Because Tesla was, is, and will continue to be overvalued as a car company. Why pay the “tech premium” for a manufacturing firm when you already have all of those core competencies in house?

Tesla clearly wasn't overvalued when it was only worth $55B though, at least not now with the benefit of hindsight.

The market can stay irrational far, far longer than I can stay solvent.

Tesla's P/E with a market cap of 55B would be 5.5. How is that overvalued?

That’s more than GM.

So? Tesla is currently earning about 50% more profit than GM is, surely it should correspondingly be valued higher?

Pffft. They have done over 10 billion net in the past couple years. High ROE. They have a big, durable competitive advantage with their buying process v other companies (just go through the buying process across a number of car types). They have a big competitive advantage in staff capabilities, also in the ability to actually produce software.

Elon is no dummy. He targeted fat tired old industries to attack. It was brilliant. He now faces possibly the weakest competition in large business.

Suggesting it's worth less than $55 billion is silly.

> Why pay the “tech premium” for a manufacturing firm when you already have all of those core competencies in house?

Well, doing it in house doesn't seem to be working out for them.

I don't think it's an execution problem: it's a product design problem.

When/if they figure out what they want to build, I expect they're leverage their existing expertise in partnering with third parties to churn out product.

I agree with you, but Tesla did get things in gear fast enough to ship cars, early. If Apple's car ships in 2028 (and that's optimistic), then they'll be 20 years late to Tesla's party. The early mover advantage is worth something, not what investors value it at but still a hefty sum.

Apple could spin up a joint venture with, say, Rivian or even Ford for 1/10th of that tomorrow.

I’ll be honest, I think the whole Apple car thing is a pipe dream. Apple doesn’t have some sort of magic that is two decades beyond anybody else driving in circles underneath their weird spaceship campus. If they have their own full self driving, it doesn’t matter who assembles the car. They can sell the tech to everybody.

But isn't the Apple way to combine hardware and software better than anyone else?

I've only ever bought an Apple tableet for my wife, so I've got no bias here. But I'd be keen to see what they can produce. If only to differentiate the market up a bit ... it's as boring as hell at the moment and why I haven't pulled the trigger on one.

Tesla is busy throwing away that first mover advantage. And the CEO is busy trashing the brand. I don't think Apple has a problem here.

I suspect they're much more interested in what's happening with the Chinese manufacturers.

Tesla is now moving into making their cars cheaper, with exceptional results. That's leveraging your first mover advantage: compete where others can't, because your manufacturing process is mature.

They’re selling more cars and making a lot less money. The results have been mixed. Cars are a commodity.

$25b this quarter in revenue while profitable is not "mixed results", it's massive.

I see 23.350M in 9/2023 quarter and 24.318M in 12/2022 quarter. that seems revenue slightly down on a quarterly basis on increasing units shipped.

https://finance.yahoo.com/quote/TSLA/financials?p=TSLA

I'm talking about q3 and q4 23.

You don’t have to look any further than the Cybertruck to see evidence that Tesla builds cars it wants to build, not what the market wants. This worked to their advantage when no one else was building an EV but now it’s their biggest liability. They could have captured a highly valuable truck or even light pickup market if they just produced something practical. Instead, they launched something like what you see as a concept at the Detroit Autoshow. It’s an art project, and a vain one at that.

They created a sex symbol which manages to include surprising practicality and insane technology. I've been excited about many concept cars, and now I get to buy one, and I know I'm not alone. It's a halo product, but a good one.

> then they'll be 20 years late to Tesla's party

There is no being late.

People buy multiple cars in their lifetime and new car companies will come and go.

Apple doesn't care a bit about the early mover advantage, if that even exists.

iPod -> Nope, there were lousy players out before it.

iPhone - > Nope, smartphones were around before 2007.

iPad -> Nope, tablets, ugly ugly tablets were around too.

But they don’t have all the core competencies in house. I don’t think manufacturing a small, mostly solid state rectangles with maybe one major stress bearing hinge is the same as manufacturing a highly dynamic multi-ton steel machine that is meant to transport people 200,000 miles over a decade or two any more than an aluminum smelting firm could suddenly dominate glass manufacturing if they decided to.

They don't have to have it in house. You can pay external companies to design shit for you, and manufacture it.

Tesla does everything in house because they need to keep costs low to stay profitable. Apple doesn't.

I don’t think it’s really Apple’s MO to outsource product design to any significant extent, though they do use a lot of contract manufacturing, my understanding is that they dictate how a lot of that’s done. Their brand is all about quality and seamless integration between everything, you don’t get that without being involved in every aspect.

They won't outsource design, but they can outsource the engineering needed to make that design safe. Its not like the "boutique car from a consumer electronics" market is saturated, they can take more risks in regards to info leaking.

> they could've acquired Tesla in an all cash deal, but for some reason didn't.

Muskeeter wanted Apple CEO position in return

> I think they would've made a great match.

Ask that to Mr. Cook :-)