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Tesla Passes Ford by Market Value (bloomberg.com)
846 points by ayanai on Apr 3, 2017 | hide | past | web | favorite | 586 comments



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."


> 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!"


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"


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.


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).


Once self driving cars a the norm you'll see companies like Uber buying fleets of electric cars.


> 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!"

I think becoming as big as Ford already is, is one of Tesla's most positive possible futures if all of their many ideas play out. But they are already valued higher than that. How can this possibly work? There are so many car makers, there is no monopole they could get. Same for solar and batteries.


> There are so many car makers, there is no monopole they could get. Same for solar and batteries.

The automobile industry will contract as we move from individual ownership to mobility. But along with that transition some manufacturers will keep up and others will not. Tesla is hoping to be one of the winners, taking perhaps 25% of the mobility market as the car buying market dries up.

Tesla's valuation is also based on the idea that clean energy will replace fossil fuels. If that happens, the battery market will grow by orders of magnitude. Tesla will basically take the market from coal and petroleum.

They don't need a monopoly in either of these to justify their valuation. Simply get 10% of mobility and 10% of electricity storage and they'll have justified well above their current valuation.

Remember mobility services will subsume much of public transit and shipping too. The borders between industries are moving around. You can't just ask "how much of industry X will Tesla get?" because whole industries will ascent and others will wither as we transition to sustainable energy.


> The automobile industry will contract as we move from individual ownership to mobility.

What does this even mean? People like to leave stuff in their cars (e.g. mug, gym bag). They like them to be at their preferred level of cleanliness or disorder. Some even use them as a means of personal expression.

If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the size of the taxi, bus, and train market.


> The "mobility" market will be about the size of the taxi, bus, and train market.

- A personal, individual vehicle which comes to pick you up where you are and take you to exactly where you want to go is a much MUCH higher value proposition than public transit.

- Add self-driving to the mix, and the cost of that service will plummet.

- When the car providing that service can drive itself, then there is little to no inconvenience to the vehicle owner to offer that service, and significant financial incentive.

- Because car owners will be able to make "rent" from their capital investment, owning a car will start to look more like property ownership than a depreciating investment-- especially as maintenance and operation costs fall for electric vehicles.

- There will be very strong financial incentive to use self-driving ride pools instead of putting up a large wad of cash to own a car. So total car ownership will go way down, and will be done much more by the wealthy and much less by the working/middle class.

- Cost of ownership is especially high in cities (parking), and the market for ride sharing is highest. So probably many fewer city dwellers will own cars.

- Families that own can shrink to one car instead of two, since the car can drop people off or pick them up.

I think there are a lot of pretty good reasons why the vehicle market is going to change significantly in the next 15 years.


This is a common pattern to electric and self-driving enthusiasts, but unfortunately it's the automotive equivalent of Wired articles about the internet circa 1996.

Problems include:

- Cost. All of the (limited) Tesla automation technologies cost more than my last car.

- Liability. Who is liable for mishaps? As Uber has demonstrated accidents and traffic violations happen with automated tech.

- Utility. The majority of users aren't high income people in SFO and NYC. We have parking, getting picked up is cool, but not high ROI.

- Pool vs own. As we've seen with transportation services as varied as stagecoaches, cabs, railways, and airlines, service based transportation models aren't cheap. Service price is always demand driven, it will cost more when you need it.

- Owning a car in the US is one of the greatest values available in any market. I can be at any point in the CONUS in <3 days for under $500 with most cars.

I think self driving cars may put the bullet in some cabs for good after Uber and Lyft implode, and may bring train-like scale to intercity transit. But the fantasy being sold today is just that.


> Cost: We're not there yet, but not paying registration/insurance/repayments/garage space will make this economical in time - at first at least for second car owners > Liability: Insurance - I think automation will be safer i.e. less accidents > Utility: I think door to door driving without looking for parking is a pretty good perk > Pool vs. own: Both of these models will be competitive with each other, so in the end it won't matter

plus there will be additional benefits Safety: Less drunk drivers on the road, less accidents from fatigue, etc. Cost: at a minimum, it will bring cab prices down Efficiency: Less traffic jams as autonomous systems won't slam on the brakes when they see a police car, etc. Smoother flowing traffic, higher legal road speeds if reaction time is shorter

And then there are other non-car transport which will benefit: logicistics, mail, deliveries etc. Minibuses that could pick you up door to door through automated route planning etc.


Interesting comments but they're hard to read because you use the word 'less' rather than 'fewer': http://blog.dictionary.com/fewer-vs-less/ ! This seems to be a generational shift so please inform your peers! :)


Thank you, I've wanted to make a point similar to the one you've made but already tied it all together.


Good point. Cars will still be valuable for road trips, but lots and lots of people will choose to skip car ownership and just settle for local, self-driving travel.

Maybe there will be a stratified market for rental self-driving cars; one for "just this trip" and another for "five days of exclusive use for a road trip."


I don't think the change will be quick, but I think you're overestimating the problems and underestimating the potential benefits here.

Cost is a short term problem. Costs will go down. Liabilities can be insured against.

Here is where I see it going:

Stage 1: Taxis start being replaced by self-driving vehicles at much lower cost. Car rentals too - liabilities potentially go down once they reach a certain level of safety as you don't face the risk of a poorer than average driver. Usage skyrockets as costs drop, and as services can cut pick-up times drastically by more optimally having a larger fleet parked around town and/or driving around town.

Stage 2: We start seeing pooling options from more and more rental providers to deal with high demand situations. E.g. Rental company crunches their numbers and see that my road => the local train station always maxes out capacity during rush hour and decides that rather than buying more vehicles, surge pricing coupled with offering a discount that brings the price back towards normal for each rider as long as it at most takes X minutes extra will be popular and more profitable.

Stage 3: They put in minibuses on some of the most congested streches and/or team up with the local bus companies to launch apps where you can tell them you're at the stop and get guaranteed pickup within Y minutes by either the regularly scheduled bus or a car. You pay a slight premium for the guarantee, which covers the car when the bus won't be there and a profit share with the bus company. (For me the only reason not to consistently use the bus is that if I need to be somewhere urgently, I can't always risk waiting for a bus that might be full; if I had a guarantee that if I press the button and walk to the bus stop, I will get picked up in 5 minutes, it'd make me use the bus more)

Stage 4: As self-drive increase in general, cities put the thumb on parking spots. E.g. in parts of London you already won't get planning consent for housing with more than 1.5 parking spaces per living unit as a means to cap car ownership. Expect to see that gradually driven down, with the expectation that people will buy parking space for their self-driven car elsewhere and/or forgo having one. Driving down the limits on parking will allow for denser developments, making ride share options etc. even more viable.

Stage 5: Youth grow up without depending on their parents to drive them anywhere from the moment they are trusted to go by themselves.

Basically, I see it as a process where the convenience of apps to get you somewhere will keep increasing to the point where people will find themselves increasingly opting to check these apps first and find themselves needing a car less and less. Some transport apps are already combining route-finding with then offering to order an Uber for you.

Expect to see more of that making it less attractive to get a car over time.

Especially as youth get used to a greater flexibility and level of freedom using these type of apps before they can buy a car. Car ownership many places represents freedom from parents driving you around, but more and more teenagers can expect to be in situations were parents opt to order them a car instead of driving themselves.

Before long, a whole generation will experience car ownership as irrelevant to the ability of liberating their transport options from parental control.

Sure, some people will still opt to own one, but many already forgo car ownership, and that number will certainly rise rapidly.


The funny thing, some of this already exists these days. It is called ZipCar, Car2Go, or DriveNow. All of them suffer from the very same problem: service.

It does not matter if a car is selfdriving or not. To be recognized as available by someone means a utilization of about 30% by the providing company. But a utilization of about 30% does not drive down costs. You still of costs for producing and servicing the vehicle, which is way higher than just the energy costs.

Tesla has no experience in free floating vehilce fleets. Uber has no experience in such thing. ZipCar has. Car2Go has. Car2Go as an subsidary of Daimler even has experience in car production.

Now think of that.


ZipCar does not pick you up and drop you off at location. I can tell you as a Zip Car user, there are many issues that caused me to discontinue, none of which was service.

1 - the zip cars available to me are a few blocks away to walk which isn't convenient if I'm carrying something or lazy.

2 - high cost. Taking uber right now is so much cheaper. Imagine if cars were self-driving. Costs would plummet

3 - parking. This can be very hard depending on where I'm going

4 - I have to pay for the length of time I'm out, not for my ride. I also need to return the car when I'm done.

These are the biggest pain points in my opinion. Also, not needing to drive myself is a huge bonus. The leverage of solving these pain points are huge, imo.


zipcar and it's ilk have the same problems as bike-share programs: people don't use the service in such a way that the vehicles get to where the demand will be. And if you finish work at the end of the day and all the cars are gone, you aren't going to trust it again.

the bike shares solve this by driving trucks around, collecting bikes from areas where they aren't going to be needed and moving them to areas where demand is about to spike. it's hard to load up a truck full of cars to meet demand in the business district at 5pm, but it's very easy to send over all the spare capacity in your autonomous vehicle fleet.


That is it, and the ability to use the data to start offering sharing options with either discounts or priority pick up to make people ride share when capacity is full will be a massive change ("we're seeing high demand; you can wait 10 minutes for a vehicle to yourself, or a ride share can pick you up in 5 minutes"). There are plenty of times where I know it will take time to get a car because of demand, and would happily share if it meant I'd get picked up sooner.

Smoothing that out, so that you come to expect a car to be available very rapidly no matter what, with only minor inconveniences, may not end private car ownership but certainly will make a lot more people opt for alternatives - I know for myself (I don't own a car) the occasional lack of predictability in how soon I'll get picked up is the one aggravation that occasionally make me want one.


You missed the point like the GP. None of those services are anything like what's coming. Car2go still has to be parked, has to be close, you have to live in the home zone. Zip car is just... Not even close. It's a rental service and you need to take the car back.

Comparing either of those or public transit to self driving cars misses the point entirely.


The ridesharing systems (like uber pool and lyft line) are meant to alleviate that utilization problem. Zipcar has no experience with the complex logistics automation work for ridesharing that Uber and Lyft are doing, nor do they have a large enough userbase to make that ridesharing system viable and competitive.


As a zip car member, I wish it did all those things, but it is a far cry from the self-driving future GP is talking about. I'm also worried about tesla's market share, but more because I don't know if they can corner all the markets they are about to compete in: automotive manufacturing, batteries and set driving systems are all hard enough problems for an entire company. It's a lot to get right.


ZipCar is very useful in it's own regard. It's problem is that you need to pick it up and drop it off at the same location, and availability during peak hours.

Self driving car networks basically can solve that.


> I think there are a lot of pretty good reasons why the vehicle market is going to change significantly in the next 15 years

But not necessarily shrinking the market. The cost of mobility goes down, consumption will go up. How high? I'm going to guess absurdly high. The reason US cities are sprawling messes is that they were built as the cost of mobility dropped off a cliff (cars and trucks replaced horses). Go read Clifford Simak's "City". People will live in self driving cars and commute in their sleep. It's going to be nuts.


> Cost of ownership is especially high in cities (parking), and the market for ride sharing is highest. So probably many fewer city dwellers will own cars.

If it's really self-driving it can go park wherever. Not very good for the environment, perhaps, but it completely solves that problem.


The farther the car goes to park, the longer the wait for it to pick you up on demand. Not to mention, traveling a few blocks rarely saves much on parking in densely populated areas.


It can travel way further than "a few blocks" and I'd guess most trips are not so unexpected that it's impossible to accept a delay of 30 minutes or maybe even longer.


If your parking spot isn't included as part of the building where you live, then you're going to have to either buy some more property (however small or far away) to keep your car, or pay someone to let you park your car on theirs.


Yes, agreed, but if you live in a major city that's already the case (or you drive around for an hour looking for a space, something the self-driving car could also do).


Right. And so my point is the expense and inconvenience of parking in cities is incentive for you to either (a) not buy a car, and instead use an on-demand (self-driving) rideshare service, or (b) buy a car, and recoup costs at little inconvenience by putting it into a self-driving rideshare pool.

The end result is fewer cars owned by fewer people, but utilized much more fully, so the cars that do exist in cities spend more of their time driving and in-service, rather than sitting parked and empty for 98% of their lifetimes.


But a self-driving car that can either find street parking or else drive to some suburban lot makes that incentive much weaker, not stronger?


A service will be able to keep cars near you, and will have sufficiently higher utilisation of their cars to be willing to pay more for parking spots. Your waiting time to get a taxi service will likely drop substantially at the same time as your waiting time to get picked up by a car you own is likely to go up.

As someone who doesn't own a car, the only potential appeal to me of owning a car is shorter waits and predictability (always there). If the predictabiity and waits drop for rental services, my reasons for considering buying a car would rapidly drop. If the waits to use a car I own go up, my reasons for considering buying one would drop further.


As someone who doesn't own a car I don't think you have that much insight into the mindset of people who own a car.


You're assuming I've lived in a car free household all my life.


I find it shocking that something as simple as personal belongings would be a "lock in" to existing technology.

It's like saying "I prefer my horse, I can feed it grass off the side of the road, but you have to find some fancy petro-chemical station for your auto-mobile? Insane! My gas grows next to the road!"

I get it, but try to put yourself in the place of someone younger who doesn't make decisions like "I would never replace my car because I keep spare diapers there!"

>If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the size of the taxi, bus, and train market.

This is very Bill Gates "no one would ever need more than ..." argument. Come on!!

ZipCar has literally nothing on the future of mobility.

You (and many people your age, conditioned from birth to place massive value on personal car ownership) may never move past that paradigm. You might go to your grave in 50 years a proud owner of a vehicle in an era where almost no one owns.

I think, instead of sagely predicting failure, maybe try creativity, use that entrepreneurial mindset to solve future challenges.

You want to keep spare diapers nearby? Why not have a secure storage module in the vehicle, lets say the trunk can be split into 2 or 4 secure storage modules.

You order an autonomous electric vehicle to your location, ETA 5 minutes. You hit the "bring my secure storage container to my location" option, restricting the available pool of cars to meet your need to those close to your container, at a small additional fee.

Boom, the "insolvable" problem of personal storage in a vehicle is solved by commoditizing the storage and use the AI vehicle to transport it where you need.

I'm sure you could come up with a better solution if you tried.


It's not "personal belongings," it's "personal space." Hot-sheeting happens where sleeping space is extremely limited, like oil drilling camps, but it hasn't taken off among the general population, despite the fact that you only use your bed for around 1/3 of the day. People are willing to pay for their own beds and, frequently, their own apartments or houses, despite the fact that most of that space goes unused most of the time for someone with normal work and sleep schedules. Do you AirBnB your bed (at hourly rates)? Do you AirPantsAndT your clothes? Most people don't.

I doubt I'll last another 50 years, but I'll probably live long enough to see the end of the current robot taxi fad.


Conflating a home and a car is a bad argument. Homes have been required for hundreds of thousands of years. Shelter has been a human need since before humanity.

Cars have not been. The earliest proto-human sought shelter from a storm. They did not seek personalized shelter during transportation.

I don't like the argument at all, and I think it's a cop out, a slippery slope argument.

>Do you AirBnB your bed (at hourly rates)? Do you AirPantsAndT your clothes? Most people don't.

This is just a very feeble slippery slope that ignores the very real differences.

Yes, clothing and shelter have been humans needs for far longer than civilization itself.

Can you say the same for micro-space in a personal transport?

Were humans owning personal space inside of pack animals 10,000 years ago?

It's a bad argument. There's no slippery slope here. Homes and clothes are fundamentally different than cars.

You cannot live a civilized life without a home and clothes. You can live a civilized modern life without a car. Obviously we approach higher order needs differently than lower order.


> Conflating a home and a car is a bad argument. Homes have been required for hundreds of thousands of years. Shelter has been a human need since before humanity.

> Cars have not been. The earliest proto-human sought shelter from a storm. They did not seek personalized shelter during transportation.

Are you familiar with New World Economics' discussion of "really narrow streets"? One thing the author points out (in "Let's Take a Trip to an American Village") is that even in the 19th century, the US was very interested in what he calls "My Personal Means of Transportation" -- the fashionable thing to do was to have a carriage house, no matter how little you actually needed a carriage. I think you see less of this pattern elsewhere in the world (or else you just see less wealth; consider how "pedestrian" seldom has positive connotations and "equestrian" never has negative ones), but there's definitely an enthusiasm for personal transport in the US.


> Conflating a home and a car is a bad argument. Homes have been required for hundreds of thousands of years. Shelter has been a human need since before humanity.

The need for transportation is just as ancient as the need for shelter. Before cars, it was a horse, or camel, or a chariot, or something else on wheels.

I think you underestimate the strength of car culture, and the value people place in personal space (at least in the US).

And as with so many things, why can't these unnecessarily-competing worlds coexist?

There are millions of overly confident entrepreneurs rationalizing millions of wacky, over-engineered money-grabs and only a few of those ideas have strength to be so culturally and socially transformative as the world you describe. Is the end of car ownership one of those lofty ideas? I am not so sure.

Edit: and on a more personal level, I see ideas like that -- the end of ownership, whether it be cars, software, or land -- as an attack on individual ownership, so that moneyed interests can instead own everything and lease it to the peasants at their leisure (and profit). The world needs the opposite: to make ownership easier and less costly, and to restore the the increasingly-stratospheric costs of everything* down to levels that put ownership within reach of the common man. Not owning cars is just another step towards feudalism.

* As for how, there could be much to gain simply by analyzing the cost structure of stuff and stripping out unnecessary middlemen, expenses, and materials. Adopting a more restrained form of capitalism, like what one sees in tight-knit economic communities or in idealized small-business environments, could perhaps foster a business culture centered around balancing customer, employee, and shareholder value. The current system of only maximizing shareholder value creates much of the turmoil, unnecessary innovation, and naked profiteering we see today.


The problem with this is that there are multiple competing needs and desires here. People may have a desire for that personal space, but many will sacrifice those when it helps them meet other needs.

Yes, it's great to have personal space. But you know what? People sacrifice personal space for spending less money all the time. And for convenience.

Consider e.g. London - a city awash with money, where a lot of even people who could afford to be driven around by a personal chaffeur will opt for public transport for convenience.

As another example for London: People will opt to smell someones armpit on the train in the regular train carriages rather than pay a few pounds extra for a seat in the First Class carriages all the time. The value of personal space when travelling, as it turns out, is deemed by large parts of the public to be very low.

People tend to opt for personal space mainly when the public transit options are unusably bad compared to driving.

Places like London are perhaps the areas where this transition is most likely to start: Places where those who even own cars often own cars as a "contingency" for those times when the bus doesn't arrive or you're going somewhere odd that just doesn't work well with public transport currently.

In those cases, for a lot of people, it'd be very attractive to e.g. pay a membership fee to guarantee a certain level of "contention" for cars to be able to just press a button and have one arrive "fast enough". Even more so with the ability to do that on either end of a train ride. For a lot of people this will make a car pointless.

And in environments like this "personal space" is moot, as almost everyone are already used to using public transport some or most of the time.

At the same time, it is somewhere where local authorities are clamouring for ways to reduce parking and make car ownership less desirable. Expect housing units to start coming without parking spaces or with very few parking spaces in high density areas as cost saving measures, or because they'll sell some of those parking spaces to ride share companies, or make residents who want them buy them separately.

Expect planning rules to start reducing the maximum allowable number of parking spaces.

Places with plenty of space, sprawl and a strong culture of cars as independence will certainly experience this change last.

But consider e.g. the impact of a generation of youth who will eventually grow up with a situation where they may be able to rent a self-driving car on demand from before they are able to (afford to) buy one, and where e.g. parents may opt to just order a journey rather than driving them somewhere once old enough, and who will grow up increasingly likely to get used to some car taking them somewhere without needing to take the step to car ownership to get that freedom from parents driving them around. The "liberation" may become to be able to sign up for your own account so your parents can't see your every journey.

I think that the whole culture where car ownership is seen as a rite of passage and signifier of liberation from your parents could change far faster than you think.


Self driving cars are the future, hardly a fad.


Human extinction is definitely the future, eventually. Beyond that, I find it hard to make absolute statements about the future with no evidence or argument.


Some people just like owning cars. I live in San Francisco and don't currently own a car, but I want one. Perfect example where Uber fails - I can't take my dog anywhere.

Different people have different values. Also I'm quite young, so I don't think age is a strict delineation.


Having personal transportation, rather a horse, a bike, or a car, is pretty vital for a lot, if not most of us, here in the US.

Self driving shuttle services will be a great new way to transport us, especially in metro areas, but this won't work very far from the center of those so if the valuation of that market is too optimistic in regards to Tesla the holders of their stock will pay for it.

If you look at the number of US car companies that have started from scratch in the past 70 years you don't see many still standing (pretty close to none). Tesla has a very different model though so we can't lump them in with most all of the others.

In my own humble opinion, I think Tesla's fate will be decided by how fast they can produce a low end, very affordable and dependable car for the masses. If they can deliver that within the next 3-4 years they've got a very good shot at moving up to competing with Ford and GM.

If they instead try to compete with higher end cars they'll find that's a hard road to travel. At some point soon the big players will produce a car that's a competitive option and dilute their market and they'll die.

It's worth remembering that both Honda and Toyota captured market here with affordable dependable cars, not luxury cars. Those came quite a few years later.

I fully expect Tesla will produce an affordable car though, and it would make perfect sense if they called it a "Model T".


"Some people just like owning cars."

Yes I did point out that most Americans and many people are conditioned from birth to value car ownership, even when it's a poor financial decision.

"Perfect example where Uber fails - I can't take my dog anywhere

As I told the other guy: Stop predicting failure based on problems, put on your creator and builder hat, and solve the problem.

Why not have pet friendly vehicles available at a small charge, guaranteed clean?

It bothers me that these problems are so easy to solve and yet people are so willing to write off a future possible technology without so much as thinking through any of the solutions.


You seem very defensive. I was just pointing out that I don't own a car and live in the epicenter of the ride-sharing revolution, and I'd much rather go back to owning a car.

Regarding the dog, I'm just pointing out something that currently doesn't work for me. Until they fix it I don't care - right now their solution does not help me and nobody has done anything to address it.

My point is simple. Right now owning a car is better than not owning a car for me. Until that changes I will want to own a car. If you don't want to own a car then good for you - different people have different desires.


It's not "car ownership" that we value. It's autonomy and independence.

A teenager doesn't just "want a car." He wants that freedom that car gives him... to go somewhere without bugging his parents or friends for a ride. If you're in a big city or someplace where this is not the norm, I could see you believing otherwise.

(And I laughed at "guaranteed clean." Right. All that means is you get a refund when you find the dog turd in the back seat.)


"A teenager doesn't just "want a car." He wants that freedom that car gives him."

Precisely, and this is why owning the car isn't that important. This teenager presumably still has to pay for the car and fuel, or bug his parents for it. Paying for the (cheaper) self driving ride is no different.


So why not call a cab? or take a bus?

It is different. If you're relying on someone (or something) else, waiting around, you're not "independent."


Cabs are expensive, relatively slow, and busses are just slow and don't take you to your destination.

Really, this doesn't seem like much of a stretch.


I think that most people are hardwired from start to value ownership of things.

You might have noticed that people are hoarding a lot of stuff, that are of little value to them. It's probably an intrinsic value to most people to own things. It might vary a little between cultures, but it seems to be a common trait.

If you don't - great for you.

However. It might happen that you one day walk by a car on display in a mall, and notices the nice paint, a practical laptop holder, the particularly nice storage boxes for diapers and what not, and thinks to yourself - "I want that car."


>"You seem very defensive. I was just pointing out that I don't own a car and live in the epicenter of the ride-sharing revolution, and I'd much rather go back to owning a car."

And I was just pointing out that your personal experiences with today's ride sharing aren't relevant to a hypothetical discussion of an unrelated future transport technology.

I'm defensive because you're continually derailing a thread about futuretech to list your personal experiences with todaytech. I don't get why you derail this conversation to make it emotional and personal, so I get defensive about the track of the conversation of solving tomorrow's problems. Stop taking it personally, think bigger! Solve a problem!


If it's so easy to solve why don't you share the solution?


I did.

I literally did share a solution in this post, and the one before.

- Commoditize storage and transport it to you on demand

- Offer pet friendly cars

Boom. Solved.

As I also wrote: "I'm sure you could come up with a better solution if you tried."

Is this hackernews, where builders come to talk about exciting ways they're solving tomorrow's problems?

Am I on the wrong site?


Do you have any evidence that either of those will make money? I have evidence that pet friendly cars lose money - Uber used to have a program that catered towards dogs and they cancelled it because it lost money.

You haven't solved anything until you've demonstrated a working solution. If it were so easy to fix problems in the real world, politicians would have our economy constantly booming, there would be more jobs than people, and the Middle East would be the most peaceful place on Earth.

Anyway, I don't think we're going to agree on anything. I'm exiting this thread.


> Uber used to have a program that catered towards dogs and they cancelled it because it lost money.

By the same standard uber as a whole is not a working solution.


In fact it may not be.


Give it a rest. There is no possible way he can solve it right now, we don't have self driving cars yet.


I thought I was here to discuss programming and related news rather than engaging in mindless boosterism.


This 'switch from ownership to mobility'-buzz is one of the most overvalued ideas recently. Much like the Kindle was supposed to kill the book.

Why must some people see new inventions always as colossal destroyers of products they don't like instead of the more humble 'enriching ones freedom to choose'?


The kindle may not have killed the book, but it has made a massive dent in the paper-book market, despite substantial problems with e-books. It will likely continue to eat away at it.

If self-driving cars has as massive an impact on car ownership as e-books have had on the paper book market, that will be a dramatically noticeable change in most cities.


Wait. But Kindle killed the book. I stopped buying paper books long time ago.


I've never bought a Kindle, and the only e-books I own are ones that came free with the purchase of a printed copy.


They're true believers and their faith is called religion.


Exactly. I like knowing that there are extra diapers and a change of clothing for each kid in my car should I need them. I carry enough in to cover my current needs, but as anyone with kids known sometimes that isn't enough.

I know many people who keep golf clubs in their car because sometimes a salesman is looking to round out a 4-some. I like going to walmart/lowes... over lunch and leaving my treasures in my car.

Car sharing won't actually work out anyway because everyone needs their car during rush hour. Everyone is driving then anyway, and then the cars sit idle.


The car sharing won't cover everyone's needs and some people will stick to keeping their own car. I'd imagine people living in urban areas are more likely to use a car sharing service since it's uneconomical to own a car in most cities. I'd imagine the suburbs will be a mix of sharing and ownership. I can imagine a family having a car they keep for weekends or whenever the parents and kids need to go somewhere but they still use a car sharing service during the weekdays when mom takes the family car to work and dad need to get to work too.


I think you're exactly right. Once cars can drive themselves to destinations, it becomes so much easier to get by with one dedicated family car, supplemented with car sharing services.

For example: Mom takes service to work, possibly carpooling. Dad takes uses family car to drop off kids and goes to work. Car drives itself to mom's work for her to use to pick up kids and commute home. Dad takes service home. Or whatever. The point is kids can always be in the car with the extra diapers, with safety features parents want, etc.

The other part of this that people ignore is that a car sharing service could open up a lot of flexibility. For example, maybe our dedicated family car is just a sedan, but on this particular weekend with the grandparents in town, we can use the car sharing service to get a minivan and have everyone ride together. Or I want to pick up a piece of furniture and request a truck from the service. Or it's my anniversary, and I can request a luxury sedan to drive us to the restaurant for a touch of opulence. I'm sure there are many other examples people can think of.

Like you say, car sharing won't cover everyone's need, especially at first, but eventually, the big players in the space will have enough sophistication to cover many cases, especially for a second car.


I think car sharing even works in those cases. It's all a logistical problem. Not that there won't be some people who own cars. There just aren't that many problems that are hard to solve with car shares to outweigh the huge benefits.


car sharing works less well for getting to work because everyone else is trying to get to work then. You may as well own your own car for getting to work because you pay for all the costs anyway. All car sharing buys you is fixed maintenance costs on your car.

Car sharing starts to make sense when you want the car outside of rush hour. Want to go to the store for an hour at 2:30, no problem there are plenty of cars free. Want to get to work every day - you are paying peak rates for a car that will probably be used exactly twice that day, once to get you to work and once to get you home.


"Rush hour" is actually a pretty long distribution of time compared to the average length of a person's commute. I imagine just considering commuting, you could likely get close to half the amount of cars required with car-sharing, since you may get in at 7:30 and I may get in at 9:00. And you could provide good price incentives to convince people to mix up their commute times a bit. I already know people who push their times significantly to avoid traffic just due to the stress aspect.


This seems as good a place as any to add the familiar lament: Why does no one build new commuter rail in this country?

(This assumes that you're also from the US, for rhetorical convenience.)


I think it comes down to cost. Its only effective in very dense areas. For example, right now I'm on an established commuter rail line going from downtown to a suburb. I'm paying $12 round trip to travel 60 miles total. It's just barely cheaper than driving (not including parking expenses).

At this point in time, I think it's wise to avoid laying costly new tracks with the dawn of driverless cars on the horizon.


I think there are physical reasons why driverless cars will never be as good as trains: they're rubber-on-asphalt instead of steel-on-steel, and you need a lot more engines, space, and transportation of dead weight per unit of people moved -- and they'll probably still need parking, too. As near as I can tell, driverless cars are horseless-carriage thinking... but trains have no element of novelty to them.


Driverless cars can take you between train stations and destinations. No magical form of train will come to your house or go to your office.

In fact, this is a perfect use case for driverless cars. The problem with trains everywhere is the wasted time not on the train and the million stops along the way.


Ultimately I think driverless technology can revolutionarise high density public transport too:

It gives us exactingly detailed information on what journeys people need. The dataset will be immensely valuable in allowing the companies that sit on them to first start doing quasi-bus services:

Order a bunch of minibuses. During peak hours, offer an option: Wait for the next dedicated car to be free, or ride share with quicker availability and a discount. Limit detours strictly - there'll be plenty of "Follow road X and pick up 6 people on the way to station Y" type stretches that will make people happy (little time lost; feels efficient if there's not lots of turning off).

Then you can see them partnering with bus providers to dynamically fill in during peak hours, or even bidding for bus franchises and proposing contract changes that would allow for more dynamic, demand-based scheduling.

Ultimately this can feed into planning train type services - companies offering these type of drive share will be able to e.g. let people order "end to end" journeys of the type "pick me up at address 1, get me to address 2" where they show journey options that include rail when it makes sense. The key beying that if they do so, they will know the entire desired journey, and would be able to offer insight into the most efficient interchange locations or other changes to train services would be most desirable.


I really want to be in the business of writing the software that plans these things. The possibilities are crazy. Predicting where to have cars based on overall traffic flows, having cars ready for individuals who always leave at the same time. Think, a car is 30 seconds away every time you follow your routine. That's faster than getting into and starting your own car! Especially if you have a parking garage.


If you're predictable enough, it might be worth it to simply arrive a minute or two ahead of schedule.

The raving reviews you'd get the first times people order a car and are told instantly "your car is already waiting right outside your door" would be rather interesting.

Get in, and your favorite radio station or music is playing.

And for colder climates: Your car is already pre-heated. I remember too many winter mornings during winter in Norway when even ensuring our car would actually start in the morning was an annoyance (even with a garage, space heaters in the garage or motor heaters is sometimes necessary).


> No magical form of train will come to your house or go to your office.

Yes they will; the magic trains you're thinking of are called streetcars. And, with the oddities in oil and the difficulties of maintaining suburbia, we'll be moving back to dense streetcar suburbs soon enough.


Even buses don't take you door to door. I can't imagine a future where a streetcar is anywhere near as good as self driving cars (possibly paired with mass transit).


Are you familiar with streetcar suburbs? They'd have a streetcar running along a commercial street, with residential streets branching off from it; typically one would have a walk of a few blocks from streetcar stop to house. I don't know if a return to that pattern is the future I expect, but it's certainly the one I'm hoping for.


That is only true if the costs of the return trip is free: it isn't. When the car for the guy who arrives downtown at 7am goes back to the suburbs to get the guy who wants to arrive at 8am it is burning nearly as much fuel as it did getting in, and putting just as much wear on the car. The effect is shared cars are more expensive than just a car per person. (Note, this does not account for cost of parking which is a significant factor)


Car sharing (if self-driven) does provide an additional perk--time and money saved trying to find a place to park and paying for that parking. In addition, people turning into parking lots/garages (or worse parallel parking) interrupt the flow of traffic, making congestion worse. There's also many other potential improvements that self-driving cars could use to reduce congestion (faster speeds, reaction times, communication between cars, etc) and greatly lessen the commute during peak times


Wow, so for the short time you have kids in diapers this won't work for you personally. Big whoop.

We still have typewriters around too, and some people ride horses. Old tech doesn't die, it just diminishes to a smaller niche.


"Diapers" is just a synecdoche for parenting equipment: diapers, wipes, books, snacks for older kids, extra changes of clothing, etc.

Car seats will be a bigger problem: they are unwieldy, legally mandated, and require careful installation to be effective. Unlike diapers, even the small boosters used for older children can't fit in a shoulder bag.

A young couple expecting to have children in the next few years might balk at these inconveniences, and that could depress adoption of the 'mobility' model. You have to keep prospective purchasers in mind, who are evaluating their needs over the use-life of a car.


I think you are generally right about a primary/family car, but less so for a second, commuter car. I think this mainly hinges around making the self-driving technology safe, reliable and cheap (that is, cheaper than owning a car currently). I think taxis would be used more if they were significantly cheaper. Buses and trains have extra delays for stops, and you may still have to walk/bike after you get off. Having a cheap transportation option once you get off the train would probably increase train ridership as well, and decrease congestion during peak hours (at least for the major freeways, it may increase it some on roads closer to the train station)


Trains should be faster than cars in dense urban environments (if you are close to the station), e.g. London Euston to Watford 19miles 15-20mins by train 32mins by car (outside rush hour).


Although you do have to enter the station ~5 mins before the train leaves (allowing time to get through the ticket barrier, walk to the platform, board the train), plus exiting at the other end. My train gets into London Bridge in the morning at :32 but I don't get to the street until :36 because of the sheer volume of people. It seems minor, but it does all add up. That said, in rush hour there's no contest - that same journey would take 1 hour+.


Exactly.

Maybe poor people will take the robocab from hell, with sick on the floor. Most people will not.


Poor people might take "the robocab from hell", but just as I don't order "the humancab from hell" now, but order from the slightly more upscale "clean, air-conditioned high end sedan with blacked out windows and wifi" for just a slightly higher fee, people who earn more will still have alternatives, yet will still benefit from the cost reductions.

The difference being that poor people will have the "robocab from hell" alternative rather than have nothing they can afford, and that more people will afford said high end sedan when it's self-driving, and will be able to justify it more often, and more people will afford to trade up to even more luxurious services.

There is already a marked class difference in commuting in London: Low paid people take the bus four two hours+ for commutes that'd take less than half that if they could afford the train from the outer fare zones (bus-rides cost the same within the entire London fares area), so transport is already today segregated by income. A lot of the longer bus lines makes no apparent sense until you realise that low paid people often can't afford the train, or a car.


Uh, what? Cabs are already really popular. Why would a self driving car be "from hell"? You think they can't be cleaned?


>Simply get 10% of mobility and 10% of electricity storage and they'll have justified well above their current valuation.

Please show your math.

>Tesla will basically take the market from coal and petroleum.

And you base this off, what, exactly?

Sometimes I think that half of HackerNews didn't even know solar or battery backups were a thing before Tesla. These are competitive spaces where Tesla has essentially no market share (just like cars).

I think Tesla will be successful, but I doubt they end up market leader in any of these things.


> Sometimes I think that half of HackerNews didn't even know solar or battery backups were a thing before Tesla. These are competitive spaces where Tesla has essentially no market share (just like cars).

I'm genuinely curious if the numbers reported by SolarCity represent the full picture. [1] shows SolarCity with ~35% national marketshare while the closest competitor is at just over 10% (Vivint). This was in 2015, but it still appears to have a significant lead.

[1] https://www.greentechmedia.com/research/subscription/u.s.-pv...


Battery backups were several times higher before Tesla. Just looking at the South Australia proposed battery, Tesla's offer of $250/kWh is about a third of other bids for storage, from what I can tell.


> 's valuation is also based on the idea that clean energy will replace fossil fuels.

Last month Tesla sold 10,000 electric vehicles to Fords 2,500.

If we are serious about climate change, then sometime in the 2030s [1] we have to stop building new combustion engines.

The entire technology platform on which these 6,7 million Ford sales rest is about to be swapped out in little over a decade.

[1] https://arstechnica.com/cars/2016/10/germanys-bundesrat-vote...


> If we are serious about climate change, then sometime in the 2030s [1] we have to stop building new combustion engines.

Or there might be a breakthrough in carbon capture, converting atmospheric CO2 into petroleum and we can drive combustion engines forever.

CO2 capture is an area of active research and it's entirely possible that advances there will make Tesla and Solar City moot.


> CO2 capture is an area of active research and it's entirely possible that advances there will make Tesla and Solar City moot.

I don't know how likely that is. Even if carbon capture comes through, the low hanging fruit of fossil fuels are gone so now we have to get more invasive in harvesting the hard-to-get ones (strip mining, fracking, etc). It's likely that even with C02 emissions taken care of that we'll want electric vehicles and renewable power in general.


I mean capture of CO2 from the air and conversion into a fuel that can be used. Something along the lines of algal farms that soak up sunlight and CO2 from the air and excrete alcohol. Combining solar and the CO2 that has already been released into a liquid fuel suitable for a variety of uses. We could cease raw material extraction entirely.


Seems inefficient. Fossil Fuels work today because you just suck them out of the ground and ta-da! free energy when you burn it. If you have to pump enormous energy into harvesting the carbon so you can burn it and re-harvest it, why not just put that energy straight into the car and cut out the carbon entirely?

The battery is the thing that makes an electric car "expensive" today, but it's following a consistent downward price curve. In ~5-7 years, it will cost more to make an ICE car than an EV car, and then ICE dies. Simple as that.


> If you have to pump enormous energy into harvesting the carbon so you can burn it and re-harvest it, why not just put that energy straight into the car and cut out the carbon entirely?

Energy density. Jet fuel has about 25x the energy per kg as the best lithium batteries. Perhaps batteries will be able to match carbon fuels some day, but it's a long way off.


Not if the EV can't go more than 200 miles and takes half a day to refuel.


Except they already go >300 miles and take <75 mins to charge to 90%...


Ah I see, I thought you were just talking about carbon sequestration


Or maybe there will be a breakthrough in battery tech and in five years we all drive Teslas.

CCS + Power2Gas + synthetic fuel is unlikely to be cost competitive. It's not like climate scientists don't consider that option. In fact the only half way plausible scenarios for reaching the two degree target involve going carbon negative after 2050. And synthetic fossil fuels are probably the only way to make airtravel carbon neutral.

Full de-carbonisation requires a multi-pronged approach, and cars are at a point where electric vehicles are already very close to conventional vehicles. Within a factor of two or three for range, so totally sufficient for most needs, and not much more expensive. It's one of the better options we have to de-carbonize a huge sector. Second only to the energy production sector itself.

Compare to food production which looks absolutely hopeless (the two degree pathways often assume we manage to implement massive dietary changes see e.g. here http://tool.globalcalculator.org )


... because Tesla is the only company making electric cars, right?


Even if CO2 to petroleum were 100% efficient, you're still throwing away 70+% of the energy by burning it in an ICE rather than putting it in a battery as electricity.

Any likely method of CO2 to petroleum is likely to be below 50%, more like 15-30% efficient. Round-trip efficiency an entire order of magnitude worse than battery. That's why batteries are better for ground-based applications and will remain so.


I'm honestly not sure the assumptions underlying your comment. Solar cell to battery is pretty inefficient at the moment with the best solar cells converting 26% of the solar energy hitting the cell into electricity and the charge-discharge efficiency of li ion cells is 80-90%. The ultimate amount of energy delivered is less than 30%.

Regardless, if any of the biological/algal methods of CO2 to fuel techniques become successful, why would we care if 5%, 50%, 100% of the solar energy received makes its way to the end product. It's basically free energy at that point. The only thing that would matter is real estate to house the facilities.


Round-trip electricity efficiency is what I was referring to, assuming you'd use electricity in both cases. If you have to synthesize fuel using electricity and then burn it to produce either movement (shaft-power) or electricity, the efficiency is on the order of 10%. Whereas for batteries, the efficiency is on the order of 80-90%.


Effective CO2 capture might cause governments to not mandate a certain number of electric vehicles or provide tax credits for buyers or impose a carbon tax, but if electric vehicles are better and (eventually) cheaper to manufacture than gas vehicles, then people might still prefer electric to gas even without environmental motivation.


Isn't vegetation essentially a form of carbon capture, and it's not nearly effective enough to keep up with human CO2 emissions?


To put things in perspective, Ford sold over 645,000 vehicles so far this year. Tesla feels massively overvalued.

[1] https://corporate.ford.com/content/dam/corporate/en/investor...


It's a good point: there very well could be a few Kodak Moments if technology changes and the incumbents don't adapt.

But predicting the future is hard.


I think in a few years we will talk about how in 2017 people based their investment on the idea, that one company will win in not one, but in two already saturated markets, competing against companies with hundreds of thousands of employees.


I'm far from convinced that the people buying 40,000 Ford F150s every 3 weeks are doing it for mobility and they're just dying to take a "taxi" everywhere instead.


Those aren't congesting city streets, at least that I've ever seen.


Will they though? Traditional car makers are not ignoring renewables by any means.

From article:

> Dozens of other companies around the world have battery-powered cars on the market, and more are in development. Investors “act as if Tesla has some sort of patented product that cannot be replicated,” said Dave Sullivan, an analyst at researcher AutoPacific Inc.

> “By the end of this decade, there’s going to be some significant choice for consumers looking for an electric vehicle,” he said, calling Tesla’s valuation outpacing Ford’s “mind boggling.”


I get that that is the vision, and 10% of mobility or electricity would justify their valuation. I'm just not buying that they are going to achieve either. In fact, I'm of the opinion that they won't even exist as an independent company in five years time.


A lot of these tech company valuations seem pretty questionable, not just Tesla's.


except ford is spending an order of magnitude more than tesla. it's much easier to spend 100 dollars meaningfully than a 100 billion. I also hope you're willing to level the same charge at Google and Apple.


It is like comparing a spunky startup to an entrenched corporation. Ya, IBM once spent more than Facebook, but Facebook was worth more because it had potential while IBM didn't.

Ford doesn't have any good ideas for the future, they are too busy with the here and now and haven't shown an ability to do anything but incremental improvements with their R&D spending. Like we don't expect much more from IBM, we don't expect much more from Ford, but we do from Tesla.


> Ford doesn't have any good ideas for the future, they are too busy with the here and now

according to who? your average HN reader who basically hates cars? yeah, sure. the guy who hates cars is bearish on ford, shocking.

what about all the people buying raptors and gt350s and fgts and fists and fosts, hand over fist?

do you even know what i'm talking about? do these insanely popular cars even register on your radar?

it sounds like you're not-a-car-guy-but-a-tech-guy which makes up for a huge portion of tesla fans. and you're exposed when you make shit up like "ford doesn't innovate" or whatever your thesis is.

signed,

-not even a ford guy. porsche, there is no substitute.


For what it's worth I'm a (European) tech-guy who would love to buy a Ford Focus RS, the only issue is that I don't have the financial means to do that. And I also love their Ranger line, both the new one and the one from the late '90s - early 2000s, whose models are cheaper than the Hilux and whose engines are just as reliable (the only issue seems to be rust, which inevitably sets in after 250-300,000km).

I will also avoid buying a car connected to the Internet/which has a tablet-like dashboard for as long as I could, and I say that as a guy who has done web-programming for the last 10+ years.


The kind of people who buy raptors and gt350s are a tiny fraction of the market compared to the people who just want to get to work. Tesla isn't interested in car enthusiasts, they want to be the default answer to the question "How do I get from point A to point B for $1?"


>people who just want to get to work.

People who "just want to get to work" aren't buying cars that start at $35,000, either.


Depends on the market. I see a lot of CLAs in LA, and they are probably paying more than $35K for them.


No, of course not. But They'll pay $0.10/mile for Tesla mobility services.


Currently, Tesla is a luxury car company. People who want to get from point A to point B buy a used Ford Focus.


The most popular cars are crossovers and SUVs, a segment Tesla hasn't shown any interest in so far.


The Model X is essentially their answer for an SUV/Crossover.


Sure, if (your_universe == USA).


OK, sure, the picture becomes a lot more complex if we want to talk about international markets. Anyway the car I see in the Tesla showroom does not say "car for practical people who just want to get from point A and point B." The article claims they're selling to the kind of people who would normally buy a Porsche.


Beijing has a lot of Tesla Model S's these days, up from virtually nil a few years ago. Chalk it up to Beijing separating the plate lottery for EVs, and the people that normally buy Audi aren't going to buy a Chinese EV.



Tesla isn't interested in enthusiasts? The only people buying them are enthusiasts. The pragmatic folks are still in wait-and-see mode.


Those people will just buy another Toyota. They aren't spending 35k+ on a Tesla.


I just bought an Acura ILX this year and I really like it (despite the reviews that it is just a luxury Civic), and I never even considered buying a Tesla.

People misunderstand post car like post PC: it doesn't mean the market is going away, but merely that it is no longer growing. Therefore, WYSIWIG on earnings, because they aren't going to change dramatically. Ya, Ford might have record earnings that are slightly more than last year, but no one sees them doubling before inflation makes that happen naturally.

> do you even know what i'm talking about? do these insanely popular cars even register on your radar?

I have to admit, I prefer Japanese cars and would never consider buying an American brand. I found them unreliable in the past, and got burned more often than not. But I still don't see the Japanese companies pulling a Tesla in the future, they are fairly stable companies with stable market share and profits. They don't change the game.

> -not even a ford guy. porsche, there is no substitute.

German cars break down too much. Ya, you can get one, but after the warranty is up, you are toast. Better to lease instead.


http://www.businessinsider.com/2016-was-a-record-breaking-ye...

india and africa will be china in 20 years. this is the market that tesla is fighting for a fraction of, not the other way around. you're out of your mind.

people like cars. people will spend an irrational amount of money on their cars. they don't give a shit if it pollutes, or kills people, or doesn't because it drives itself sometimes. the trends show this, decade after decade. guess what? teslas pollute also. how many tons of CO2 was emitted extracting all of the rare earths and other super toxic shit that makes a tesla?

i'm sure tesla will be super successful. the rest of the brands aren't going anywhere either. and toyota was the first tesla. look at the prius figures. someone will do it again with electric cars. it won't just be tesla. you can't be serious if you think that.


Every year is potentially a record breaking year for profits. That's how inflation works!

India and Africa are going to buy Fords?

China has been really nice to Ford, it has kept them afloat while the American market tanked at home, BUT let's not delude ourselves about how Chinese JVs work. Also, China has some weird tax games going on, so its not clear where demand will eventually settle (disclaimer, I lived in Beijing for most of 2016). Other countries have and will follow similar home-grown biases.

You seem to have a bullish outlook on Ford, I don't know. I don't see them as a tech company, they make cars, they always have and always will, nothing will change for them. They aren't aiming for a shot at more greatness than they already have.


> Every year is potentially a record breaking year for profits. That's how inflation works!

do yourself a favor and never own or run a business. record breaking numbers do not happen by accident or because of inflation. you have a fundamental misunderstanding of what is actually going on here.

the analogy you are looking for is "right before the car showed up the record sales of horses looked unstoppable." but you're not putting the pieces together in a coherent manner.

also, ford will make whatever the car is. doesn't matter if it's electric or gas or diesel or bio.


How many years does Ford have record breaking sales? It happens more often than you'd think and doesn't really prove much.


do you run a business? if not, keep it that way.


Ad hominens are not appreciated on HN.


Friendly note - disclaimer != disclosure. Although in this case neither would have been better.


> would never consider buying an American brand. I found them unreliable in the pas

Ford Focus is insanely reliable. I have a 2002 with a bazillion miles on it and it's still running like new.

To be fair, Japanese cars are generally great as well, especially Hondas.


coastal people are stuck in the 90s when it comes to their domestic automobiles. middle america has figured it out already; domestic is good again.


What is this based on? Ford has had record profits over the past few years and has continually improved their vehicles and manufacturing processes, including remaking two assembly plants to make aluminum body F 150s. They also invested a billion dollars in Arvo AI and are making aggressive moves into self driving technology.


Market perception.

Ford's P/E ratio is 9.89. IBM's P/E ratio is 14.02.

Facebook's P/E ratio is 40.79. Tesla's P/E ratio is infinity since the E is negative.

I'm sure Ford has done many incremental innovations, I didn't say they didn't. IBM does the same thing, and has "record profits" every few years also. Its just the market isn't expecting the next big thing to come from Ford, while they are expecting that from Tesla.

If you think the market is wrong or too irrational, you can make a killing by shorting Tesla and buying cheap Ford stock.


I don't really like the analogy for several reasons, but what's wrong with IBM? Have you looked at their share price over the past 12 months? As of today, IBM is trading at around $164 billion market cap and paying out a dividend of over 3%. I'd say that's pretty good.

I don't short stocks because I don't believe in trying to time the market. I actually think Tesla could move well north of where it is currently trading. Not because I think they are going to grow to justify the valuation, but because I think lots of people will look at the $45 billion valuation and will incorrectly compare it to Amazon, Facebook (as you just did), Alphabet, and Apple and think $45 billion is low.

However I am long Ford. In fact it comprises the largest percentage of my personal portfolio. I continue to add more to it with every drop and just added more a few days ago. While the value has been dropping over the past couple of years, I've been collecting healthy dividends along the way ($F pays out now over a 5% yield), and am happy to sit and wait to see how long people will wait for Tesla to move beyond a niche auto maker and into the mainstream market.

Edit: One other point- this recent run-up is attributable to Tesla delivering more cars this quarter than expected, not because they just unveiled some new technology the market wasn't previously aware of. TSLA has been extremely volatile whether you've been long or short over the past 2-3 years. All it takes is one missed earnings report and it'll send this stock down at least 25%.


In general people who invest in stock are people who work at big financial institutions. Not 'regular' people trading on their own. For individuals, picking stock in stead of just buying accross the board is really risky. So it doesn't matter what 'lots of people' think, really.

The only thing happening now is that investors seem to be extremely worried of 'missing the boat' on automated driving. See the big investment in Uber, a taxi company with an app that essentially anyone can copy. But they raised billions on the promise of automated driving.

The only thing here is the idea that the organisation that perfects automated driving first will dominate every transport sector. That seems far fetched to me though.

But hey, I'm just a regular person too. So maybe I'm dead wrong.


Tesla is RISKY: it is a bigger gamble, higher volatility, higher upside if it works out, bigger chance of it going completely bust. Put Tesla in your portfolio if you want to add some risk to it. You want stability with a healthy dividend? Well, add some Ford to it.

Shorting is the way you capitalize on a stock that you think is overvalued. It is an advanced maneuver but can be done for the long term as well.

IBM...man, IBM is a tech company that got rid of most of its R&D to focus on consulting and accounting tricks. But ignoring that, IBM has a huge R&D division but has been unable to come up with any breakthroughs for quite some time now, it is the canonical mature tech company that isn't going to have rapid growth like a startup.


If you're looking for other stable tech-sector companies (mostly supplying corporate infrastructure), FICO and PEGA are good examples; so is Microsoft, for that matter. But why look for them? (They're S&P 500 components with solid dividends, so maybe that's answer enough.)


I own Microsoft stock, it isn't exactly a growth one.


That's not how the math works out, according to Nasdaq.com Tesla's P/E was -53.63 for 2016 and estimated -103.48 for 2017.


Sorry I guess. I couldn't find Tesla's P/E ratio on Google like I could for the other companies. It is my understanding that they don't report P/E ratios for companies with negative earnings.

And it makes sense: a high P/E ratio indicates high potential. The lower the earnings, the higher the P/E ratio. But if earnings went negative, then the P/E ratio would automatically go negative (since that is how math works, as you say). So if my stock price is $100, and I earn $1, my P/E ratio is 100...so much potential! If I accidentally lost a dollar instead, my P/E ratio automatically becomes -100 even though not much changed in my earnings.


The interesting thing is that as soon as you go negative, a larger negative P/E is better than a smaller negative P/E, and it's really wonky at earnings close to 0.


Those numbers are meaningless since Tesla has negative earnings. Infinity is basically right.


> If you think the market is wrong or too irrational, you can make a killing by shorting Tesla and buying cheap Ford stock.

the market can remain irrational for longer than you can remain solvent!


Don't try to short Tesla! Shorting depends on the short-term trajectory of the stock after you borrow it, and Tesla's being bought like mad by people who've put their faith in St. Elon, so this is a great way to lose your money.

The likely long-term outcome is for Tesla to be bought out for a pittance (maybe $20-$30 a share? $10 would be surprisingly low, $50 surprisingly high), by a mature automaker interested in the marque; in the meantime, the way to make money off Tesla is to realize that all the people who are zealously pumping their money into Tesla are leaving everything else under-valued.


And you can lose a lot of money while still being right. Always remember, Wall Street's cemetery is full of people who were right too early.


An aluminum body is exactly the kind of iteration that was being talked about. It is neat, but its not and all new drive train on a totally different tech. Aluminium is a pretty well understood material, while self driving cars are virgin territory.

Tesla is making larger swings and potentially accepting larger risk. Ford is... iterating.


What innovation is Tesla making? Electric cars are not new. In fact the first production car to reach 60mph back in the day was electric. Aluminum in a production car is a lot more innovative that an electric car. (li batteries in a production car though is innovative)


The dunning kruger effect is super prominent in the tech community's discussions of Tesla.

Plenty of other manufactures are doing innovative things with automation, technology, etc. Not to mention most of them can build a higher quality interior/driver experience for far less than what Tesla wants for a Model S


It's 2017 and a $60,000 Audi still won't let you start it up remotely from your phone and run the heater/AC so it's comfortable by the time you leave your house.

Seems like the most basic, obvious, easy to implement feature but they still can't manage it. Apparently because it's "illegal in Germany" to have a car running without an operator behind the wheel. What a joke.

Tesla will wipe the floor with them.


Why would I want to install an app from a carmaker on my phone, complete with privacy-invading spyware, when I could just use the keyfob to do it?


At work I'm parked down the street from the car so the key fob wouldn't reach. But that's beside the point; you can't even do it from the key fob today on a new Audi.


I can do it on a 15 year old chevy impala. I have a hunch that fernstart is verboten in europa because it is a waste of fuel (and emissions.) They have webasto heaters and parked ventilation instead. Aren't all these cars stop/start now?


You can get an aftermarket remote start installed for $150. That's not some innovative feature unique to Tesla


With always-on 3G connectivity and a corresponding app? Link?

I know it's not very innovative but if the incumbents can't even do this then how are they going to leapfrog Tesla at, say, self driving?


Electric cars aren't new... if you really want to compare modern vehicles to those it pile batteries. When the roadster came out there was nothing like it.

Electric vehicles prior to the Telsas where research projects and low torque ultralight budget vehicles. Listing the differences between a Telsa and its closest successor, if you could pick one is not an easy task. Listing the difference between an F-150 and and F-150 with and aluminum was already done this sentence the hardest part was spelling aluminum.

You can pick an threshold for choosing what is evolution and revolution, I am just trying to choose a reasonable one.


I would much rather drive an iterated vehicle than one based on a large swing or risk.


But you can drive the latter in the car pool lane


For now. Once enough EVs are on the road, it'll go back to being 2+ or 3+.


You can drive anything in that lane with a passenger. Just sayin.


IIRC, here in sand-land (AZ) you can drive solo in our OHV lanes with a vehicle that has less than four wheels (mainly motorcycles - but if you have the cash for one of those nice 3-wheeled "cars", you're still good).


I wonder if Tesla is contemplating building and selling a half-ton pickup truck to compete against Ford's F-150 (and others)?

That's what I'm kinda waiting for - I don't want a car; I like having a pickup. Ideally, it would be 4WD (and my next pickup will be - right now my off-road vehicle is an Isuzu VehiCROSS that I'm pouring money into). I would love it if my next pickup truck was a self-driving, off-road, 4WD electric beast.

But I don't see that happening any time soon - at least not before I get to the point of replacing my current truck.


According to the "Master Plan part 2", a "new type" of pickup is in the works. That is pretty much all that has been released at this point though.


Ford have also been quite innovative in the engine department building small volume turbo charged engines for greater efficiency and lower emissions

https://en.wikipedia.org/wiki/Ford_EcoBoost_engine


Being innovative at small details of existing concepts isn't likely to produce huge gains in stock value, as opposed to being innovative at entire categories of new industry- and infrastructure-disrupting products. Ford does the former, Tesla does the latter, and the market is valuing them accordingly.

The market could be wrong, Tesla could fail to achieve their vision, Ford and other existing big companies could somehow turn themselves into organizations that aggressively pursue ambitious new visions.. but the market is betting not. You're welcome to make an opposing bet.


>Tesla does the latter, and the market is valuing them accordingly.

Suddenly we believe in a rational market when it comes to Tesla? Everytime I ask basic valuation questions in these threads, I get touchy-feely answers about "potential". And HackerNews is supposed to be a data/tech place. Imagine what average Joe thinks?


> The market could be wrong, Tesla could fail to achieve their vision, Ford and other existing big companies could somehow turn themselves into organizations that aggressively pursue ambitious new visions.. but the market is betting not. You're welcome to make an opposing bet.

I don't know about 'we', but I don't believe in an irrational market - the market may well be wrong, but it's not usually wrong for unreasonable reasons. And potential is all investors ever care about: they're looking to put their money where it has the most potential to turn into more money. Predicting the future is necessarily uncertain and involves ambiguous judgment; you can call that touchy-feely if you want to be dismissive, but there is no such thing as data on things that haven't happened yet.


Markets can remain irrational a lot longer than you and I can remain solvent.


We could quibble about the meaning of "irrational", but I do agree that markets can be mistaken for longer than most people can financially back their conviction that it's mistaken.

In the case of Tesla vs Ford, there is probably a sense in which the longer the market is 'irrationally' convinced of the value of Tesla, the less irrational it actually is - it's a bet on Tesla's viability and vision, and the longer it seems like a good bet to most people, the more likely it is that it is a rational bet to have made.


Maybe that's part of it. I'm sure another part of it is that Ford is already big enough, that there isn't a lot of growth potential there.

That said, it's not like they are exactly just making small refinements to gasoline engines, while SV companies are the only real innovators, chasing electric and self-serving vehicles. We just tend not to talk about it as much on HN (compared to Tesla, for example):

https://www.google.com/amp/s/electrek.co/2017/01/03/ford-new...


Ford doesn't have much room to grow because they are a mature company in a mature field. Tesla is creating new fields. Ford doesn't know how to create new fields, therefore they're stuck making small improvements to existing things, and, once someone like Tesla makes it very clear that a new field exists and is viable, Ford will reluctantly follow the market trend.

Ford does normal science [0], Tesla does revolutionary science [1].

[0] https://en.m.wikipedia.org/wiki/Normal_science [1] https://en.m.wikipedia.org/wiki/The_Structure_of_Scientific_...


[flagged]


I don't know what this is meant to mean.


Pretty much everyone who wants a Ford has one, or could buy one. There's not a lot of growth left for Ford. Their only hope is to steal a few customers from the other automakers, but those other automakers will steal a few back. It's unlikely that large numbers of people who don't currently own a Ford are going to buy one any time soon.

Tesla on the other hand, has millions of potential customers who would and will buy one once they become a little more affordable and the charging infrastructure becomes more built out. We already saw how fast the pre-sales for the Model 3 went. And that was just people who were willing to put down money on a car that wasn't even available yet.

It's not just about innovation or not. Tesla has a lot of room left to grow. Ford is about as big as it's ever going to get.


> Pretty much everyone who wants a Ford has one, or could buy one.

Yeah but it's not like people buy one car, and never buy one again. Ford sells over 800,000 units of just the F150 every single year.

Now it's true that they don't have as much potential for growth because they've reached a sort of stable place in the market. Maybe sales can grow a few percentage points year over year but Ford is unlikely to jump by 20% the way Tesla can.

But that's not really saying much as Ford is a mature company with a complete lineup and Tesla is only on its 4th model of car.


I don't understand this argument. Tesla is currently trading at a higher valuation than Ford. Ford has saturated the North American market. Tesla could eventually grow to saturate the North American market but is just a fledgling auto maker right now full of potential but not many sales.

But they are already trading at a higher valuation than Ford.

So unless you think that Tesla can command much higher margins than Ford does, then shouldn't Tesla only trade at a similar valuation when they are making similar amounts of cash?


Huh? Do you own a car?


exactly. Ford is stagnant. Tesla has much more potential.


Ford also signed a deal with Blackberry's automotive division and will be making their own software platform based on QNX.

Sounds like they may be trying to compete with Android, Apple, and Tesla on the software side. And QNX has a good microkernel architecture for an automotive OS.

https://www.forbes.com/sites/greatspeculations/2016/11/03/wh...


Sorry but this is like Nokia saying they are spending all this money to make their phones and manufacturing processes awesome, all the while when a iPhone is getting designed somewhere.

Incremental changes is what most senior management folks at places like Ford can do because that is what they teach at MBA schools using linear growth graphs.

Self driving tech is really novelty thing now. And nobody expects it to work anytime soon.

The real deal now is mind-blowing battery tech. Batteries that are rugged, can charge quickly and a car that can give a big range on a charge.

Meanwhile talking of how efficiently somebody can build an ICE based car is really like someone talking about how quickly they can produce horse carriages. Doesn't really matter because that disruption is happening else where.


That all sounds good in theory, but where are the numbers to back it up?

Apple was making billions in profit on the iPhone at launch. Tesla has never made a profit and sold 70k vehicles last year. Companies like Ford and GM have huge numbers of loyal customers and move millions of vehicles a year and quite profitably. So while it sounds great to pretend that the automobile industry is dying and Tesla is capturing their market share by sheer innovation, the numbers tell a different story.


>What is this based on?

It's based on nothing other than the weird contempt you see for large, established corporations in the SV crowd. Big established corporation = big established rule book and management hierarchy = stifled innovation. Nevermind the fact that most of the major technological breakthroughs of the past 100 years were developed by the research wings of big corporations (Bell Labs, defense contractors).


I'm not the parent poster, but I'd offer one reason why some people feel this way - Ford is a car company, while Tesla is a software company. Big difference in expectations, capital expenditures, etc.

Based on committed capital, I think this is at least partially correct.


If Tesla is a 'software company', the last thing I'd ever want to do is buy a car from them.

As anyone who has every used software will attest to: Most of the time, we can count our lucky stars if our commercial software 'works' for a year and a half.

Cue all the: "If Microsoft/Apple/Google/Facebook/Snapchat made cars" jokes.


I'm kinda with @iamatworknow on this, too (thus right there with ya too).

I've contemplated the idea of my next pickup being a commercial vehicle, if I can get one (as a single unit and not a fleet sale) - which I probably won't be able to, but I can dream.

It seems like that's the only way (except for going used) that I'm going to be able to get what I want: A standard-cab, short-bed pickup, ideally 4WD.

I don't have kids, and won't have kids. I have no need for four doors and an extended cab. I don't need a long bed. I want a short wheelbase. So far, it's either buy a used pickup (back when they made and sold these kinds of trucks) or go with a commercial vehicle (where you can still sometimes find them - sometimes).

The other perk about a commercial version is that they are stripped down to the bone. Nothing fancy in the cab, just the bare basics for a radio, cloth interior, non-electric controls for windows and seats. Basically, eliminate all the fru-fru stuff to make that much more reliable for work-based usage.

In other words, I want a truck to be a truck - not some fancy "I only go to the mall to show off" substitute for a minivan. Add in some basic 4WD with manual hubs (again - nothing to break) - and there ya go. That's my dream truck (ok - if there were a Raptor version of it that'd be nice, too - but I can't afford that, so who really cares).


I actually had very similar thoughts on the pickup truck market when I was last looking for a new vehicle. I thought maybe a small pickup because I live in rough winter territory so the ruggedness, ground clearance, and 4WD would be good. Plus if I move homes soon like I plan to, it would be cheaper to just rent a trailer than a U-Haul for my one bedroom apartment worth of stuff.

But you're right -- there are no Chevy S10 or Ford Ranger type pickups anymore. The closest you'll find is probably the Toyota Tacoma, which has more than I would want or need.

So I just got another Corolla. It does have some fancy features I enjoy, but luckily they aren't reliant on the internet to function. And it's cheap.


Definitely agree with you there. We're already seeing some of the more unpleasant idiosyncrasies of the software world with Tesla.

I, for one, kinda like driving a car that doesn't require an internet connection, doesn't have forced OTA updates, doesn't send analytics data back to base, and won't potentially be bricked if someday the manufacturer goes out of business. Other manufactuers are starting to do the same thing but I'm going to enjoy my "dumb car" for as long as it lasts. Hopefully when fully electric vehicles become more mainstream and affordable there will still be an option to get a "dumb" version.


Then don't buy their cars and their stock. The people who do obviously have a very different worldview than yours.


> Ford is a car company, while Tesla is a software company.

How? Uber has passed as a software company by making its drivers pay for capital and depreciation. Tesla currently sells physical cars to individual people. They may be aiming for "self-driving," but if they ever get there, there's still the question of who pays to build and maintain the cars. Compared to that, the value of the controlling software seems fairly small.


Ford is a car company, Tesla is a technology company. People who don't get that have never lived in the rust belt before.


What software have they made?


Does anyone pre-order a F150?


Does it matter? https://en.wikipedia.org/wiki/List_of_best-selling_automobil... Take a look at the USA on this chart.


True, but that is not the point. In terms of electric + self-driving technology, Tesla has a huge lead over every other auto player including Ford.


Yes. Lots of private individuals as well as fleets will pre-order trucks to get the exact options they want.


Sounds like customization. Tesla pre-order is basically a queue for a future delivery, not about getting a specific feature.


There's no need to because there are plenty. People did preorder the Focus RS.


Interesting. When did this happen? Was it discounted?


Not even a whole year ago, and, no, it wasn't discounted, it was marked up.


"Ford doesn't have any good ideas for the future..."

I think you just don't read about it because you don't care about Ford, but you read about it for Tesla. And it's not entirely your fault; there is definitely publication bias as well.

Here is an article from literally today:

https://techcrunch.com/2017/04/03/ford-tops-the-list-of-auto...


Truth. I sat down with Ford exec group last week (Fontinalis is an investor in the company I work for) and they explained all their ideas. Most of them are excellent, very few of them are related directly to cars, and I don't expect they will start talking about them for quite some time. Long Ford. :)


On on side, Ford, and most other companies in the automobile industry, are big corporation. The bigger it gets, the more difficult it is to change. And all the sub-contracting done in the industry might lead to even more difficulties to move things around.

However changing from petrol to electricity doesn't seem to be a drastic change. An important part of car making is changed (engine and energy), but it's not a radical shift (the rest of the car is still the same).

Today, Tesla represents a very small fraction of the number of cars produced in the world. There are still quite expensive, even Model 3, and there are not as convenient as current gas cars (long recharge time and lower autonomy). EV are definitely interesting but they are still in their infancy.

It's still to early for big car markers to shift completely. But the shift will come in 5 to 10 years, then it will be an interesting moment, we will see which companies have prepared enough to jump in the good wagon, and which companies will die.

As a side note, cars, either gas or electric have always amazed me, and not in a good way, from an energy and ecology standpoint. A 1500Kg vehicle to move on average 1.5 persons or 120Kg seems a huge waste of energy.

I do see their usefulness in low density environments such as rural areas as it's a system that doesn't require a complex infrastructure. But in dense environments like cities, transports needs could be far more efficiently provided by public transport and coherent urban planning. I truly hope that cars will not be as common in the second half of the XXI century as there are today.


Also ford is investing in on-demand shuttles service, offered at low cost, and expanding to 8 cities this year. Executed well this could become very popular.


More info on this please




> Ford doesn't have any good ideas for the future

Ford bet $1 billion on Argo.ai to build self-driving cars, and they also acquired Chariot. They are planning on using these to roll out self-driving vans in 2021 to compete with Uber, Lyft, etc.

https://media.ford.com/content/fordmedia/fna/us/en/news/2017...


> it's much easier to spend 100 dollars meaningfully than a 100 billion

Is that true? $100 is such a small amount of money that you're completely at the mercy of the supply chain. When you have $100B to spend, you are the supply chain (or at least a major part of it). Big money always makes the rules. They're either making money off of you now or planning to in the future.

Now you might say, "but wait, plenty of products/companies have done poorly because I wouldn't give them that $100." But that's not true. In reality, product success is always in terms of big money -- it's just spread out over enough consumers who individually have the $100 buy/don't-buy option.

Another objection: "yeah, but I always hear about big money wasting $30M (for example) on something stupid." Maybe so, but remember the scale. $30M waste on $100B is the same as $0.03 on $100. Moreover, the stupid thing they're wasting money on may not be that stupid -- you just might not be privy to all the details.

All that may sound like it's bad, but I think it's pretty great system. I sell my products at a markup to get small money, then have the discretion to buy or not buy somebody else's stuff with the money I made. En masse, I form a part of the "big money" consumer group at Home Depot, Amazon, etc. that has power over the more centralized big money.


Ask Eric Schmidt why Google has billions laying around in cash. You don't actually have to since peter thiel did: https://www.youtube.com/watch?v=2Q26XIKtwXQ

You can skip to 3:00 for an answer.


You're talking about power, oculusthrift is talking about capacity. Of course big money has the power. But spending that big money in a non-wasteful way is a very hard job. What would you do if you were the head of Ford and had $100B to spend? Build more plants to manufacture more cars? You won't have who to sell them to. Easiest way out is to buy other companies, which is what big money usually do.


That's not how the reporting works at all. Not at all.

Make no mistake, as much as Tesla is loved by the Tech crowd they are currently nothing compared to Ford and other established auto makers.


Well if we're going to be making generic claims I'll just add my own anecdotal observation: I notice Teslas all the time in Portland now. They are easy to spot and it brings a smile to my face. On the other hand Fords tend to blend into the background, save for occasional jacked-up F-150 or maybe a spiffy Mustang.


It's not a generic claim at all, and not surprising a town like Portland has a number of Teslas.

Tesla ships nowhere near as many cars as Ford. Doesn't matter what you may see locally or what "blends in", but there is nothing generic about the number of cars Tesla produces (which is very small compared to Ford, and other major Auto companies). Tesla has nowhere near the level of business as the other major auto companies.

As mentioned elsewhere in the thread, there is nothing generic about:

"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"

Ford sells that many trucks every three weeks. Every three weeks, versus an entire year for Tesla.

Maybe the Model 3 will change that, but I do not have high hopes with how thinly spread Elon is.


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

Ford has been in business for almost 120 years, and has contributed untold billions to the economy. What a terrible company, am I right?


Ford's experienced how devastating an economic downturn can be for an auto manufacture. Tesla started their first serious mass market car (Model S) in 2012 and has had the benefit of being in a growing and healthy market.

Rainy day funds look like such a waste of money until the roof starts leaking.


Capex is not included in net income, so your analysis is completely wrong.


Of course Capex isn't included, but its direct consequence (depreciation) is. Tesla incurred almost $1B of depreciation in 2016:

http://www.marketwatch.com/investing/stock/tsla/financials


So I dont see how the quote ties in with your statements about Tesla knowing where to invest (=capex)


Let's break it down for you:

    1. Telsa has many investment ideas 
    2. Tesla spends massive amounts of CAPEX 
    3. Tesla incurs large amount of depreciation 
    4. Tesla's net income goes down


>Tesla spends massive amounts of CAPEX

How do they spend in relation to the other car makers? Do you think that auto manufacturing capex simply turns off one day? It's a capital intensive industry.


Uh ... Ford issues dividends so that money is distributed out to shareowners, many of whom are part of the Ford family.


That sounds simple. Maybe overly simple. As though if only Ford could spend money on growing it's business and building more cars per year they could be in a better position.

Ford share holders, presumably, received a return on their investment in the form of a dividend. While Telsa haven't and won't in the "foreseeable future".[1]

So your overly simplified analysis is complicated somewhat by the individual investor carrying out a risk assessment and deciding which companies should or shouldn't be in their share portfolio.

1. http://ir.tesla.com/faq.cfm


The market makes mistakes over value all of the time.

Look at the sad tale of post-bankruptcy Kmart, and how they used hype, valuation and newly available credit to gobble up Sears. Predicable trainwreck ensued.

Tesla is alike and different. They have an amazing management team, Apple-like religious fervor/hype machine, but a marginal product category. Their continued growth is only possible as long as they can convince people that they aren't a commodity like any of the 50 other car companies.


Calling Tesla just another car company is really missing the boat on their business. Tesla started as a car company. It's how most people are aware of them. So I don't really blame you for this mistake.

However, Tesla today is an integrated energy company. They make Solar Cells (the part of the business formerly called SolarCity), Stationary Battery Systems (generally referred to as Tesla Energy) that range in size from residential to grid sized and of course cars (which ultimately also use batteries).

Comparing them to car companies is like comparing Amazon with bookstores. Yes Tesla is a car company and yes Amazon is a bookstore. But both both of them are so much more than those simple comparison.

In fact I suspect the Amazon comparison here is rather apt because Amazon is now in the situation where Amazon Web Services is essentially able to prop up the retail business. I suspect Tesla Energy will be able to prop up the car business in the near future.


That's a great point. I guess the question to test your assertion is whether distributed electricity generation and storage is the cash cow AWS is. AWS took long lead time, high cost, high risk tasks and made them like ordering Chinese food.

End of the day, even with all they have achieved, the whole machine blows up once the hype train pulls to a halt.


> took long lead time, high cost, high risk tasks and made them like ordering Chinese food.

Come to think of it, that almost sounds like what Tessa is beginning to achieve with large scale electrical storage. [1]

[1]: https://mobile.nytimes.com/2017/01/30/business/energy-enviro...


Interesting comment. I'd say that the way they are convincing the public is with a very well engineered product line that is also a big fuck-you to big-oil. The only people that like big-oil are the people who work for and profit off big oil. Musks empire is growing in ways ford could only dream of.

People love the machines they make.

Ford can add body stylings all they want, but they can't match tesla or spacex or solar city.

I just don't think they have it in their DNA - I'm actually surprised we haven't heard of any of the big three going all out attempting to acquire tesla.

What would be a very interesting event would be when Tessa builds a long haul delivery truck/trucks in general. There is no way they haven't thought of a general platform chassis which can have modular tops put on them.

Wouldn't it be great if tesla sold a chassis to boutique shops like there were in the 20s...


>I'm actually surprised we haven't heard of any of the big three going all out attempting to acquire tesla.

I'm not. The big three don't have enough cash to pay the market cap multiple needed to gain control, especially now that Tesla is bigger than Ford.

No sane lender would loan the money to one of the big three to do it either - first, the money would be better spent just buying Tesla stock and second, there is no way that Tesla would be run better by pulling it into one of the big three car comnpanies, none of which have a strong non-incremental innovation culture.


Most people don't care about sending a "fuck you" to anyone. They just want a car.

When electric has a positive ROI, it will be just another drivetrain from Ford.


> Apple-like religious fervor/hype machine

But Apple won people over with the actual product, not with a great product promise that has been implemented haphazardly.


No, market cap is not everything. Specifically it is not enterprise value, which is the correct measure of the value of a business.

Market cap is the value of the equity. Enterprise value is the value of the business (ie including debt). Tesla's EV is $52bn. Ford's EV is $150bn.


> enterprise value, which is the correct measure of the value of a business

Not even Warren Buffet thinks this. In economics, the correct measure of a value of a business is the future discounted expected value of cash flow and external utility. There's almost no way to measure this directly so major simplifying assumptions are made when applying this definition in practice.


I think his point is that DCF of a company's free cash flow is an attempt to estimate enterprise value, not equity value.


You can use either the cash flows to equity or the cash flows to the firm to calculate the value of equity (ex-non-operating-cash) or the enterprise value.


Enterprise value isn't the value of the business, its the cost to acquire a business and assume its debt. You've assumed that you have to take on a company's debt as an acquirer to take over a company.

The market cap is closest to its value representing what it takes to control/own/sell the company.


In financial theory, enterprise value corresponds to the sum of all discounted cash flows (after tax). Thus, it is the market's best estimate for the value of the business. The question of capital structure should not really matter according to the Miller-Modigliani theorem.


The value of a business is what someone would be willing to pay for control over it, or its market cap (value of all shares). This is typically disconnected from its DCF which is a modelled value based on expected future returns.

Enterprise value is also market cap + net debt, not its cumulative present value DCFs.

[1] http://www.investopedia.com/terms/e/enterprisevalue.asp


A change of control of Ford would likely trigger a default under Ford's debt, at which point it must be paid back. So if you are not financing with debt, an acquiror would really need the $150bn EV in order to afford to acquire the company. Of course, in reality, an acquiror would either replace such debt with new acquisition financing or work out a way to keep the existing debt in place.

DCF is indeed a method to estimate the fair value of a company's EV, not it's market cap. People will usually do a DCF, then subtract net debt in order to get an estimate of equity value from the DCF. Here's a citation: http://macabacus.com/valuation/dcf/overview


Strictly speaking market cap is what someone is willing to spend on a small portion of the company scaled up. The actual price someone is willing to pay for the whole thing is a different number, typically larger.

It isn't the EV either, though


Well, ownership and value are different things. Ford has large creditors and they lay claim to a correspondingly large portion of the cash flows. Tesla (presumably, looking at the difference between EV and market cap,) does not.

The significant extra value of Ford is ignored when you focus the cost of getting control of a company rather than total value.


How is EV calculated?


Investors invest based on promise of future value. How much is Ford expected to grow?


If they can properly pivot into the electric car market, a lot.

Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get). They know how to mass produce cars (granted right now, ICE cars). That's not an easy feat. They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate. The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future. The market is not betting that they'll beat Ford or GM.


I highly recommend Wired's article about GM's long-term bet in developing the Bolt. It talks about many ways that developing an electric car is not just a matter of adding batteries to your existing expertise in car manufacturing.

e.g.:

> Nearly everything changes when you opt for a fundamentally different power train, so GM’s greatest advantage—more than a century of experience building cars—was all but moot. Car structure was different, since they were building around a battery, not an engine. The brakes, steering, and air conditioner were powered differently. New systems, from electromagnetics for the motors to onboard and off-board charging, each came with its own learning curve. The engineers didn’t have established tests to follow. Just turning on the car required finding the perfect sequence of electrical signals from more than a dozen modules. “Oh my God, it took us forever to get the first Volt to start,” Fletcher says.

https://www.wired.com/2016/01/gm-electric-car-chevy-bolt-mar...


Though there is more to a card than just the power train. Maybe that explains some of the quality issues Tesla is having with non power train parts such as doors, leaky roofs, etc.


That's an interesting thing to notice. Most of their issue do seem to be more car related than drive terrain. Guess that goes to my point though, being a car manufacturer is much more than making the car.


No wonder they crushed EV1, they didn't know how to start it.


Is there an echo in here?


Thanks, fixed.


<< Ford sells that many F-Series trucks in the U.S. about every three weeks. >>

This is why Ford is unlikely to succeed at pivoting into the electric car market. The power and pull inside their company doesn't want them to. It will take superhuman leadership to overcome that force.


An electric f150 is kind of the dream actually. Electric is great for fleet vehicles and it has all the low end torque your frame can handle. Plus trucks have plenty of space to put batteries, under the bed, between the bed and the cab, that can be nice and rectangular. Electric drive train means more effective ground clearance for a given ride height too because you don't need a drive shaft or exhaust. Regenerative brakes are probably better than engine braking too, at least from a wear and tear perspective.

Start with a hybrid Ranger billed as "torque+" marketing slogan "it'll tow a mountain"


Also the ability to run 240v + 120v right off the inverter for the pack would be a huge thing for contractors. I know many then end up hauling a genset out just because quite a few sites don't have dedicated power.


I'll take all that weight on the rear axle of my RWD ranger any day. 98% of the time i have nothing substantial and have to take care not to burnout.


That makes no sense. Companies seek to be viable in the future. If Ford or GM feel that an electric car is on the horizon and that car will eat their (ICE) lunch, they will pivot.

By your logic Tesla would have been locked out of the VC/investment market due to Big Oil. Money flows like water.


> Companies seek to be viable in the future. If Ford or GM feel that an electric car is on the horizon and that car will eat their (ICE) lunch, they will pivot.

I guess you could say the same for Kodak, Blockbuster, and Borders?

“The reason is that good management itself was the root cause. Managers played the game the way it was supposed to be played. The very decision-making and resource-allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening carefully to customers; tracking competitors’ actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit. These are the reasons why great firms stumbled or failed when confronted with disruptive technological change.”[0]

[0] - https://www.goodreads.com/work/quotes/1468535-the-innovator-...


I've read the book. None of those companies would even acknowledge their competition. Ford/GM/all other ICE companies acknowledge both Tesla, and the fact that there is a clear runway on oil.


IMO GM is doing a better job of it. While they do have a compliance car (Spark EV), they've also got the Volt and Bolt, and both will be 50 state cars.

Ford has primarily focused on hybrids and there EV offerings are either fleet-only or compliance cars.


GM basically stopped selling the Spark EV already -- 11 were sold in the US in the first quarter.

http://insideevs.com/march-2017-plug-electric-vehicle-sales-...


I wouldn't say they didn't acknowledge them, they just didn't know how to fight them.


> None of those companies would even acknowledge their competition. Ford/GM/all other ICE companies acknowledge both Tesla, and the fact that there is a clear runway on oil.

Source?


The bolt. Billions of dollars into self driving technology.

Oh wait sorry this is HN. Ya, those idiots at ford will die to the great Elon. hahahahaha any company older than 25 years is worthless old school idiocy and will die within 5 years of a startup coming in.


Individuals within a company seek to be viable in the future, which often leads them to reject innovation that might endanger their role.

History is littered with companies that refused to pivot into new technology until far later than they should have, because they were too heavily invested in the old way. American car companies suffered from this in the 70s, where they got thrashed by competition from small imports for quite a while before they could be convinced to stop concentrating on land yachts.


Bureaucracy goes out the window when you have an activist investor asking you why you're ignoring clear market trends.


By the time the trends become that clear, you're often years behind.


We are behind, but a competent investor isn't.


Then how did all these companies end up in this position in the past?


> Companies seek to be viable in the future.

Companies seek to outperform themselves relative to the last quarter and year. Long term strategy like this takes a backseat, if it gets attention at all. It certainly doesn't get the luxury of a whole company pivot that could tank short term value.

Need proof? Look at all of the American companies that got caught with their pants down shipping nothing but bigger SUVs when the price of oil shot up back in 2008.


Ford has much more private interests (the Ford family) than other car companies so tends to think more long-term. Remember they weathered 2008 without needing a bailout.

They've also ditched the high-end SUV market right as that market exploded all over the world, thus missed out on massive profits because they no longer sold an Expedition. They openly admit to ceding the market to GM in their annual letters to shareholders specifically because they don't see gas-guzzling SUVs as long-term investments.

They also lead the market in fleet and industry-oriented products. They offer both technology and core-products designed to keep the incredibly lucrative fleet buyers happy.

In this regard, Ford is akin to Microsoft: their consumer products aren't mind blowing, but their corporate products are so well entrenched that they will be a practical ATM for the next decades. Ford sells six times as many F150s as Toyota sells Tundras and they own the entire small cargo van market.


If you were running one of those companies, would you sell SUVs that make you 10k in profit each or an equal number of small cars that make 2k in profit each?


look up kodak and the digital camera. They had the tech in the 70s but didn't want it to cannibalize their film sales. They're bankrupt now.


There are a lot of examples of companies which, even when directed to do so by their CEO, were unable to pivot to technologies rising up from smaller markets. The term has been overloaded to hell, but that's disruption.

I would highly recommend the book "The Innovator's Dilemma." It provides case studies of disruptive innovations across many different industries -- from farm tech to disk drives.


The electric Focus is competitive with the Nissan Leaf, at least on paper.

I think the economics aren't really there yet for them to bother with an electric platform (vs retrofitting electric drive into an existing platform). If they thought it made sense, they would be able to be producing at large volumes in a few years.


The EU has fleet CO₂ emission limits; cars and vans which produce more CO₂ than the regulated amount have a 'tax' that the manufacturer must pay.

That's an incentive not only to produce an electric car, but to produce one that people buy instead of buying petrol/diesel cars.

https://ec.europa.eu/clima/policies/transport/vehicles/cars_...


Ford is unique because it's controlled largely by the Ford family still, all of whom having a vested interest in the long-term profitability of Ford. If someone demonstrates to them that pivoting to electric vehicles is the best long-term strategy for the company, even at the expense of short-term profitability, they will do it.

Also, don't discount the importance of the cashflow from pickups. The only reason Chrysler and Dodge still exist is because of their anchorage to Jeep and RAM. Ford could eliminate their entire car division and still retain like 80% of their profits.


Aside from batteries, supercharger network, and any true desire to actually build nice electric cars. I drove an electric Ford Focus for 2 years, and it was an absolute terrible afterthought of an electric car. It was downright dangerous on wet surfaces with front wheel drive and batteries in the rear, not to mention the horrendous user experience that is Ford Sync. I drive a Tesla now and couldn't be happier.


>not to mention the horrendous user experience that is Ford Sync.

Well that's what you get for buying a car that has Microsoft software running in the infotainment system. The MS-designed Sync system had all kinds of terrible reviews at the time, and it was so bad that it brought Ford way, way down in the "initial quality" surveys, from #1 down to near the bottom IIRC. Do you not do any research before spending a giant amount of money on a car? I spent several months researching my last purchase, a Mazda (I didn't actually spend several months continuously researching it, but I was doing research and test-drives for several months before committing).

To be fair to Ford, though, my understanding is that the latest generation dumped Microsoft and switched to QNX, and should be much improved. While they were using MS, there was no way in hell I'd buy one of their cars. After they switched, I did look into a Focus, but was deterred by all the reports of problems with their DSG transmission.


It was a 2 year lease, $239/mo - and California gave a $2500 rebate also, so cost and risk were low. I wanted to try electric and couldn't afford a Tesla at the time.


Aside from the safety statements, you're comparing a ~$35K car to a $90k+ luxury car?

What about a Bolt?


My point is I don't think Ford is even remotely taking electric vehicles seriously. With a little better engineering the Focus electric could have been a decent $35k electric car.


The article addressed Ford because of the market cap issue, but, out of the major american car manufacturers, I think GM is a much better match for tesla.

My sleeper is MB though, overall.


Ford (and all the other car companies) has also huge liabilities - a huge supply chain and R&D costs around combustion engines, and costly dealerships that revolve around servicing a hugely complicated contraption made up of hundreds of mechanical parts. Much of this will be of zero value in the near future.


>a huge supply chain and R&D costs around combustion engines

You mean largely trouble-free engines that run on ultra-cheap gas?

ICE has environmental issues, of course, but the idea that electric is universally superior is questionable. There's no range anxiety with gas and any backyard mechanic can fix most issues. Your locked down $100,000 IoT car is a completely different beast.

>Much of this will be of zero value in the near future.

Says who? If anything everyone is bearish on electric since gas prices have fallen and how range and recharge times will always be less convenient. Electric might replace gas but it won't be in the near future and nothing stops Ford from launching an electric line of its own. Electric cars are a solved problem if you can convince people to pay the premium and deal with the range anxiety and long recharge times. Ford has already announced an electric Mustang and F-150 on top of the $30,000, pre-rebate, 2017 Focus you can buy today. Tesla has no monopoly on electric tech. The barrier to entry is non-existant for other car companies.

edit: saying that the government will ban ICE isn't a market statement its a regulatory hope and for most nations a far off proposal. The idea that Tesla can only succeed with the government literally making their competitors illegal isn't actually a pro-Tesla argument. You guys are much less convincing than you think you are.


>Says who

It is foreseeable that ICEs will become banned, at least in Europe. Right now there is still too much lobbying by the traditional car makers, but long term there is no other choice for reaching climate goals.

Edit: See e.g. http://bigthink.com/scotty-hendricks/the-end-of-the-internal...

https://www.autoevolution.com/news/germany-asks-eu-to-think-...


That would never work in the US. It would be both impractical and politically impossible. Most people don't have 35k to drop on an electric car, and even if they did the infrastructure doesn't exist.


If American car companies want to sell in the EU, which is about 500 million people, they will soon have no other choice.


Things change. The car will landscape will look pretty different in 20 years.


Gas isn't "ultra-cheap" in most other parts of the world, especially Europe and Japan. Norwegians are buying Teslas at an absurd rate. Watch for Europe to switch to EVs sooner; their main roadblock is the charging infrastructure. Unlike here in America, where suburbanites all have garages that can be easily retrofitted with a charging port, Europeans don't have that luxury usually. They're a lot like the eco-conscious pro-EV city dwellers here in America who park on the street and have no garage.


Norwegians are buying Teslas mostly because of tax breaks and parking/toll discounts.


Combustion engines in vehicles like the F series trucks aren't going away any time soon. You need generational leaps in battery technology and safety to compete with those trucks. The whole "rugged, dependable" thing that they play on the television is not just for show. I've got a former co-worker who buys a new F-350 supercrew every couple of years before selling it and the depreciation is less than a lease for a midsize sedan.


If it's so rugged and dependable, why does he need to buy a new one every couple of years?


Do you understand the difference between want and need?

He uses the thing as a commuter vehicle and to tow boats every now and then. The reason he gets a new one is that the dashboard computer systems on these things get updated from year to year and he prefers to stay up with the most current technology.

For most vehicles, 100K miles is nearing end-of-life. For an F series truck, 100K miles isn't even the halfway point.


consumerism


Because Tesla's cars are not "hugely complicated contraption[s] made up of hundreds of mechanical parts?"


To a much lesser degree. An electric engine is a lot simpler, mechanically, than an ICE. To the point that, I think, major malfunctions will result in replacement of the engine instead of fixing engine components. Given good refurbishment logistics, this is much more efficient.


Ehhhh. I work with batteries and have worked with electric engines in the past. When an ICE vehicle breaks down, or doesn't work, or goes fast, or goes slow, we know why. With batteries and electric engines, when stuff doesn't work... nobody really knows why.

Copied from another comment I made on HN:

Nobody really understands lithium-ion batteries. One production run might have substantially higher or lower capacity. Some batteries might explode. Some batteries are high discharge and some are low discharge. The "explanation" for all of these things is 'heat'.

Imagine that happening to any other industry (for example the auto industry.)

- "Why did my car just explode!?" "Heat"

- "Why does this car last a tenth the lifetime of this car?" "Heat"

- "Why does this car go a thousand times faster than any others?" "Heat"

- "Why is this entire production run of cars not working?" "Heat"

People say "heat" for two reasons: 1) because nobody understands li-ion batteries and 2) because yes, the real answer does have something to do with heat.

Batteries are one of the most important industries and critical to every company on HN. But the state of the art of batteries is putting together random metals with a bunch of random chemicals and watching which ones don't explode.

Imagine talking to the CEO of Boeing: "We just did our millionth test, engines made of cheese and wings made of coconut shells. It crashed during takeoff, of course. We haven't had any improvements in over a decade, but we're sure we'll get there eventually - we've spent billions on research so far. Wanna come watch test 1,000,001? We're trying engines made of cheese and potato-chip wings next!"


The reasons you mentioned are precisely the reason why an ICE based car selling company can't suddenly wake up one day and build electric cars.

Engineering takes time, Tesla has spent a lot of time building and testing battery tech that works. And they are using it across multiple applications.

If you get reliable electronics in, then without frequent oil changes, and tubeless tire. A electric quite literally is a zero maintenance car.


Hmm. The battery stuff is hard, yes, but only one company has to figure it out. Battery companies sell to everyone. All the battery breakthroughs so far have benefited every EV player. The actual meat-and-potatoes of Tesla's battery tech is actually from Panasonic, who has no problems selling cells to whoever wants to buy.

And EVs are absolutely not zero maintenance, that's just a fantasy. Even in dream-world where we have tires that never need to be replaced and no oil changes, batteries are always going to be a large part of the car's cost and only last a few hundred charge cycles.


I'm sorry, but that's just not true.

The basic premise of an electric "engine" is simpler than that of an ICE, but when you actually make the car, it's nowhere near as simple on paper. Just look at the issue people have had with getting Tesla's repaired... the "mechanics" don't even know that you have to keep the battery charged.

Also, don't ignore the fact that we have 100+ years of experience with ICE.


Judging by the electric motor portion of the telsa manufacturing I would say it is much more simple than ICE https://youtu.be/AVCCroN7vS0

Also, I would argue electric motors have been around far longer than ICE because it is simpler. https://en.m.wikipedia.org/wiki/Electric_motor


>>the "mechanics" don't even know that you have to keep the battery charged.

I've been through the CRT -> Flat screen television phase in India.

Arguments were typically like these. How will TV repairmen fix these new TV's which have move like plug and play internals. Therefore new flat screen TV's won't sell?

In the end it didn't work out well for TV repairmen. If its easier to identify and swap the malfunctioning part, you need lesser and lesser skilled professional to service these goods. You can dumb down the process to a point anybody can do it.


Dealerships aren't company owned. Ford sells cars to independent dealers who mark them up and sell them to the consumer.


Don't underestimate the value of dealerships, Tesla took two months to replace a friends cracked windscreen


There is such a thing as retooling your existing infrastructure. Nobody is saying that Ford's offering will be a homogenous Ford vehicle... hell, neither is Tesla.


Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get).

If that is done so "easily," why is Tesla building a Gigafactory?

The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future.

Patents? Have you been following?


Will that actually result in growth for Ford, however? Electric vehicle sales in Ford may displace sales of non-electric vehicles; in other words, the net effect might not be more than zero. This would not really represent growth for Ford, in that case.

You are right about some of their resources, however I think it is a mistake to glibly discount the importance of the battery supply and manufacturing (and by extension, the charging infrastructure) -- that is arguably the hardest and most important part of an electric vehicle, and with Tesla's Gigafactories, that could represent an important advantage of Tesla.


So if Ford/GM holds on to their huge marketshare with a successful switch to electric, that's a mark against them?

Hypothetically, it would cost Ford/GM much less to put a "SuperCharger" at every existing dealership than it would for Tesla's entire basic roll out.

Tesla has been successful at marketing thus far, not manufacturing.


No, that isn't what I said -- you are moving the goal post now from "a lot" of growth, to "holding on to their marketshare".

As matter of fact, that was my whole point: Rather than growing "a lot" they may end up just holding on to their marketshare. Whether that is a mark against them or not is for you to decide, when researching investments.


> No, that isn't what I said -- you are moving the goal post now from "a lot" of growth, to "holding on to their marketshare".

Ok true, but Ford is way past "post-ipo". Growth is not the metric to measure them by (they will grow, but no where near as much as Tesla). That's pretty much agreed upon by market analysts.


I completely agree with you that this doesn't represent real growth for Ford. Auto sales have essentially reached peak already; people only need so many cars. Honestly, this is what I find so ridiculous about Tesla's valuation. A valuation that puts them as worth more than Ford then needs Tesla to be selling more vehicles than Ford to justify that valuation.

All of the existing manufacturers have better infrastructure than Tesla and are getting into the hybrid, electric, and autonomous car marketspace. Even if Tesla survives long enough to make a profit I see no way this company ever justifies it's current valuation. Long term I expect huge price drops in Tesla stock.


Strictly on the car front (which largely ignores Tesla's real growth potential) ...

Ford also maintains an extensive dealer network which can disincentivize some painful adjustments that otherwise might need to be made to be more aligned with future sales, etc. People talk about direct sales for Tesla usually in a negative connotation due to institutionalized friction (re: lawsuits / political favoritism), but I think it's a strong asset in a savvy marketplace, and can illustrate how established infrastructure isn't always for the best. One less mule for the cart to pull, IMO.

I also think there are some signs that existing manufacturing practices can be / need to be rewritten around an all elective drivetrain. For instance, Tesla plans to operate its lines at full-speed using some new "invasive" robotic procedures that the full-glass roof of the model 3 will afford. This has dramatic labor and capital consequences for an automaker with a diversified fleet. Might be costly to rebuild the machine that makes machines.

https://electrek.co/2016/09/15/elon-musk-confident-that-tesl...


Dealership networks are fiefdoms in a benevolent kingdom. While they get a say, ultimately you go with the will of the manufacturer or you find another car to sell.


Are we assuming that electric cars are the only future or simply one part of the future? As an example, what work is Tesla doing with hydrogen? Ford is doing quite a lot: https://corporate.ford.com/microsites/sustainability-report-...

We're also making the assumption that charge-battery-drive-the-car is the future

Battery power is an evolution of car tech but it isn't a revolution. Tesla is building wired telephones when the majority of the market is using wired telegraphs. A substantial improvement to be sure, but to suggest a company such as Ford is not able to grow is very short sighted-- they aren't standing still either. Tesla could increase production and sales by an order of magnitude and still have a minuscule market share.

Of course Tesla will grow, but they don't have a monopoly. The future value of Tesla is certainly greater than today's value, but to discount everyone else because we are analyzing this through a specific lens of perception is a folly.


I have heard many times that the traditional car companies are heavily outsourced aside from the drivetrain. If I haven't been misinformed there (quite possible either way!) and this is true, then outsourcing that would leave Ford not adding much value themselves.

Even if it would work out for them, Tesla is pushing really hard to be a major battery supplier, so they could end up benefitting either way.


>I have heard many times that the traditional car companies are heavily outsourced aside from the drivetrain.

It's true, but I don't think it matters. Traditional automakers rely on suppliers for all kinds of parts on cars: headlights, wipers, tires, glass, airbags, and many electronic modules (auto-dimming mirrors, blind-spot radars, etc.). However they do tend to always keep the body/chassis and the drivetrain in-house (sometimes they'll outsource the transmission, like to ZF).

I don't see how this would affect them moving to EVs. Going from ICE to EV means two giant changes: the chassis (to make room for an entirely different layout, esp. because of the batteries), and the drivetrain. Well, the automaker controls both of those. All those other things, like glass, headlights, electronic safety add-ons, etc., are going to be the same either way. You don't need a different blind-spot monitoring system or windshield wipers or tires just because the drivetrain is electric.


Moving to EVs, they either outsource the drivetrain (as the comment I replied to was suggesting, and as GM is doing with the Bolt) or start doing EV drivetrains in house. Either way, they lose the advantage of their long experience with ICE drivetrains.


Sure, but they don't lose their advantages with chassis design (crashworthy design and testing is hard), manufacturing at scale, logistics, etc. It's not like there's a ton of serious EV competitors out there anyway; there's only Tesla (which can't manufacture at huge volumes), and a few other traditional automakers that have also dipped their toes into EV production.


The Bolt uses a drivetrain built by LG.


Right, so what is GM bringing to the table there? If the Bolt were to somehow become a best seller, how much benefit would GM see?


Lots of design knowledge around vehicles, both from an aesthetic standpoint and in a number of other subsystems. But the bigger point is actually that GM, Ford, and the other major car manufacturers are really giant project management and logistic organizations. They are far from perfect corporations, but don't undersell what they do.


The piece of the puzzle that Ford doesn't currently have is charging stations.

Tesla building its supercharger network was a brilliant move because it means that Teslas are comparable to most petrol-fuel vehicles (as far as where you can go), and everybody else isn't.

If I buy a Ford, can I drive it to see my family in Northern Minnesota[1]? Because I know that I can take a tesla.

That's a really big deal.

I know there are 3rd parties in the US trying to compete with tesla's superchargers (a very close friend of mine was an engineer at probably the largest one until they went bankrupt), but as far as I can tell they're nowhere close to Tesla.

[1]Originally I said North Dakota, but it looks like even Tesla doesn't have chargers there yet. BOO! Well luckily I have plenty of family in Northern Minnesota too!


You may want to clarify the non-sequitur there. Yes, Ford doesn't have it's own network of "chargers" (300+ mile recharge in 5 minutes or less), but you know there's a solid network available; in the few places where chargers are lacking, you can easily take extra power units with you (disposably cheap at that).

That said, Tesla is pursuing the angle of enabling customers to install their own charging station requiring negligible maintenance, and no supply; charing networks are only needed for longer trips which most customers don't need. That is a game-changer for many industries.


Can you expand on what you mean by "you can easily take extra power units with you (disposably cheap at that)." ?


Fill a $10 gas can with gasoline, throw it in the back of the pickup.


It is a response to this:

>Ford has all the infrastructure that Tesla is attempting to build now


Charging and batteries are literally just partnering and investment issues.


And Tesla doesn't have a fully viable charging network either? What's the point? Outside SV and major cities, it's a pain in the ass to own a tesla.

As for the charging stations, that's an investment that ford would have to make to stay viable, which they would do


Big gap in Northwest Nevada/Southeast Oregon too, although quite remote, a fun place to drive. I'll stick with my ICE for now.


There's a big gap in those parts for gasoline, too. Once a few years back I camped out near Fields Station waiting for the store to open 'cause I didn't have enough gas in my Jeep to make it to Burns.


Good point, I bring an extra gas can in the bed of the truck but I ended up getting a few gallons in Frenchglen from the store, probably could have made it with the extra I had but didn't want to chance it. It's a lot cheaper and easier to bring extra gas then a spare battery!


GM has for the most part done a good job so I am really surprised how much Ford ceded this segment to them. GM announces EV sales at end of the week and I am really curious how well the Bolt is doing at its still in limited number of states but will be in all by fall (September I think).

I really don't think there is any difficulty in making EVs now, its finding enough to support the market. While 200 is great for a base range I find it the absolute minimum for any pure EV and to be honest I won't go pure EV till I see 400+ (Drive a Volt now). Not all want/need two cars and even many families are constrained based on size/packaging of the car which led to my surprise when the 3 was a sedan which is not a growing market.


Let me disagree with some of the points:

> Ford has all the infrastructure that Tesla is attempting to build now

* no battery production facilities * no charging infrastructure * no vertical integration (unlike Tesla, Ford has to sell through the dealershits - I see it as a big disadvantage)

> They know how to mass produce cars

Yes - but can they produce the car the public will want in three years from now, when affordable all-electric, high-performance, autonomous Model 3s will redefine what modern car means?

> They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate

I admit that they have some hurdles ahead, but what would stop Tesla from being more efficient at manufacturing than Ford? It is one of their objectives - and their track record is pretty good, to say the least.


> unlike Tesla, Ford has to sell through the dealershits - I see it as a big disadvantage

My, what a strong argument.


Sorry for not explaining the reasons, I thought they were obvious. First, dealers cut into margins; second, they are not interested in selling vehicles that require very little service; third, they won't be able to provide great customer experience - no one likes negotiating with dealers.


Tesla has already figured out how to mass produce cars. The move between 200k cars and 200,000,000 cars is hard, but not rocket-science hard, and they can always hire the right people to help. But can Ford figure out how to make cars that drive themselves at 80mph on highway? Having driven in Ford cars, I don't believe they can. They can barely figure out how to make a radio control panel that doesn't suck.


  >> How much is Ford expected to grow?
  >  If they can properly pivot into the electric car market, a lot.
And how much of that growth into the electric car market would cannibalize their ICE sales?


What infrastructure do you have in mind? Factories?


Factories, dealerships, a maintenance network, etc.


I can't imagine that all of those will remain usable and competitive without major investments. Note that doesn't need dealerships.


Of course Ford would make investments to stay viable... that's how business works.


Bottomline: Ford is run by professional managers. Tesla is run by a visionary.


That's true, but underscores how treacherous comparisons between big companies based on market caps are. By every metric other than investor confidence in a single narrative (except maybe R&D spending?), Ford dwarfs Tesla and will continue to do so for the foreseeable future.

I don't think anyone has any trouble telling a story in which Tesla is ultimately a more valuable company than Ford. And I agree that's a big deal. But this comment thread suggests the market cap comparison is some kind of milestone. It's hard to articulate what that milestone would be.


The point is not really how much Ford is expected to grow, but how much Tesla is expected to grow. That is, it seems like the only way for Tesla to grow to reach Ford's metrics in terms of profitability would be perfect execution (plus Mars, Jupiter and Venus being aligned).

I'm a huge fan of Tesla and think that they will succeed, but saying that the stock is "priced for perfection" is putting it mildly.


Tesla is also doing other energy-related stuff now though with solar and batteries. Lots of potential market growth there.


that's the metanarrative that is used yes.

Realistically they more often invest on their perception of others perception of the promise of future value. How those perceptions get linked together is interesting but it is not nearly as objective as you imply.


> 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."

How much stationary energy storage did Ford sell last year?

"Tesla CTO: our energy storage is growing as fast as we can humanly scale it [Gallery of new Powerpack station]"

https://electrek.co/2017/01/30/tesla-cto-energy-storage-grow...

Disclaimer: Own a bunch of TSLA.



Actual laughter was produced at a generator product page.

Fuel has a marginal cost. Stationary battery storage soaks up power when power is cheap, releases it when the cost is higher and energy demand is higher and has a 10 year minimum life.


> Actual laughter was produced at a generator product page.

You must be a blast at cocktail parties then.

>Stationary battery storage soaks up power when power is cheap, releases it when the cost is higher and energy demand is higher and has a 10 year minimum life

I think you're making a few unsubstantiated assumptions here. Primarily that the cost differential in electricity (or the availability of renewables) is broad enough for the Tesla tech to be significantly profitable.

I ran the numbers: a Tesla PW2 gives you ~20.3MWh throughout it's useful life for $5500 limited by power availability and recharge rate. A slightly more powerful Ford generator at $1500 with $4000 worth of diesel fuel would yield ~8.9MWh of anytime power with the ability to run on waste oils and a comparatively perpetual lifespan.

So, 44% the power cost with a power wall but a substantially higher upfront cost, a considerably lower salvage value, and a number of restrictions on it's usage (hope you don't need power during sustained outages in the Northeast).

Any more chuckles?


"SolarCity developed a microgrid with 1.4 megawatts of solar generation capacity — enough to power nearly 100% of the island, according to a SolarCity blog posted on Tuesday. The microgrid is enabled by 60 Tesla Powerpacks, the company's large commercial battery, which can store solar energy at night."

http://www.businessinsider.com/tesla-powers-tau-in-american-...

"The Kauai project consists of a 52 megawatt-hour battery installation plus a 13 megawatt SolarCity solar farm. Tesla and the Kauai Island Utility Cooperative, the power company that ordered the project, believe the project will reduce fossil fuel usage by 1.6 million gallons per year."

http://www.theverge.com/2017/3/8/14854858/tesla-solar-hawaii...

"On Thursday, Tesla announced that it had been chosen “through a competitive process” to supply utility company Southern California Edison with 20 MW (or 80 MWh) of battery storage. In May, regulators ordered Southern California Edison to invest in utility-scale battery networks after natural gas provider SoCal Gas leaked 1.6 million pounds of methane into the atmosphere when a well ruptured at its Aliso Canyon Natural Gas Storage Facility."

https://arstechnica.com/business/2016/09/socal-utility-will-...

"California will shortly bring more Tesla energy storage systems online in Southern California Edison’s (SCE’s) service area.

The 50 MW projects (utilizing Tesla’s Powerpack 2) are conducted by Macquarie Capital, the corporate advisory, capital markets and principal investing arm of Macquarie Group (a global finance corporation)."

http://insideevs.com/southern-california-edison-to-bring-onl...

"With the confidence of a well-oiled pizza shop, Elon Musk “seriously” said that Tesla could deliver a more than 100 MWh Powerpack project to Australia in 100 days – or it will be free."

...

"Considering a large part of the 100 days will be for shipping the Powerpacks and other equipment from Nevada to Australia and then installing those packs, I wouldn’t be surprised if it means that Tesla and Panasonic already have a capacity of over 100 MWh per month at the Gigafactory. That’s a significant 1.2 GWh annualized rate."

https://electrek.co/2017/03/10/tesla-gigafactory-elon-musk-c...

Chuckles remain firmly in place ;)


I don't know. How much money does TSLA make selling stationary energy storage?


This time it's different! This time bubbly companies with no earnings and tons of debt will create a new paradigm! Lol


It might very well be overprices (I sold because I think it is) but they got $7B in revenue in 2016 which is hardly no earnings. They make money on every car they sell so it would be pretty straightforward for them to decide to become profitable at the expense of growth and R&D. Now, their stock price assumes they're going to conquer the world rather than settle down to become a profitable small car manufacturer and solar/battery provider so lots of investors would lose their shirts if that happened. But it's an option for the company which makes them very different from the pets.coms of the world.


Revenue is nice, but earnings are all that matters when you have debts to pay. Just look over to the recently IPOed Snap, Inc. for a company with less revenue and more eyeballs!


Tesla is potentially a trillion dollar company and it's biggest current hurdle is getting it's production up to meet an enormous demand. The reason it's trading at a higher market cap is because Ford doesn't have any growth potential and Tesla is still trading at a fraction of what it could be. Of course there is still a ton of risk factors for them, but expected value for investing should be based on the chance of success * potential future value over a variety of possible outcomes.


What are you basing that trillion dollar evaluation off of?

Combining the 5 largest auto manufactures on earth and you are still well short of a trillion dollar company.


Ha! I just wrote about it this morning. Tesla's potential is not in the car business as we used to know it, but in the way it's going to play out in the next decade. Based on everything happening right now, it's not an IF but WHEN kind of question. Here, some detailed thoughts : http://kirillzubovsky.com/what-is-tesla-really/


While the biggest 5 are spending in R&D to meet tesla in product, tesla will be enjoying (presumably) apple level profit margins on their established product.

Or at least that is how I understand it.


Add in the 5 largest oil producers, the 5 largest electric utilities, and the 5 largest public transit systems and you'll get there.


ah hell, might as well toss in the 5 largest software companies while we're at it.


> Tesla is potentially a trillion dollar company

A trillion dollars? For a niche/luxury car company? What fantasy is that based on?

> it's biggest current hurdle is getting it's production up to meet an enormous demand

While enormous to Tesla, actual demand is pretty small compared to other car companies.

It doesn't help that even the most "affordable" Tesla is far more expensive than the average competitor's EV or hybrid vehicle[1][2], let alone it's base price (not final sale price) starts off above the average new car purchase price (final sale, after upgrades, etc) for the entire industry[3].

There's a lot of hype around Tesla, but that doesn't mean they're going to take over the auto industry, let alone become larger than the largest auto makers around who produce "Everyday Joe" cars for the rest of the population.

[1] http://evobsession.com/10-best-electric-cars/

[2] http://www.caranddriver.com/best-hybrid-electric-cars

[3] http://mediaroom.kbb.com/new-car-transaction-prices-up-2-per...


If batteries reduce the demand for oil, oil's value will start to transfer to batteries.


> If batteries reduce the demand for oil

That's a big IF.

Also, it ignores the fact that every car manufacturer already has a plethora of fully electric, or hybrid models available (and they are, on average, far cheaper than the cheapest base model Tesla can offer), and the markets still don't buy them.

This also ignores the fact that many companies make great batteries, and Tesla is only recently sitting down to that table. Why wouldn't Panasonic be that "trillion dollar" company? Or Sony? Or Fujitsu?


Put a probability on the IF and multiply it by the revenue of the oil companies and you've got a valuation for Tesla.


So, when will Tesla be manufacturing 2,500,000 cars per year?

Edit: No, really. Ford sold over a million vans, pickups and heavy trucks last year, a market that Tesla has no apparent interest in entering.[1] The Toyota Camry alone sold 428,000 in 2014, the Honda Accord 328,000, the Corolla 340,000, the Ford Fusion 306,000, the Nissan Altima 336,000, and the Honda Civic 326,000.[2] The Tesla Model 3 will presumably be in that latter market (although those are roughly $10,000 cheaper), and if Musk is right about scaling his factory to 500,000/year, it will take a big chunk of it (but still, it's $10,000 more). (If it's in the BMW 3-series/Merc. C-class/Lexus range, 500,000/year would eat all of that market.)

[1] https://corporate.ford.com/content/dam/corporate/en/investor...

[2] https://www.bloomberg.com/graphics/2015-auto-sales/


Tesla has already announced plans to build vans, pickups, and semis.


Tesla is _priced_ as if they are already building vans, pickups, and semis.


Tesla seems to be nimble and quick. They are making the future of cars like making software. Quick and iterative. If they can make batteries cheaper than anyone else. If they can make electric cars cheaper than equivalent gas cars for long term then they are clear winner.

It didn't take Apple much to take Nokia out of the game. Nokia had smartphones on the agenda for a long time. The problem was that wasn't their only focus. Apple went all hands into the iPhone.


>Tesla is potentially a trillion dollar company...

Huh?


I think that line of thought assumes that they pivot from electric cars to batteries, and from batteries to energy in general. Imagine huge, modular atmospheric/solar/geothermal/battery/molten salt combination generator/energy storage plants dotting the globe.

But I mean, couldn't GE do that too? Or Samsung/Murata/Vishay/Maxwell/Panasonic/etc.? It kind of seems like the stocks are trading largely on the strength of Musk's vision. I am kind of okay with letting mad scientists-cum-Bond villains like Musk and Bezos run amok with billions of dollars, though. I mean why not, it's a bit of a wildcard and it makes about as much sense as anything else that's happening right now.


> But I mean, couldn't GE do that too? Or Samsung/Murata/Vishay/Maxwell/Panasonic/etc.?

Sure. So could Martha Stewart, or Jeff Bezos.

That hard part is actually doing it and doing it well. Is GE better positioned to do it than Tesla? Not really. It's a complex problem involving advanced software, engineering, branding, customer service, talent retention, supply chain, and myriad other challenges. Tesla is better at some of these things, worse at others. But they're going for it. GE, GM, et al don't appear to be moving aggressively towards these goals at all.


>Imagine huge, modular atmospheric/solar/geothermal/battery/molten salt combination generator/energy storage plants dotting the globe

Or space elevators, or flying cars.


Tesla isn't a car company. It's a power/battery company that makes electric cars.

This is the goal:

https://www.tesla.com/tesla_theme/assets/img/solar/section-h...

Powerwall Solar roof Car

All made/sold by Tesla.

If Apple can be a multi-billion dollar company making laptops, phones, and an app store, I don't really see the Tesla "could be a trillion dollar company" as too far-fetched.

I mean this is the era when SnapChat is "worth 25 billion".


>I don't really see the Tesla "could be a trillion dollar company" as too far-fetched.

Anything could be anything. The challenge for Tesla is that they validated the electric car market and managed to carve out some market share, but now they are in the sights of every car manufacturer in the world. It's a different ball game for them. Car companies know how to make cars at scale, Tesla doesn't. It's a big challenge.


> Ford doesn't have any growth potential

Word? https://seekingalpha.com/article/4031938-ford-potential-grow


That link has no real info on their growth potential, it's just one analyst saying that it has some with no follow up.


the parent has provided no citation on his claim of no growth potential. my source at least provides qualitative reasons why Ford has seen growth in the 2016 fiscal year, reasons which are clearly overlooked by parent. Not many people are aware of Ford's big sell on Mobility Services - it certainly is not as exciting as Electric cars that have a "Ludicrous Speed" button. Full disclosure, I'm a fan of both companies.


A study from Navigant research ranking leaders in automated driving ranks Ford 1st. Tesla ranks 12th:

https://techcrunch.com/2017/04/03/ford-tops-the-list-of-auto...


I'll put the math behind the numbers aside just for a moment to consider this is still a pretty impressive feat. I wouldn't have believed it 24 months ago. Also wouldn't have predicted for Ford and other nameplates to remain so static in this category. A high performance luxury EV just seems a great asset for any brand at the moment, even selling in lower numbers. We're at one of those shifts in technology where the cards get shuffled. I think Porsche gets it. Jaguar. Maybe Chevy.

Tesla is reminding me a lot of early Apple—equally rapid supporters and detractors. If anything, that means people find your work interesting. (Wonder if Elon will send out a staff note mirroring the note Jobs sent when Apple first passed Dell in market cap.)


> ... market cap isn’t everything ...

Nothing is everything. That doesn't negate the fact that:

Tesla Passes Ford by Market Value.


It's not about the number of cars that Tesla can sell today, and it's not even about the cars it will sell in the next decade, it's about the market domination a decade from now, and I see Tesla as a clear-cut winner. A few concrete thoughts here - http://kirillzubovsky.com/what-is-tesla-really/


Meanwhile, this very same day, another article topped HN:

"Ford tops list of automated driving leaders in Navigant study. Tesla ranks 12th"

https://techcrunch.com/2017/04/03/ford-tops-the-list-of-auto...

Like parent said, market cap isn't everything.


There's no such thing as "independent research." Any article like that is always paid for by the company that ends up "leading" in it; that's how these research companies make their money.

I worked for this lovely company once where we paid hundreds of thousands of dollars to a consulting company to "research" how we were the dopest, only to have pretty much written the entire document for them. Go figure...


ps. From that TC article: "Ford has already responded to their position in the study, with a Medium post from CTO Raj Nair expressing their satisfaction at being ranked number one. " -- if this doesn't read like a pre-plan PR, I don't know what does.


Isn't that the point, though? That Tesla's market cap can really only be justified by making the rosiest assumptions?


There wasn't a doubt in my mind that this would be the top comment. But it is still a milestone, and a trend. Does anybody think that what happened to Apple and Google's market caps wasn't globally significant?


it is what you concentrate on when your other numbers don't look so good.

The 3 is going to be a real test here. Not that they can make the car but that those expecting to get one at 35k actually get one and on a timely basis. Then throw in, is there any profit at that price point when factoring in all related costs?


I doubt there will be much profit at $35,000, at least not for a while. But does there need to be? As long as it's profitable on average, the base model can just break even. I bet a lot of buyers will pay for the Autopilot option, for example, and that's pure profit.


Are you arguing that people would be better off investing in Ford? Because if not, I don't really see the point of always trotting out the fact that 100 year old auto-makers have a larger manufacturing base than new ones. Seems obvious. "People in their 30s, on average, are taller than people in elementary school!" Whoa, really??!!!


and... this is how bubbles happen. Investors and fans say "but, but my stock isn't overvalued! Mine is the exception, its everyone else who is in the bubble!"

There's no sane scenario where a car company that sells cars in the tens of thousands over-values a car company that sells cars in the millions.


Investors and fans say "but, but my stock isn't overvalued! Mine is the exception, its everyone else who is in the bubble!"

It was true if you held Google stock.


Google had a search monopoly. It trounced all competition trivially. I remember Google absolutely dominating the market and everyone shifting away from hotbot, yahoo, etc within a year or so. Anyone can, and does, make an electric car now and ones that don't cost $90,000. These aren't remotely comparable scenarios.


Lots of people made search engines back then.


You've got impressive hindsight.


Tesla probably has a premium partly because of the exclusiveness of ownership and the features that come with those vehicles


Ford also had 3 large vehicle recalls last week alone


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