Their P/E at Q3 level of profit is 147. That's quite small for a company growing at more than 50% and whose margin keep improving. Also, the addressable market for vehicles, solar and stationary storage is almost limitless. We're not even talking FSD, where their lead continues to increase vs competitors (most are stopping their research, cf. BMW and Mercedes).
>I think Ford and Toyota are going to figure out how to be tesla a lot sooner than Tesla is going to figure out how to be Ford and Toyota.
Tesla keeps increasing its technology vs Ford in all the main areas (battery, power trains, casting, electronics, self-driving, but also market that Ford does not even pretend to serve such as energy generation and grid storage).
Toyota is completely lost. They invest far less in EV than Tesla and the gap continues to increase. They only focus on PHEV, which people aren't interested in when they have become familiar with EV (see Norway, where climate does not even favor BEV). They'll try to do something with hydrogen only because the Japanese government will subsidize them for that.
They would have to see 50% YoY growth for 6 more years to reach the same number of deliveries as Toyota alone let alone the entire car market.
And Tesla's income is growing fast so P/E is dropping at the same speed (the share price has remained stable since early 2021).
Compared to Tesla, Toyota is stagnating. Their battery technology is outdated and they invest almost nothing in BEV. They're still making a full bet on PHEV and hydrogen light vehicles. For now, Toyota simply cannot compete in BEV. They won't have the batteries and/or the materials (lithium / nickel), and every year they do nothing, Tesla, VW and others are securing multi year procurement deals.
Also, it would take years of great EV sales for Toyota to be able to outpace Tesla's battery purchasing power. And Tesla is making their own cells so they're not even playing the same game.
Isn't Toyota investing heavily in solid-state batteries?
- Utilities: PGE is worth 22B.
- Insurance: Libery Mutual is 16B.
- Robotics: ABB is 71B.
- Cars: Toyota, the biggest and highest margin is 288B (on 700B in revenue).
So let's be very, very generous and assume Tesla is able to execute as well as Liberty + PGE + ABB + Toyota. Thats $400B. 44% of today's valuation.
I don't see a path to $900B down the line, let alone today.
US electric market is $400B in revenue today, this needs to double for the fully electric fleet politicians are pushing for. This does not account for hardware sales. We could estimate that at 1T in 10 years, if Tesla gets 10%, then that is $100B in revenue.
US auto ins market is $300B in revenue today, their market share there will likely be close to their share of vehicles. Robotics I suspect will be one of the largest industries in the future. They could become a supplier of batteries, electric motors, and self driving systems to other auto companies. Elon has said multiple times he will have the conversations.
That's just the US market. You'd then have to extrapolate to the rest of the world. At a P/E like Apple or Microsoft, they would need to get to $30B earnings per year to hit $1T, which seems feasible. They have shown that they can build and scale faster than their competitors and spend many multiples more on R&D than they do as well.
If they can maintain their 50% YoY growth for 10 years, then the P/E ratio on a $1T market cap would be under 10.
Assuming the present valuation holds. That's kind of the thing, I've zero interest in buying in if I think 10 years of 50% growth from now they might be worth today's sticker price.
I like them as a company, but I hate them as an investment.
Their current price to sales ratio is ~6x less than a mature company like Amazon.
https://ycharts.com/companies/AMZN/ps_ratio https://ycharts.com/companies/TSLA/ps_ratio
To reach the same price to sales ratio they would need to go from ~250,000 vehicles/quarter to ~1,500,000 vehicles/quarter, which is ~44% of US sales.
https://www.cnbc.com/2021/09/30/us-auto-sales-forecast-to-pl...
Realistically, Tesla sells a lot of cars overseas, so this price more likely represents them hitting ~20% of US sales. The energy side increasing volume with in-house cell manufacturing and/or supplying other OEMs could also change where they need to be with vehicle deliveries to hit a PS ratio in line with established companies.
Tesla Solar, Battery, Car Insurance and Car Financing off the top of my head.
Musk even said insurance could be 30%-40% of Tesla's auto business
If they ever deliver on the promises of FSD, cars will become safer, which will diminish accidents which will diminish insurance payout which will diminish revenue which will diminish insurance profits, because it's an extremely regulated business where profit margins are regulated.
If they deliver on the robotaxi promise, why would anyone buy a car themselves when they can just robotaxi everywhere? If the cars make money, why would Tesla sell the cars to people in the first place?!? And if they own all their cars, how would they make money off of insurance? The only reasonable future is that making money off your robotaxi Tesla is a pipedream, which means you can't count on that argument to drive sales.
For insurance to win, FSD has to fail. But for sales to soar, FSD has to win.
Even a successful entry into both those businesses would be 45B, or 5% of Tesla's current market cap.
Can you name one company in such a position? Tesla price-to-earning ration based on Q3 2021 income is 147, and dropping like a stone. Looks cheap to me.
They're already number one, worldwide, and by far.
>keep their dominant car margins while gaining market share.
They're doing both at the same time.
Source? The only info I can find in a quick search shows they have the largest single factory, but other manufacturers are larger in aggregate, and Telsa is only a small part of the overall market: https://www.statista.com/statistics/1246713/largest-lithium-...
edit: here's a better source, showing them not even number one for Electric Vehicles https://spectrum.ieee.org/the-top-10-ev-battery-makers
These players are fighting for Tesla's contracts, and Tesla will keep buying all their batteries while adding their own production capacity (search for "project roadrunner"). What matters is 'who has access to the end customers' and to the best tech. Tesla has so much demand from grid operator that they can easily buy all the supply. They're just limited by their own production / assembly / installation capacity.
And they have consistently made the right decisions. People on HN might not like their approach to development of Self-Driving but they have invested a huge amount in deep neural nets and all the infrastructure around, including their own chips. They might well be able to sell access to that chip for example.
Tesla is deep into batteries already and is building a huge team including research and vertically integration into the machines, mining, precurser production and so on. That expertise can eventually be used in a number of ways.
I believe Tesla in a few years will seriously go after electric flight. I believe they have the talent to pull that off, maybe in cooperation with SpaceX. Its the logical next step.
They have one of the world leading materials development departments as well, shared with SpaceX.
They have the electronics, software talent and manufacturing to go into many other industries as well.
I simply believe in their execution and strategy in the long term.
People said they were crazy to make their own cars, they should just go to a contract manufacturer. But then they wouldn't have 30% margin right now. This kind of story will repeat itself.
im not saying Tesla isn't successful and never delivers but it does seem exponential what musk promises and while i think it's possible, managing all these massive projects is probably too much for the company. the humanoid robots thing for me really make me feel like he's just feeding investor hysteria. (i was a former musk fanboy)
They literally started work on this a few months ago and didn't announce a product. Are they not allowed to do research? Seems pretty clear that one of the reason for this is recruitment, they explicitly said so.
As an investor I don't expect any profit from this anytime soon.
> - profitable tunnels/loop
The literally just signed a huge deal to expand the Loop in Las Vegas.
They successfully bid on a number of other projects as well. They are testing their next generation tunneling machine.
That is not Tesla btw. different company.
> - rocket propelled cars
Its really just air-pressure release valve. Its not as crazy as it sound. It will happen eventually but only for a maybe a few 100 cars. Again, not really all that relevant, just like most Hypercar products by big car companies.
I think it will happen in a couple year but its basically just a 'look we are better then you' project.
- a semi
Why is that crazy? They haven't done it because they are limited on battery and chips. They can currently grow without inducing more products. Each Semi would mean 4 less Model Y.
They are working on the Semi and related Mega chargers. They have multible test vehicles on the roads. They just recently set up a bunch of Mega chargers in Nevada.
- a truck
Again, they are setting up a factory and battery factory next to it. This is clearly going to happen and when it does it will be at large volume. A vehicle program being a few month delayed isn't really special.
> - cars that drive themselves
I don't think it will happen anytime soon but Tesla is at the forefront of making it happen in the general case that is enough for me.
This doesn't really seem crazy, other car companies have cars, trucks and semi in their lineup as well.
> Seems pretty clear that one of the reason for this is recruitment, they explicitly said so
this doesnt change my opinion on whether they should dive into robotics while having 5-8 other major projects ongoing, i didnt even mention tesla solar.
> Its really just air-pressure release valve. Its not as crazy as it sound
you dont need to explain how itll work, i know already, and i think it wont work in practice, or at least its not worth the marginal speed increase for the added weight of the pressurized tanks (even disregarding the safety of it all)
> The literally just signed a huge deal to expand the Loop in Las Vegas.
the economics of the loop make no sense. its not profitable now, and whether they expand that will not change anything. They need FSD for the loop to be worthwhile, and theyve shown already that their current tech is unable to navigate the tunnel without a human driver.
> They haven't done it because they are limited on battery and chips. They can currently grow without inducing more products. Each Semi would mean 4 less Model Y.
sounds like an excuse to me, it may be true but then as a CEO its irresponsible to announce youll ship semis in 2020 and almost two years later its still not on the market. Maybe dont make promises before you know they're realizable at scale
i didnt even mention in the original post, tesla solar (roof tiles, battery bank, etc), Hyperloop, building tunneling machines. i understand these arent owned by tesla. But theyre still managed in part by musk and he has stated he splits his time between all his ventures. Again my issue is with the number of, and scope of each project, and their reputation to deliver on time.
The goal of company is not to make as many projects as possible, but to make money. It simply makes no strategic sense to create more products while they are growing 50% a year with existing products.
They will bring these products to market when it makes sense.
> this doesnt change my opinion on whether they should dive into robotics while having 5-8 other major projects ongoing
Tesla is not a small company anymore, they have lots of profit and free cashflow. They need to start series long term research projects and investments to continue that.
> and i think it wont work in practice, or at least its not worth the marginal speed increase for the added weight of the pressurized tanks
There is no reason it wouldn't work, people have done the math on this. Its not just about speed but also about handling.
> the economics of the loop make no sense
Great that you have so much knowledge of that. Please share the detailed economic model. They are underbidding the competition on a number of projects and I for one no longer bet that Musk companies will go bankrupt.
> They need FSD
No they don't. Its a much simpler and much more constrained problem.
> tesla solar (roof tiles, battery bank, etc)
I think you mean Tesla Energy. Battery packs are no-brainer for them.
Solar roof is a bit pointless I would agree. But I don't think Musk spends much time on it.
> Hyperloop
Not an active project. This is literally a 7 year old blue paper. Boring company might restart something like it eventually.
> But theyre still managed in part by musk and he has stated he splits his time between all his ventures.
Well if you are gone mention Boring company then SpaceX is far bigger distraction. But the thing is, these other ventures have existed for many, many years. Some since Tesla existed.
> Again my issue is with the number of, and scope of each project, and their reputation to deliver on time.
I mean its fair enough but reality is Tesla is increasingly a really large vertically integrated company. Elon Musk can't (and never could) oversee every project all the time. As a company of the size of Tesla with their growth aspirations they need to have many projects in flight. Tesla recruits many smart people and need to have project for them to work on.
Semi and Cybertruck are the sensible next products and they need to be ready so working on them is total no-brainer.
I think among people not obsessed with the details, not delivering Semi might matter. But generally doesn't hurt their reputation because most people don't know or care.
Its extremely optimistic that a company that is proven to be able t build EV at scale (literally the biggest EV company in the world) and is growing 50% a year can introduce a new EVs and work on research projects at the same time?
That a company that is the largest buyer of batteries in the world can make strage systems with those batteries?
Maybe the timelines are to short but the idea that its not realistic is just nonsense.
> Loop NEEDS fsd because basically right now its a taxi service and every single driver needs to be paid.
Again, just because it has drivers now doesn't mean it needs to be capable of FSD. Its an extremely limited well mapped area on dedicated lanes. Totally different requirement.
> have you heard of buses? theyre economically cheaper
Just because you prefer some other solution doesn't mean something you don't like isn't viable.
> People have done the math on this and its contrary to your point.
Are these the same people that said Tesla could never reach volume production, EV would never be profitable, orbital rockets couldn't land and that rocket reuse would never be economical?
Again, can you please show me detailed cost model and not just 'people' (whole likely work for competitors) did some napkin math and said it wasn't competitive.
> If you want contrary points just lookup thunderfoot on youtube
You realize with this statement you have immediately disqualified yourself from any discussion. He is basically a youtube troll who generates clicks from gullible Musk hater. I mean seriously, his video are just embracing to watch in their incompetence. If you actually use him as a source for what works and what doesn't you have no credibility.
In the space community, meaning people space journalist, and people who professionally analyze space his is basically regard as a joke. He directly contradicts what former SpaceX employees say, what former Astronauts say and so on. He doesn't believe things in offical NASA reports and so on. Literally no credibility.
For Tesla you have people like Sandy Munro, former lead engineer at Ford and leading an independent shop consulting on automotive production with 50 years experience who comment on issues like production. And instead you believe some guy with no actual industry experience who clearly does not have accuracy as his first goal, but rather showing how much smarter he is.
The guy is a joke that produces video like it was 2005. I mean if he is so amazingly smart that he can reason about every single engineering project in the world why can't he make a video that looks doesn't look like a 8 year old put together.
Seriously, there are people on yt who spend 100s of hours researching videos, talking in detail to engineers from all over the industry and build connections, find publicly available papers and patents. TheLimitingFactor on yt validates each video with a number of experts on the subject before he releases it.
While thunderfoot basically just spends 90% insulting people and then 10% showing some misleading data about something that he didn't understand in the first place.
You have seriously been taking in by a charlatan.
> hes the one who convinced me to stop investing in tesla.
If thunderfoot is the sum of your research on these topics then you shouldn't have invested in the first place.
The Teslas at the moment are clearly just because its an easily available cheap platform. I think eventually we should move to 1-person or 2-person 3-wheeled pods and small buses or transport pods.
A point to point high speed underground loop is an interesting idea with a lot of potential. As clearly pointed out by them, the long commercial viability depends on the tunneling cost.
> i used to be an evangelist like you
I'm not an evangelist. The fact is Boring company has commercial products and have successfully bid on some project. They are putting their money where their mouth is and investing in research and investing in loop systems. That is enough for me. I'm not gone dismiss it based on some 3rd rate yt research or industry experts who say 'this will never work'.
I am happy to just watch and see what the come up with. As in other cases, people make fun of the initial version, after 3 iterations it looks decent and after 3 more iteration its a great system.
I think Ford and Toyota are going to figure out how to be tesla a lot sooner than Tesla is going to figure out how to be Ford and Toyota.