Total Debt:
VW. $237B
GM. $192B
Toyota. $190B
Ford. $155B
Daimler.$108B
Nissan. $42B
BMW. $80B
Honda. $42B
Simply put, the stock market cap is the total company value minus the debt.
Tesla debt by comparison is $14 billion.
All those companies together being worth only about 3x Tesla is perhaps surprising, but the market is weighting for the possibility that their entire current product lines will be virtually unsellable if not illegal to sell in a decade or so.
Tesla scaling electric vehicle and battery production by 60% CAGR for a decade doesn't seem too ridiculous when you put it that way. And that doesn't factor in new products. Look at Apple in 2007.
2014 16,689
2015 25,416
2016 47,644
2017 50,140
2018 191,627
2019 192,250
2020 500,000 estThink of it like a house. If you pay me $200K for my house plus assume my $300K mortgage, then you say that the value of my house was $500K.
When comparing values of companies, use the "enterprise value" metric, not the "market cap" metric. Enterprise value metrics will still show an overpriced Tesla, just slightly less overpriced.
Unless you are one if the few and nearly extinct economists who believe the stock market is perfectly efficient, comparing by market price often leads to justifying one mis-pricing by another mis-pricing.
For example, Yahoos ridiculous pricing during the bubble could always be justified by even more ridiculous prices for companies with near zero revenues by pointing out Yahoo had revenues and was growing them incredibly fast.
The only question you need to ask about Tesla is how can a $30B revenue company be worth a $680B valuation? How long before Tesla’s earnings catch up to the risk free returns on $680B (roughly $32B/year)?
Assuming an optimistic 15% after tax profit margin for the rest of its life, Tesla would have to grow revenues seven times. At 15% a year, revenues double ever 5 years. So in roughly 14 years Tesla would be reach an annual after tax profit of $32B. And it would still be $200B behind in total net profits, it takes nearly 20 years for Tesla to generate more total net profit than the risk free investment.
Is that reasonable? It all depends on the risk Tesla falls short, and whatever assumptions are in your DCF analysis. That’s a long time to catch up, I’m gonna go out on a limb and say far from a slam dunk.
Many of the companies mentioned are quite far behind, and will face severe challenges in the coming years trying to adjust with little marging for error.
But most importantly Tesla is also a battery company! Who knows, most of the other players might even have to buy batteries from Tesla.
Gut feeling tells me that Tesla will still grow significantly, especially if they start selling batteries to other markets at scale, but also the car business itself will experience a tremendous growth.
NKLA (seems like a scam), NIO (seems really good), and with a huge amount of SPACs buying EV companies, they are going to have lots of room to grow. Also many of these companies have been operating for a decade trying to create a product like KNDI, PLUG and they are getting closer with their products. I didn't jump into TSLA early as it wasn't profitable, but now they are making money so it fits my investment principles.
Take a look and do some research here at the competitors to the traditional car dealers [1].
[1] https://docs.google.com/spreadsheets/d/1sKMfBZNkHdvaVKmweuv3...
- Sincerely, a TSLA hodler since summer 2019, when I bought my first car, a Tesla.
I'll be holding the stock I have, but I don't think traditional car companies are going away any time soon. On the contrary, I'm thinking of getting a Taycan, a BMW or some other EV car.
Tesla isn't overpriced per se, but once the spigot of cheap debt and printed money stops, we might see a good decline from the stock market. Not that I'm going to bet against the market either.
Comparisons that try to make Tesla seem like an ordinary car manufacturer are probably quite a bit off.
They are ahead of the field, their chargers are faster, but there's already thousands of other places with relatively high power chargers that can likely be upgraded as demand materializes (at a minimum, the competition is not starting from 0).
Multiple other manufacturers already make and sell EVs, in some cases outselling Tesla in their home territories.
Moreover, while Tesla assembles their own batteries, the underlying battery cells are made for them by Panasonic, which owns the IP to the chemistry. (Tesla's IP relates to the assembly, referring both to the process and the finished battery product.)
And that IP is only valuable until the inevitable switch to solid-state batteries, which have significantly more capacity and durability than anything on the market today. And other automotive companies have already acquired exclusive licenses to the most (commercially) promising research.
This appears to have a lot of similarities with the dot-com bubble where the new internet companies were thought to quickly overrun the old, "uncool" companies. It just doesn't happen like that. Plus there is a vested interest in the home countries of these car companies to see that these companies survive. Sure some of them might be ripe for losing a lot of market share, but they still have time to catch up as the world is slowly turning to mostly EVs. It's not the same as with internet companies where people can switch their search engine the next day if they so desire.
Note that Panasonic, which will actually be making the batteries, has indicated in its own investor releases that it is working on developing the batteries but they aren't anywhere close to production-ready yet.
The other announcements relate to making the batteries cheaper, but would not otherwise extend performance (and in some cases would reduce performance, but due to the reduced costs would come out ahead on a $/kWh basis).
What's the market cap of a gas station chain comparable in scale to the Tesla charging network?
What's the market cap for however many Ford dealerships it would take to match Tesla's sales capacity?
Rinse repeat for every industry Tesla is in.
There are already a dozen other electric models on the streets. Why should they have to license from Tesla? The electric engine part of the vehicles is actually not that hard - it's the battery that is complicated and Tesla doesn't even produce the batteries in their cars. That's done by Panasonic.
VW, Toyota, Nissan have supply chain management under control, they don't need to learn it from Tesla.
Supposedly GM's Ultium battery platform will equal or exceed Tesla's batteries, but that remains to be seen as the first Ultium-based cars don't come out until 2H 2021 and all we have to go on right now are press releases.
VW holds some patents and exclusive licenses on solid state batteries, and is planning to go all EV within the next few years, though the SSB autos aren't expected until 2025 at the earliest, assuming VW is able to commercialize the technology.
Patents last 20 years, and it's not unusual for 5 of those to past between filing and the invention being turned into a usable product that hits the market.
There won’t be mass shift without these companies driving the shift, simply because there won’t be enough cars for the demand.
I have no idea if history will repeat itself, but I find the parallel interesting
WOW. I knew their stock price has been like a rocket but I dont follow them closely. ( They were over priced ages ago ).
But $660B! Shouldn't that make Elon Musk the richest person on earth? I remember he owns 20% of Tesla?
Edit: Turns out Jeff Bezos [1], even after the divorce settlement , has a net worth of ~$187B. Elon is at $146B. Until SpaceX's IPO at ~$100B [2], which will add roughly $54B to his net worth... he will be the richest on Earth.
I mean I dont know how Tesla is a $600B company, but I sure as hell think SpaceX is worth a lot more than $100B.
[1] https://www.forbes.com/sites/sergeiklebnikov/2020/12/19/elon...
[2] https://www.forbes.com/sites/daviddawkins/2020/10/23/elon-mu...
https://www.forbes.com/real-time-billionaires/ (I had to disable essentially all content blockers to get this site to load.)
Quarterly profits for the most recent quarter (Q3 for most companies, Q2 for Honda): Toyota: $4.6 billion. Honda: $4 billion. GM: $4 billion. VW: $3.8 billion. Ford: $2.4 billion. Fiat: $1.4 million (not a typo, that is an m there.). In all cases, these profits were below their 2019 quarterly profits for the same quarter. Total of approximately 18.8 billion.
Tesla: $331 million, or approximately 1.5% of the Q3 profit share.
(Note that Hyundai had a loss and so is excluded from the profit share calculation. In all cases, these are global numbers. https://www.caranddriver.com/news/a34602700/auto-sales-profi.... For all automakers except Tesla and Fiat, profits are related to the sale of automobiles. Fiat's profit is related to a special one-time accounting event, and Tesla's profit, as with all of its previous quarterly profits, relates to the sale of credits to other automakers; Tesla has yet to have a profitable quarter based on the sale of vehicles.)
Keep in mind, Tesla sold 367,500 cars in 2019, while those other companies sold over 34 million cars, or nearly 10,000% more. I realize that stock prices are based on future profits, and working capital is factored into it, but still, I just don't see the rationale in an ownership stake in Tesla being that much more valuable.