighting with dealers.

Sure, but it looks like Tesla needs say 10x more sales to get $5 billion earnings. Another competitor only needs to deploy a little faster to catch up.

TSLA is the exact same position as AMZN a decade ago. They don’t need to make profits. They need to invest in assets and scale, which is exactly what they’re doing.

Except AMZN was cash positive and their lack of profitability was due to the fact that they were investing money they were generating from sales. TSLA on the other hand have to raise money from the market to fund their operations, let alone invest in assets and scale. The two companies are not in the exact same position

Amazon used and still uses debt...

Amazon basically never lost money (or at least not in a material way). That's different.

It's not different. Not even a little bit. TSLA has sold equity and debt to pay for assets to scale. It does not lose money on its sales. AMZN sold equity and debt to pay for assets to scale.

>People have been predicting failure for Tesla since the beginning.

This is such a bizarre argument. Things don't fall apart overnight, until they do.

Are you a software engineer? "People have been predicting our app will collapse under the burden of technical debt since the beginning. Hasn't happened yet!"

It is certainly not bizarre. Extrapolating from the past is almost always the best baseline for predicting future. I put emphasis on the word baseline.

Do that and you'll miss predicting every single company that has ever failed. Sounds like a brilliant plan.

To clarify they’ve said each step was impossible and that Musk was basically a fraud or a liar and each step has been executed so far.

I place the people predicting failure with those predicting a stock market crash - given a long enough time horizon you’ll eventually be right, but otherwise it seems to have mostly been nonsense so far. I suspect people outside Tesla are either just bad at predicting their ability to execute or have other reasons to want them to fail.

>To clarify they’ve said each step was impossible and that Musk was basically a fraud or a liar and each step has been executed so far.

This is a nonsense narrative that some people tell themselves to justify hanging on for dear life.

Sure, there was some skepticism about EVs, but it was mainly around whether there was demand and whether they could be built profitably at that level of demand. Who Killed The Electric Car? came out in 2006 and the entire premise was the feasibility of EVs.

So what has Tesla done? They've demonstrated that EVs can work, and that there is some demand there. They've burned through almost $20BB in subsidies and shareholder equity to get there. They are certainly not near profitability. In fact, they are changing their entire business model as of a week ago, apparently. Why, if they've proven that EVs can be so successful?

It's hilarious that the fanatics claim to think "long term", but then in the same breath claim Tesla has has nothing to fear because they haven't gone bankrupt yet, therefore they never will. Enron was the 7th biggest company in the US at one point, and won multiple awards for The Best Company to Work For. It doubled revenues between 1999 and 2000, and was set to do it again in 2001. Then it disappeared. "Nothing to fear!" right until the end...

>given a long enough time horizon you’ll eventually be right, but otherwise it seems to have mostly been nonsense so far.

By what metric? Most owners haven't owned the car for a year yet. If you bought the stock in the past 5 years, you're underwater. Do you consider that some ridiculous time frame for an investor or business? I certainly don't.

I'm not sure what to tell you, basically nothing you've said is true.

There wasn't 'some skepticism' about EVs, very few took them seriously back then.

During the roadster the main narrative was it couldn't be done and if they could do it nobody would buy them.

For the Model S there were constant reports of Tesla not having the money to build them etc. the same thing was said repeatedly about the Model 3 (they would never be able to manufacture enough, they didn't have the money, they were going to fail).

Tesla pulled EVs from the future to now in spite of it being a very hard market to enter with massive up front costs. Along the way they also built out a charging network and made huge improvements in car software and getting rid of the dealership model.

The next shift is autonomous driving and the pivot to it is because any car without the tech when it happens will have negative value.

I'm not claiming that there's nothing to fear because they haven't gone bankrupt yet, they could still fail - but you're not arguing in good faith and people have been saying the same thing for years even though Tesla has proved them wrong at each previous stage.

You should watch the Rich Rebuilds series of videos about the problems he had buying a used Model X from Tesla:

https://www.youtube.com/watch?v=H8ro6kpKlw0

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

https://www.youtube.com/watch?v=pxSQuGeoug8

https://www.youtube.com/watch?v=ezqwfha-BZ8

Yes, I've seen all these, and I'm staggered at how bad the used tesla experience seems to be. They can't even get simple basics right. Buying a used Tesla should be a simple, straightforward experience and run smoothly - after all, they are not cheap.

I buy and sell cheap (sub £2000) cars on the side. I have a better customer experience than that. That is a damning indictment.

Please tell me you have a YouTube channel. I would love to watch someone with your hobby. That sounds completely awesome.

I never set one up for doing that sort of thing - I wish I had done when I first thought of it (maybe 2009?), but I'm a bit lazy! There's now loads of people doing it, although they seem to just be rebuilding lamborghinis, etc... Mine would be a bit more mundane!

I bought a Model S last year and around the time of weedgate I decided the risk was too great and sold the car. It seems from the used market that the value has plummeted. The one I bought is easy $40k less just a year old.

Repairs and parts availability is one of the biggest risks. Could easily see situations where a small fender bender causes a total loss.

a lot of cars rapidly depreciate in the first year. A model S losing almost half its value in a year or so is no incredible shock.

Especially now that the perf option used to cost twice as much (now the uprated brakes/wheels are part of the perf package). Now autopilot (not FSB) is included. Also the new motors mean 370 mile range is available with the 100 kwh battery. AP3/HW3 is also now shipping as standard.

So yes the rapid progress means that the older cars depreciate quickly. This is only get worse with the next refresh rumored to be fairly soon.

Last year this time some of the same models selling for $40k in the used market were $80k. These were for some of the oldest cars in the pre-owned segment.

The biggest hit to value came with the Tesla price lowering.

Id expect a 20% loss but not 50%. Porsche and Lexus don't lose 50% the first year.

I have a 4 year old s85d. A year ago I got an offer to trade in for 50k from tesla. I bet the value went way down because My ~260 range is so much less than 370.

Don’t understand the downvotes? Not original poster so I hope I can bring this up.

Commenting on year 1 depreciation is like commenting that 2+2=4.

I would only lease a Tesla. Why be stuck holding the bag if the proverbial shit hits the fan?

AFAIK Tesla hasn't been friendly to lease arrangements so far. Parts and repair has always been my concern there--other manufacturers have a good history of parts, a robust aftermarket, etc. Porsche's EV will be the one to watch in this regard.

What's the potential problem for a consumer? No battery replacements? Someone's gotta be making parts even if Tesla goes bust.

Unlike other car manufacturers who go bust (like Saab 7 years ago), Tesla has worked hard to limit third-parties from repairing their cars. So if they go bust, you have to hope that their service business gets spun out into a company that lives on, and that this company (which retains a monopoly) doesn't charge you ridiculous rates.

Unless I'm mistaken a major component of the Tesla value prop is the supercharger network.

I presume "shit hits the fan" includes goodbye supercharger network.

Furthermore, unless I'm again mistaken, a bunch of people are under the impression that they'll have unlimited free supercharger access for the life of the car.

I'm fairly sure cars have a required minimal / expected lifetime (especially in the EU), but I wouldn't be surprised if that's well earlier than the expected lifetime of their batteries. So far so good, I haven't heard any news about battery failure or used Tesla cars being worthless due to needing a battery replacement. Mind you that is likely to happen sooner rather than later, it's been nearly 10 years since the first Model S models appeared.

Just like with SaaS, when things go boom, you’re screwed.

With Tesla, i would assume that in car features like autopilot would go poof, along with the proprietary chargers and spare part availability. Also, who knows what over the air maintenance is happening.

With a lease, your liability is capped to the lease payments. With ownership, you can ride it down to zero.