
Tesla Passes Ford by Market Value - ayanai
https://www.bloomberg.com/news/articles/2017-04-03/tesla-passes-ford-by-market-value-before-musk-delivers-model-3
======
dan1234
Interesting, but market cap isn’t everything - FTA:

"While Tesla’s market capitalization has swelled in size, Ford still
overshadows the Palo Alto, California-based company in most other financial
metrics. Over the last five years, Ford has posted net income totaling $26
billion, while Tesla has lost $2.3 billion. Last year, Ford had annual revenue
of $151.8 billion compared with Tesla’s $7 billion.

And when it comes to car sales, Tesla sold 40,697 vehicles in the U.S. last
year, according to researcher IHS Markit. Ford sells that many F-Series trucks
in the U.S. about every three weeks."

~~~
crabasa
> Over the last five years, Ford has posted net income totaling $26 billion,
> while Tesla has lost $2.3 billion.

Ford: "We have no idea how to invest this money. I guess let's just put it in
the bank."

Tesla: "We have so many idea for investments, we're only constrained by cash.
Let's go back to the capital markets!"

~~~
shawkinaw
More like

Ford investors: "Let me soberly evaluate the company's present and future
financial situation before I make any commitments"

Tesla investors: "TAKE MY MONEY"

~~~
pembrook
Dead on. The price of Ford is predominantly being determined by institutional
investors with a strong understanding of the dividend discount model.
Investors moving the market on Ford are buying/selling what they believe to be
a stable, mature company and are pricing pretty much ZERO potential for
innovation into Ford.

Tesla on the other hand is a darling of retail investors attracted to the
marketing machine of "Silicon Valley disruption" and they have already priced
in a belief that Tesla will win the global automotive market. DDM? What's a
DDM?

Meanwhile Ford, GM, and all the other automotive incumbents are investing in
the same technologies as Tesla. Is it more likely that Tesla never falters
(even slightly)? Or is it more likely one of the 10+ incumbents surprises with
a self-driving/electric success?

I know where I put my money. Interest rates will be climbing at the exact same
time as Tesla will be attempting to expand their market to a larger audience
who always purchase new cars with an accompanying loan. Oil prices are showing
no indication of climbing again for years to come. Consumers have just
replaced their aging vehicles in record numbers and won't be in the market for
a new one for roughly 7-12 years. Good luck Tesla.

~~~
zxcmx
Right so for Tesla to make sense, it has to make the iPhone of cars with Ford
analogously in the position of Nokia. It looks like that's the expected level
of disruption priced in right now.

(Personally I have no idea whether this is likely or not).

------
peterbonney
Former finance professional here: Ford is actually worth 3 times as much as
Tesla, once you factor in debt. The total value of the Ford capital structure
("enterprise value") is about 150 billion.

When two companies have wildly different capital structures, you have to
compare them on enterprise value, not the market cap of their equity. So while
I give kudos to Tesla for building a valuable business, it still has a long
way to go to catch up to Ford.

~~~
robzyb
[edit]: Current finance professional here.

> When two companies have wildly different capital structures, you have to
> compare them on enterprise value, not the market cap of their equity. So
> while I give kudos to Tesla for building a valuable business, it still has a
> long way to go to catch up to Ford.

That is not necessarily true.

Market cap and enterprise value are two equally valid ways of measuring value
or worth. There are even more ways to measure value, such as DCF or value of
assets. All of these have their pros and cons.

In this case, my personal opinion is that market cap is a very meaningful way
to measure Tesla/Ford and that it's noteworthy that Tesla has passed Ford.

I think it is very meaningful because it (loosely) implies that the present
value of Tesla's profits (i.e. net profit after tax) is higher than Ford's.
Even on a risk-weighted basis. Or, at least, that's roughly-kinda-sorta what
the market believes.

I would argue that enterprise value would be more meaningful that market cap
if we were talking about which company was 'bigger'. However, the interesting
thing here is that Tesla has become more 'valuable' than Ford, for this
definition of value.

~~~
aerovistae
Current amateur here. I feel like there's only one important thing to consider
when comparing Tesla and Ford as investment opportunities: is their value
likely to increase?

With Tesla, there's an obvious path for potential massive growth. It's not
guaranteed, but the potential is obvious.

With Ford, it's like any other auto manufacturer. What surprises are we
expecting? What new products or innovations? Does Ford have _any_ path, even
hypothetical, to massive market share growth relative to its current position
the way Tesla does? It seems clear to me that the answer is no. Even if their
Bolt is a success, they're not about to dominate the market, double their
sales, and double their stock. They don't have any Model 3 type event on the
horizon.

So all these comparisons of financial metrics on current value, to me, seem
pointless. This is the only thing that should matter (along with whatever
analysis you want to use to gauge whether Tesla is likely to be able to
_execute_ on its plans, which is a more complex question-- but performance so
far makes it clear that they are experiencing steady and dependable growth of
production and sales with clear, well-defined plans for further future
growth.)

~~~
traviscj
Irrelevant nit that doesn't undermine your point: the Bolt is made by
Chevrolet.

~~~
aerovistae
Totally forgot, sorry. Right you are.

------
sxates
I think these comparison's to other car companies really miss the mark. Those
who are long on TSLA (myself included) aren't looking at them as a car
company. Tesla is cracking open new markets in the following areas:

\- Electric Cars (most visible. Also don't undervalue their unique direct
sales channel, which is a huge competitive advantage)

\- Batteries/Energy Storage (not just cars - utility scale energy storage,
with capacity coming online that will double global output of lithium
batteries)

\- Solar panels and solar roofs (both residential and commercial, a market
with a hockey stick growth curve coming)

\- Self-driving AI (head to head with Google on one of the most fundamental
changes to transportation our society has seen in a century, and they have the
hardware driving around us all the time already, rapidly learning and
improving)

Ford, GM, et al are irrelevant and poor comparisons. This is SpaceX for Terran
energy and transportation.

~~~
chipperyman573
What makes you think solar is a hockey stick? I'm not saying you're wrong it's
just the first time I've heard this before.

~~~
sxates
The price has been rapidly decreasing in the last 10 years, to the point that
it no longer makes sense to _not_ have solar everywhere. It's cheaper than
coal, and will soon be cheaper than all the other fossil fuels as well, and
will continue to go down, never up.

China now employs over 1 million workers making solar panels. And they're
ramping that up as fast as they can, and shelving coal power plants. We've
reached that critical tipping point for PV solar to go vertical, and
Tesla/SolarCity just built their own factory in Buffalo to take advantage.

~~~
legolas2412
I think solar is the future, but these claims are stupid.

> "to the point that it no longer makes sense to not have solar everywhere.
> It's cheaper than coal, and will soon be cheaper than all the other fossil
> fuels as well, and will continue to go down, never up."

Then the market should automatically have shifted to 100% solar by now.

Solar is getting cheaper yes, but it is dependent on hours of sunlight
available, which like wind energy, is unreliable and doesn't work at periods
(like night). Further, the capacity of a solar power plant isn't its produced
electricity, because the capacity is mainly peak capacity, which is only
reached a few hours a day.

> China now employs over 1 million workers making solar panels

Don't know where that figure is from, but I guess china must be covered in
solar panels by now. 1 million is large number of people. Unless your figures
are deceiving. For example, walmart sells solar panels. So, you will count
every walmart employee as a solar panel retail employee.

~~~
sxates
>Then the market should automatically have shifted to 100% solar by now.

65% of new capacity in the US last year was wind or solar.[1] The world
doesn't change overnight, but expect that trend to continue.

Renewable energy growth is only being slowed by lack of storage. As battery
production and other storage techniques come online, it allows higher and
higher % of energy to come from renewable sources.

>Don't know where that figure is from, but I guess china must be covered in
solar panels by now.

Pretty good summary of the situation here: [2]

"In 2015, China installed half of the world’s wind power and a third of its
solar photovoltaic capacity. Last year, solar capacity jumped 81.6 per cent
and wind capacity grew 13.2 per cent. Greenpeace has said that China’s
renewable energy growth rate is equivalent to installing one wind turbine and
covering one soccer field with solar panels every hour. Five of the world’s
top six solar manufacturing companies and five of the 10 biggest wind turbine
companies are in China. By 2020, half of the country’s new electric generation
will come from solar, wind, hydro and nuclear power."

[1][https://www.ferc.gov/legal/staff-reports/2016/dec-energy-
inf...](https://www.ferc.gov/legal/staff-reports/2016/dec-energy-
infrastructure.pdf) [2][http://blogs.ei.columbia.edu/2017/03/03/will-china-
take-the-...](http://blogs.ei.columbia.edu/2017/03/03/will-china-take-the-
green-mantle-from-the-u-s/)

~~~
legolas2412
USA is a saturated market, where renewables are given incentives by the
government (unfortunately it won't be so any longer).

Look at developing countries, only a fraction of new energy sources for India
are solar, even though our coal is inferior quality.

I'm pretty sure that coal is still cheaper than solar

------
chefandy
Wasn't overvaluing the potential of newer companies over established
institutions with significant holdings one of the hallmarks of .com bubble
ridiculousness? I'm not particularly knowledgeable about finance and
economics– if someone that is knowledgeable has some insight, I'd love to hear
it.

~~~
mikeash
Totally. Just look at the ridiculous valuations here:

[https://en.wikipedia.org/wiki/Dot-
com_bubble#List_of_compani...](https://en.wikipedia.org/wiki/Dot-
com_bubble#List_of_companies_significant_to_the_bubble)

On the other hand, there were some major successes as well. Amazon got its
start in the bubble and is now gigantic. eBay is doing great. So is PayPal
(which is relevant here, since without PayPal we wouldn't have Tesla).

Sometimes these ridiculous valuations are completely unjustified, but
sometimes they do come true. Figuring out which is which ahead of time is,
well, hard.

~~~
giarc
Cherry picking a piece or two from your link.

>Books-a-Million - Saw its stock

>VA Linux - .... They set the record for largest first-day IPO price gain;
after the price was set at $30/share, it ended the first day of trading at
$239.25/share, a 698% gain (9 December 1999)

I don't think we are quite in the situation where valuations are based on
updated websites. Nowadays it seems like monthly active users drives
valuations which when your revenue is ad based, is a smart metric. In Tesla's
case, they are actually shipping cars.

~~~
mikeash
Agreed. During the dot-com bubble it seems like a lot of stock was driven by
abject cluelessness and investors' perceived need to get in on _any_ stock
with .com in it.

These days, it's more like excessive optimism. People actually understand this
stuff, at least vaguely, and if they're getting it wrong it's just because
they don't see the downsides.

------
dabeeeenster
Bill Ford gave a talk at SXSW, and I asked him the question "Why hasn't Ford
built the gigafactory". He gave IMHO a really weak answer about how they
weren't sure the economics of it worked out.

Big car OEMs have so much invested in terms of R&D, brand and emotionally in
the combustion engine that I think most are just not going to be able to make
the jump to EVs. Nissan and BMW are trying, but they are still making really
baby steps.

~~~
hammock
He's right, the economics don't work out for a Ford. They only work out for a
smaller, separately owned disruptor. Inevitable truth and pattern seen across
all mature industries

~~~
dabeeeenster
That makes no sense to me - can you explain further?

Why don't Ford produce a 60KWH car as cheaply as they can?

~~~
erikpukinskis
The dealerships won't sell it. Any marketing they do for it will hurt their
other brands. Any marketing they do for their other brands will hurt it.

It's like McDonalds selling an organic, grass fed burger. If they talk about
the quality of the beef, they're basically saying the Big Mac is low quality
beef.

~~~
jhpankow
Interesting they haven't done a sub-brand like a Saturn or Scion.

~~~
erikpukinskis
The sub-brand still messes with their marketing. Why do you think there is so
much anti-Tesla astroturfing? There's no point in starting a sub-brand if
you're just going to have to astroturf it.

------
nickpeterson
This headline reads like a race between Nicola Tesla and Henry Ford, with some
Musk character unable to get a third revision done.

~~~
ff10
Continue in the same vein: Musk works for Tesla.

------
hodder
Can anyone long the stock who is bullish about the future growth of
production, cars, batteries etc write down some quick napkin math on future
expectations that would justify your investment at this valuation? I have yet
to hear a bull case with any actual math behind it, but am willing to hear you
out.

Something like:

cars sold by yr, Margins.

battery wall, solar sold by year. Margins.

multiples assumed on revenue and earnings by yr, and at mature phase.

dilution of equity assumed to scale production.

Can someone address those things without hand waiving them away for me? Again,
I'm not long or short the stock, but havent heard a coherent argument with
math for going long.

~~~
paulpauper
The thing is, Wall St. already factored all that stuff into their valuation
and determined that the 'fair price' is $290/share (as of today).

Tesla's car business is quite profitable and has huge growth...that's what
matters [http://greyenlightenment.com/another-correct-prediction-
tesl...](http://greyenlightenment.com/another-correct-prediction-tesla)

In the late 90' during the tech bubble, companies that had negative cash flow
operation were bid to the stratosphere. Tesla and Amazon however have positive
cashflow for operations and huge growth.

People said the same thing about Facebook in 2012-2013 and Google in
2004-2005: how will they (Google and Facebook) justify their valuations? Well,
they did. Wall St. sometimes get it terribly wrong (Infospace in 2000) and
other time very right.

Sometimes it doesn't make sense...but there is a method to the market's
madness.

~~~
jm__87
lol @ "but there is a method to the market's madness." It is just supply and
demand. More buyers than sellers => price goes up. More sellers than buyers =>
price goes down. Not all buyers need to be smart and informed. I think Elon
Musk will do great things with Tesla but I would never buy that stock... it is
purely a gamble.

------
brohoolio
Ford's F-150 truck line is a fortune 50 company by itself. Two factories. It's
kind of insane.

~~~
na85
And yet the rest of Ford's lineup is a snoozefest, even the Mustang.

~~~
supernovaqq
My Focus ST is pretty sweet

~~~
chrisper
Isn't that one built in Germany?

~~~
selectodude
Focus ST is made in Michigan until 2018 when it moves to Mexico.

~~~
chrisper
I was thinking of the RS!

------
andy_ppp
I would agree with the market that Tesla has the _potential_ to be far far
larger than Ford should things go well. If they manage to get to 500000 cars
and full automation within the next year, they'll be worth even more than
their current market cap.

Remember that Tesla have by far the best dataset for building self driving
cars and this is going to give them a huge time to market and/or safety
advantage over their competition. If they launch an Uber clone as well (which
they have implied they might) I think they _could_ be able to replace a lot of
car journeys with their service instead of paying drivers, something Uber's
lofty valuation is entirely based upon.

~~~
LordHumungous
>If they launch an Uber clone as well (which they have implied they might)

Lol. Yes, the second most unprofitable tech company in the world should clone
the first most unprofitable tech company. Why not.

~~~
andy_ppp
Because Uber's value is all based upon self driving cars, as I said in my
comment.

------
simonsarris
Ford is sitting on almost $16 billion cash. Tesla, like Amazon, burns through
cash as fast as they can turn it into _scalable future stuff._ Whether you
consider this good or bad depends on your future outlook:

Being long Ford is making a bet that the future will look pretty much the
same.

Being long Tesla is making a bet that the future will look different. (Plus
the risks of believing that they can do what they say they can, and that their
vision is more correct than not)

If you are a Ford investor and want Ford to be investing in the future, you
should be ashamed of them for being either too scared or too stupid to know
what to do with their piles of money. Then again, the largest carmakers in the
US (incl. Ford) were making a _loss_ just a few years ago, and unlike Tesla,
they were making that loss while doing ZERO to invest for the future.

So maybe Ford should be scared.

Or maybe they should be pivoting faster so they don't return to not-making-a-
profit, because unlike Tesla, they _still_ aren't spending very much on the
future, are they?

We can argue about whether or not Tesla has a good plan or a bad plan, but
Ford has shown before that they more or less have "No plan." Their reliance of
SUV profits almost killed them in the mid 2000's (and did mortally wound GM,
only to be resurrected). Will Ford's reliance on the F-150 (or on ICE
expertise while outsourcing most other things) do the same thing in the
future?

~~~

I've been holding Tesla for a long time. Currently I'm more optimistic about
the company than when I bought it, which seemed fairly risky.

I think the room for growth and market expansion (Important Electric Things
and energy future) is very large. I think trying to compute how the math will
get there is a mistake, short of making sure that they are not going to run
out of money.

Being long technology stocks is a strange game. If you're long IBM or AAPL
right now, you're more or less betting that the future is going to look pretty
much the same, just like with Ford. It's almost a misnomer to call them
technology stocks.

There are only a handful of public companies you can bet on (Tesla and Amazon
are probably the most obvious) that are really betting _big_ on the future.
The dividends of these will be unknown.

(This was part of a previous small discussion about the price of TSLA last
night:
[https://news.ycombinator.com/item?id=14018954](https://news.ycombinator.com/item?id=14018954))

~~~
mcguire
" _Being long Tesla is making a bet that the future will look different._ "

No. Being long Tesla is making a bet that the future will look like Tesla,
that Tesla will be producing a very significant chunk of the vehicles on the
road sometime in the reasonably near future. Tesla currently has plans to
expand to produce 0.5 million vehicles per year in the 2018-2020 time frame;
Ford currently produces 2.5 million vehicles in the US for ~15% of the market.

Disclaimer: I'm on my second F-150 and third Ford vehicle.

------
tahoeskibum
I've been expecting this ever since I test drove a Tesla last year and got the
same feeling I got back in 2008 when I saw an iPhone 3G. The market isn't
betting on just another car company but on. car + energy (electricity instead
of gas) + TaaS (Transportation as a Service). Tesla has a tremendous headstart
on this and in 5-10 years I expect a bloodbath like the smart phone wars, with
a only 2-3 main players left e.g. Tesla:Apple::Waymo:Android.

------
aphextron
Ford has dozens of production facilities across every continent on earth
producing millions of vehicles a year. How can Tesla possibly be more
valuable?

~~~
jernfrost
It is all about who owns the future. E.g. how much would you value the stock
of SpaceX competitors now that SpaceX can fly reused rockets? Doesn't matter
how many factories these guys have. They will be destroyed because they will
never be able to compete on price, with somebody who can just refuel their
rocket while you have to build a whole new one each time.

People value stocks based on what they think the future holds.

~~~
briandear
Do you actually think other rocket companies won't be able to do that? Tesla
doesn't have a monopoly on the future. Also SpaceX isn't Tesla.

------
rottyguy
I think people are betting more on Elon then they are on TSLA.

As an aside, he strikes me as someone who's been told he has some short
measure of time left to live and is trying to make the most of it. By all
measures, he's swinging for the fences.

------
rebootthesystem
My prediction has always been that all traditional car manufacturers will jump
into the market with gusto at the next inflection point in battery technology.

The current state of the art battery technology for vehicles is heavy and has
less than desirable energy density.

The minute a new technology can deliver twice the energy density at the same
or lower weight and lower cost most established car manufacturers will jump
in.

Electric cars are very easy to build when compared to IC cars. The simplest
fact being that you are eliminating thousands of mechanical components and
replacing them with an electric motor and hundreds (or thousands?) of
electronic components (for motor control). Electronics design and
manufacturing is easier, cheaper and faster than mechanical manufacturing.

I believe Tesla is positioned to take a big hit when that inflection point
happens. They are inexorably married to a battery technology. The Gigafactory,
as awesome as it might be, is now a large ship with huge mass that is very
difficult to turn around.

The next battery technology might very well turn the Gigafactory into a huge
anchor for a few years, during which all other car manufacturers, lacking that
commitment, are likely to leave Tesla in the dust.

~~~
jernfrost
When that change comes the other players will have the problem that they too
will need to build some sort of Gigafactory. There is no way they can do a
rushed attack against Tesla on this. These guys are slow movers not willing to
take big risks. When this battery technology switch happens I am pretty sure
Tesla will actually be the first to move. They will have more experience with
large scale battery production than the competition.

It isn't just about cells but putting them together and designing a whole
battery, with cooling and everything. Tesla knows very well how to do this.
The competition doesn't.

~~~
Jtsummers
They could also buy from the gigafactory, just like Apple buys components from
Samsung (their competitor within, particularly, the mobile market). Google
licensed their search engine to Yahoo and others.

Tesla is not in a position to replace Ford and others, and they won't be for
several years. Even then, they won't be in a position to displace anyone in
anything other than _consumer_ vehicles. They have no truck and no
announcement for a truck. They have no busses. They have no heavy equipment.

------
karpodiem
This is a perfect slice of Americana here.

I can't find a number through Google but the number of Ford Hourly/Salaried
employees has to be over 125,000. As a guess.

Tesla has 30,000 hourly/salary employees.

Despite being valued 'less' Ford has a huge economic impact for many peoples
lives. This may decline, over time, but don't be surprised if Ford/GM/Chrysler
combine forces for a huge battery factory of their own. Their ability to tap
capital markets with lower interest rates than Tesla is a competitive
advantage. They also move many more vehicles than Tesla and get better prices
from suppliers, which is a competitive advantage.

Tesla's gambit with batteries is either going to work or will offer a
fantastic opportunity to pickup a battery factory at a good price.

At the of the day, when all major automotive companies have EV vehicles,
what's going to differentiate them? The accuracy of the self driving software?
Entertainment options within the vehicle? Serious question.

~~~
tachyonbeam
> don't be surprised if Ford/GM/Chrysler combine forces for a huge battery
> factory of their own.

They could do that, but they haven't really woken up to the huge threat to
their markets that electric cars are posing. They still believe that ICE cars
are what people really want. Ford has just announced now that it will begin
designing hybrid vehicles. They're a few years behind.

If they decided now that they're going to fund their own gigafactory, it would
only be ready in 4-5 years. Where do you think Tesla is going to be then? If
things go as planned, in 4-5 years, Tesla could have sold 2+ million Model
3's, and be on its way to more new models.

> when all major automotive companies have EV vehicles, what's going to
> differentiate them? The accuracy of the self driving software? Entertainment
> options within the vehicle? Serious question.

\- Better performance. The Model 3 isn't a model S, but you can be sure that
it will kick the Leaf and Chevy Bolt in the balls.

\- Slicker looks

\- Brand appeal. Don't underestimate this. Think Apple.

\- A supercharger network that's already in place. Other vendors all have
major catching up to do.

Another thing to consider is, Tesla has a lot of expertise and an EV designed
from the ground up to be electric. Other vendors can't just come up with that
tomorrow. It takes time to design and refine a product. IMO, by the time Ford
really wakes up, they will largely be fucked. Not just because of Tesla, but
because all other vendors are already ahead.

------
abakker
Of the major automakers, Toyota probably has the furthest behind ICE
platforms. The 5.7L V8 and the 4.6L v6 are 10 years old, and very fuel
inefficient compared to the the engines from ford or GM. I think that Toyota
really has the most to fear in this case, since they haven't had any success
bringing out more efficient ICE/Drivetrains to match the competition, and
haven't really managed to scale the hybrid efficiency past the sedan market.

~~~
skoocda
In the truck/SUV/CUV segment, the engines are dated- sure. But that segment
barely exists in other markets, at least compared to small cars. Particularly
in Europe and Asia.

Regardless, I don't think it's a tech issue, but rather an image issue. Trying
to sell hybrid trucks to Americans is like trying to feed boiled spinach to
kids.

~~~
abakker
Ford has been successful with the Ecoboost, though. And Ram has the ecodiesel.
Both viable options. Though the segment is small outside the US, the Article
states that Ford alone sells 40K trucks every 3 weeks.

------
mvpu
Comparing Tesla with Ford is like comparing Ford with (GM + Shell + Hertz).
Tesla is an energy company not an automobile company. It plans to sell you new
ways to capture (solar panels), store (power wall), and consume (cars) energy.
It also plans to make cars fully autonomous and ownership free. Ford will
obviously compete with Tesla in some segments is not a primary competition for
Tesla.

~~~
thinkling
What you said is correct but immediately raises the question "what's the value
of that integration?" Obviously GM and Shell have been successful and
profitable without being integrated, and it's not clear that merging would
yield them advantages. Why do these advantages exist in the electric energy
arena?

~~~
mvpu
Can't predict numbers but some obvious integration points are... a) on the
hardware side a solar panel customer could also buy the power wall (natural
extension) and car, which can yield very high LTV per consumer; b) on the
services side a fully autonomous ride sharing means low operating cost; c) if
Solar City continues to lease out the panels then Tesla could become the
biggest solar powered grid network on the planet.

~~~
gph
I just don't see a) as happening much. If there are cheaper solar panel or
electric cars available I don't see the point in a consumer not going with the
competition. Unless Tesla intentionally makes it hard to integrate competitors
solar panels into their power walls/cars, which would likely land them in some
anti-competitive/monopoly troubles in a number of jurisdictions.

~~~
mvpu
Possible.. interesting thing to note is that home owners are more inclined to
lease panels than buy them (so retail cost doesn't matter much it appears).
SolarCity really took off after it started offering the 0 down lease. If that
trend continues, Tesla could potentially offer a blanket $x/month for energy
production and $y/month for consumption (cars) and lock people in. We know
panel cost and batter cost will go down over time, so the game is likely in
selling experiences not entities..

------
vonkale
I think this is mostly undervaluation of Ford. 45B$ marketcap is quite low for
that kind of revenue, profits and assets. I mean 12B$ in free cash flow! How
do analyst even evaluate car companies?

------
jernfrost
Why doesn't this have a huge benefit to Tesla. They always seem to be short on
cash, but if you are worth that much shouldn't cash be super simple to raise
for Tesla?

Why push for high stock prices if it gives little benefits.

Seems like a nutty evaluation even if Tesla knocks over the established
players in the future. I do in fact think that there will be an iPhone moment
where established players who have not taken electric self driving cars
seriousness will be eradicated like Black Berry and Nokia.

~~~
spectistcles
That's an interesting comparison — we could very well end up in a market where
existing manufacturers catch up and vastly outsell Tesla in the long-run
(Android), and Tesla ends up as a very successful luxury model (iOS).

~~~
jernfrost
Android was not an established player either though. So we had a situation
where new entrants like Apple and Google both destroyed the established
players like Nokia, Black Berry, Windows Phone, Siemens, Sony-Ericcson etc.

There might very well be another electric car maker upending the market, but
really I think Tesla has quite a number of years head start now. Building and
planning something like the Giga factory took many years. A competitor will
not be able to reproduce that in a couple of years.

Tesla also sits with years of experience designing batteries now. They have a
competency advantage over the established players who mainly know how to make
a fossils fuel engine. Each year passing that becomes useless and dead
knowledge. They also lack the software development skills of Tesla. They have
mostly bought that from vendors. Tesla thus sits with expertise in the key
areas for the future of automobile while the competition is very weak in these
areas.

I predict a bloodbath. 10 years from now I think Tesla will be quite big and
the established players struggling hard to hang on.

------
hueving
This seems like irrational exuberance levels. It's already worth more than
Ford and still hasn't even produced the model 3. :/

------
tvladeck
Not a very meaningful metric. Ford is still 3x Tesla in terms of Enterprise
Value, which accounts for how much of the cap table is debt.

------
frozenport
Note that Ford stock pays good dividends. You can make money just by holding
onto it [https://www.fool.com/investing/2017/02/13/how-safe-is-
ford-m...](https://www.fool.com/investing/2017/02/13/how-safe-is-ford-motor-
companys-48-dividend.aspx)

------
resiros
Can someone more knowledgeable explain how is that even possible? Doesn't this
mean that the market predicts that Tesla's future earning after discount and
after taking risks into account is higher than Ford's? Under which data? Or am
I missing something?

~~~
mcguire
" _Doesn 't this mean that the market predicts that Tesla's future earning
after discount and after taking risks into account is higher than Ford's?_"

Roughly, yes.

" _Under which data?_ "

Data? Data? Never heard of it. This is all gut feelings here.

------
truebosko
This is exciting, but Ford continues to be a major player. They just invested
$1 billion in R&D in Ontario, Canada. Seems like they are on the right path,
but perhaps don't have the flexibility and velocity of a (relatively) smaller
company like Tesla.

------
Taek
What this says to me is that the stock asset class is broken. The value of a
stock is supposed to be the amount of earnings you are expected to receive
from it over its lifetime (adjusted according to the risk free rate or
whatever).

But today a stock's value can be influenced by a cool factor. Stocks that
never pay any earnings can have high values (Amazon) and investor mania can
out-live any attempted short.

There has to be a better way to set up the market.

What if stock had an expiration, after which you had to buy it again? And what
if, when you short a stock, you get the full face value of the stock and then
only have to pay the owner the earnings? Since the stock expires, you don't
have to worry about covering both the earnings and the stock price, only the
actual earnings.

I think the result would be pricings that more accurately represented a
company's earnings potential.

~~~
rcMgD2BwE72F
> the value of a stock is supposed to be the amount of earnings you are
> expected to receive from it over its lifetime

Who supposes that? I don't and I'm ready to pay a different price that you'd
do. If there isn't a good reason for that, you might be able to take advantage
from my position.

Now, there are many reasons why I wouldn't price a stock as the sum of its
(future) earnings. For instance, a company can be acquired by another and
makes a very different business in the combined configuration. Moreover, the
acquirer could use the merger to prevent a competitor to enter a very
profitable market. Why would you care about the performance of the acquired
company if it remained independent? There's no way to estimate the future
earnings of a company without knowing all the possible strategic
configurations.

Growth stocks are bought for potential capital gains, not dividends. (Market)
power is much more important than earnings you can forecast.

I'm a Tesla shareholder (the stock makes over 90% of my financial assets) and
I don't expect a buck of dividend from this company. I intend to keep the
stock for ~20 years, which I bought at $25 avg.

~~~
Taek
All companies eventually die. Sometimes this can take hundreds of years, but
all companies do eventually die. At that point, the stock is worth zero. So if
all stock is eventually worth zero, why pay for any of it today?

Well, you may want voting rights. But voting rights don't mean much unless you
hold a lot of stock, and a lot of stock is non-voting anyway.

That leaves dividends and exits. An exit depends on someone having a value for
the company, and can almost be looked at as a 'final dividend'. So I would
essentially boil the value of most stock down to purely dividends.

If you buy it for any other reason, you are hoping that some other person will
be willing to buy it from you later. Which means that other person needs a
reason (voting power, dividends, or some other business move with external
benefits).

But my appraisal is that many stocks exist today that have value simply
because people think that other people will want the stock. It's inefficient,
and at the moment of exit (death also counts as exit here) someone is left
holding a bunch of stock that's worth less than what they bought it for.

------
paulpauper
Part of this huge surge in tesla stock has to do with enthusiasm over their
battery technology. tesla is a battery company that also makes cars, too. I
think the share price goes as high as $500 soon.

------
LyalinDotCom
Totally relevant news to 99% of us readers who wont be driving a Tesla anytime
soon :)

~~~
bronz
even years ago, a model s was as expensive to own, all costs accounted for
over the span of seven to ten years, as a honda odyssey minivan. they are
about to release a car that costs 35000 dollars.

~~~
josefresco
There's literally a sh*t ton of assumptions, and caveats to the comparison
you're referring to:
[https://www.teslacost.com/model](https://www.teslacost.com/model)

Also, the "winner" of his comparison was a RAV4 EV (by about $20K) The Tesla
finish mid-pack (behind the Ody)

~~~
lkbm
So three years ago, the high-end, not-meant-to-be-cheap $92,800 car was 5%
more expensive than the Odyssey according to a decent-looking model (but
cheaper according to some reports), and significantly more expensive than the
since-discontinued Rav4 EV.

Fair, it's not a slam-dunk that the Tesla S was a great purchase if your goal
was saving money. I'm pretty sure it' wasn't the best option in that case.

The Model 3 sticker price is less than half the S85, though. Short-term, yeah,
most people _still_ won't be driving a Tesla, but when I see volume increasing
and unit price decreasing, I extrapolate to "Tesla could easily become a major
player", not to"this is irrelevant to 99% of us".

------
neom
I would say Tesla is chasing it's valuation, Ford earned it's valuation.

------
FilipeRamalho
I think that shows how important e-mobility is for the consumer.

------
BurningFrog
Maybe it's time to buy some boring old Ford stock?

------
onmobiletemp
Where are all the guys saying that this is just an illusion amd that elon
actually doesnt know any physics or engineering, but just is a master salesman
in disguise?

------
hackuser
Often discussed outside HN, but almost never heard here: Many are investing in
his relationship with President Trump. At least two major investment banks
[0][1][2] advised their clients of it and many other observers and investors
think so too. [3][4] Again, outside HN it's not an uncommon idea; just search
a news aggregator for "musk trump".

EDIT: It's a very serious problem if we lose free market competition, and
instead success depends - or even appears to depend - on politics and
corruption. Even the appearance will encourage others to take that course, and
normalize it. Corruption always exists to a degree, the market is never
perfect, but that doesn't mean it's not serious. What happens to startups if
success depends on access to politicians?

The surge in Tesla's market capitalization corresponds with Musk's public
support for Trump, though the stock market in general has recently. Here's the
data on Tesla; I recommend just looking at the graphic, which will tell you
more:

[https://finance.yahoo.com/quote/TSLA?p=TSLA](https://finance.yahoo.com/quote/TSLA?p=TSLA)

* It's now at it's all-time high (give or take a buck or two), $294

* Generally, around Election Day it was stable around $190, on Dec 2 it hit bottom at ~181, then it vectored mostly steadily upward to Feb 21 (277), then there was a dip and it stabilized for awhile; now it vectored up again starting ~ March 23. today.

\----

[0] [https://www.nytimes.com/2017/01/26/business/elon-musk-
donald...](https://www.nytimes.com/2017/01/26/business/elon-musk-donald-trump-
wall-street.html)

[1] [http://money.cnn.com/2017/01/20/technology/elon-musk-
trump/](http://money.cnn.com/2017/01/20/technology/elon-musk-trump/)

[2] [https://www.cnbc.com/2017/02/16/ubs-analyst-says-he-cant-
und...](https://www.cnbc.com/2017/02/16/ubs-analyst-says-he-cant-understand-
why-tesla-shares-are-up-so-much.html)

[3] [https://www.bloomberg.com/news/articles/2017-01-26/musk-s-
su...](https://www.bloomberg.com/news/articles/2017-01-26/musk-s-surprising-
rapport-with-trump-yields-40-rally-for-tesla)

[4]
[https://www.theatlantic.com/technology/archive/2017/02/elon-...](https://www.theatlantic.com/technology/archive/2017/02/elon-
musk-is-all-in-on-donald-trump/515562/)

~~~
hackuser
@dang, @mods: I don't care about this one comment, and obviously HN is your
forum and you can score things however you want. However, please let us know
your policies so that commenters can willingly follow them and so that they
don't waste their valuable time contributing things that are unwanted and will
be underutilized (and in fairness those contributions are most of HN's value).
Please be open about it (whatever 'it' is); we shouldn't have to guess.

When the above comment was posted, it immediately was below 7 other threads
and hundreds of comments, and it dropped quickly since then, despite no
downvotes. That is odd behavior; usually new comments start at the top, or
near it, unless the user is brand new or has some other problem (I'm in
neither category AFAIK; most of my other comments seem to behave within the
range of normality). I've seen other recent comments exhibit this different
behavior. I see nothing that would algorithmically trigger anything; it's not
short, it contains no inflammatory words, no all caps, etc.

My guess, based on eyeballing the anecdotal evidence is that mentioning
"Trump" is the problem. If you object to it, please just say so. I think it's
a bad idea to single him out - his presidency will have a very serious impact
on the IT industry, startups, and many broader things that HN readers hold
dear. But that's a different issue. Please give us the courtesy of letting us
know, whatever it is, Trump or not.

EDIT: You objected previously to something I wrote that mentioned Trump, but I
wasn't clear what the objection was - mentioning Trump? something else? I
responded and asked, but I think too late to be noticed, so I still don't
know. I really have no idea what's going on. The thread with my question is
here:

[https://news.ycombinator.com/item?id=13880838](https://news.ycombinator.com/item?id=13880838)

~~~
paulpauper
I think the placement has a large degree of randomness. Comments with a lot of
Karma will rise to the top, and everything else settles in the middle and
bottom.

------
readhn
Is TESLA now too big too fail?

------
coding123
Somewhat related, when can I hitch my Fifth Wheel to a Tesla 1 ton truck?

~~~
njharman
3-5 years. Truck is probably there next or 2nd next model. Expect announcement
after model 3delivery.

------
unlmtd
If I actually trusted the derivative counterparties to remain solvent, I'd
reopen a trading to put a long short strategy on this. Everybody seems so have
missed the glaring fact that the electric transport isn't going to go
anywhere; the lucky ones will have good bi/tricycles, or horse/mules and cart.
Motorized transport wasn't a product of humanity's sheer desire for it! It was
only caused by the incomparably immense oversupply of energy from fossil
fuels, which was a one-off. We can just pray that the transition won't destroy
us. Electric lights and computer networks would be nice to salvage out of it.
Did you think you'd never use a 100mhz CPU again? The suckless guys have the
right idea; we need more efficiency and standardization, not bigger frameworks
running on faster chips. I want a 500mW workstation with relatively fast e-ink
like display. I'd sell billions of em. Sell your (e)cars, buy yourselves nice
bicycles. You won't regret it.

~~~
astrange
Are there any public ebike companies?

