Honestly seems like absolute complete madness. Cars, batteries, and solar panels are all basically commodities. There is a certain value to a car brand, of course, but still. The only way this valuation makes any sort of sense is if Tesla manages to pull off 100% self-driving, as that field will have few competitors for a long time.
The guy in the article should definitely sell half his shares and put them into an ACWI index fund or something. Super scary seeing these people apparently not hedging.
The value is really in the inept cluelessness of the legacy automakers. If any of them woke up and got a Clue(TM) then, after they build a car that isn't crappy, and a charging network, and self-driving... Then TSLA stock might drop.
GM arguably has a better self driving solution than Tesla at the moment. At least it’s safer.
Ford has the Mach-E which is getting really favorable press from the “car guy” world (i.e people who are a little more skeptical of Tesla) which supposedly is getting self driving and is $7k less with tax credit than the Model Y.
Honestly, given Tesla’s quality issues and how they address them, I wouldn’t mind seeing what the more risk-averse, mature automakers come up with. The way Tesla has handled design flows in the Model S front suspension is downright disgraceful.
Mach-E looks ok but there's no way I'm driving long distance on J1772. You might convince people ChaDeMo is okay... but not if they've done a v3 supercharger.
Like I said, its not just the car. You may be right about SuperCruise, I have a small amount of experience with it, but I'm skeptical.
As for cars having design faults and the manufacturer being disgraceful... That's a pretty long list? We could start with the Pinto exploding? Or the Bronco roof collapsing?
That's the thing. If you're in the market for a Tesla priced car today, buy a Tesla. It's amazing. In 3+ years re-evaluate the DC charging networks when you're ready for your next car.
All Toyota has to do is build fine Corolla EV. Then all they have to do is install fast chargers at their dealerships, which I can only imagine the number of.
The crazy valuation of TESLA has more to do with the flight-to-stocks caused by the unprecedented dollar printing of 2020, combined with the "memeability" of the brand and its CEO, than the fundamentals of the company.
If that were true, that would mean all the rational (hedge funds?) are holding their TSLA stocks despite knowing that their value is largely based on fickle investors.
Big serious investors must still own TSLA stock.. right? Why aren't they selling?
"Big serious investors" are also putting hundreds of millions into bitcoin. These are crazy times. There is already over 20% more dollars now than there was last year[1]. If you follow the news you can see the dollar devaluation is likely not going to stop. Lockdowns kept inflation under control by reducing money velocity, but eventually inflation will come and funds are preparing for it however they can.
Rationality based on outdated models doesn't work when the environment is changing.
Bitcoin do not represent shares of an actual operating company though. Bitcoin's value lies in how many people want to link their net worth together.
Tesla actually has some sort of future final value, at some point it's going to be clear how many cars they're going to sell, how many engines and batteries and solar panels and AI modules and whatnot. At that point they're gonna pay dividends, and that's gonna decide a reasonable price point. And its current share price just doesn't make sense. What are people going to do when they receive 7 cents dividend per year on their 700 dollar stocks?
Or is TSLA going to pull an Apple and constantly come up with different types of devices to sell? Forever?
> Cars, batteries, and solar panels are all basically commodities.
That is only true, and arguably so, for solar panels. Cars are absolutely brand-dominated, and famously so. If they were really commoditized we'd be seeing consolidation of providers, where (c.f. the very company we're talking about!) we're seeing the opposite.
And batteries are legitimately high tech devices. No one can "just open a battery factory" without stealing someone else's chemistry process first, and probably a ton of industry knowledge about suppliers and chain management. An enormous amount of money is still being dumped into battery R&D. They are basically the polar opposite of a commoditized product.
Fair point about the batteries. Or, at least I have no grounded criticism. It's not a natural monopoly, though. It's not an OS.
As for cars, there are way fewer manufacturers than you'd think. Check out the Volkswagen Group, for example. Usually many brands share the same technical platform, and the parts are made by suppliers like Bosch, which serve all manufacturers that will pay.
Maybe he is like me, I put money into TSLA that I was happy to lose simply because I want to invest in things that make the world better. That hasn't changed just because on paper I'm rich. The mission isn't over.
It doesn't make much sense from a "return on investment" perspective. But it makes a lot more sense than the markets usually do from an "efficient allocation of capital" perspective...
Tesla is basically unparalleled in the electronic cars and their self driving is already passing certifications. Don’t come with this oil lobby, Tesla is just another manufacturer... you will keep loosing money and won’t know why
I find this illogical and scary:
'Tesla stock is now worth more than the combined valuations of General Motors, Ford, Fiat Chrysler Automobiles and Toyota. Yet, Tesla makes just a fraction of the cars of its more established rivals.'
The best part is really that Tesla has only competitive disadvantages. There is really nothing in Tesla that sets them apart. Yeah, they made electric cars popular, but other car manufacturers started to catch up and they have immense advantages, like brand lock-in and a long history of adapting and evolving to customer needs. And they were right not to jump into EV too quickly. It's a pretty unpredictable, developing market. Tesla got a head start, but at the end, they really have nothing going for them.
The stock is gonna crash so hard in a couple of years, I am sure someone will make a movie out of it. I might actually buy a good bunch of options against Tesla, if they reach far enough into the future.
Tesla IMO is just less greedy. They provide class leading safety, range, acceleration, and don't nickle and dime you. The battery packs have generous lifetimes and they have an Apple like good (rwd), better (AWD), and best (AWD performance) setup.
Try to buy a Lexus, BMW, MB, etc and you get a huge laundry list of incompatible features that bundle in the options you want into expensive bundles. So much so that to get even the basic safety things like rear view cameras and decent headlights laws had to be passed and companies embarrassed with poor safety ratings because their headlights were unsafe at highway speeds and much worse than a Toyota Prius unless you bought the many $k package with the fancy headlights.
Want a reliable car that's likely to last a few 100k miles, 353 mile range, is one of the safest cars on the planet to drive, has a great charging networks, great headlights, generous interior room, and low cost per mile? Get a model 3 AWD for $48k, it's a hell of a deal, and that's assuming your state, city, and country have no incentives. Sure it's one of the "slow" Tesla's at 0-60 in 4.2 seconds, but still one of the quicker accelerating cars around.
I'd be hard pressed to name a #2. There's a nice Porsche, but it's like twice as much. The ford Mach e is somewhat similar, less range, less accel (at the same price), not as safe, and nowhere close on the charging network.
Chevy bolt is embarrassing in comparison, doesn't handle, doesn't accelerate, not as safe, nowhere close on range, not AWD, etc.
While I think Tesla is over valued, I feel your statement is one many made about Apple. That they just used commodity parts to create the iPhone. That the margins will be driven too small to maintain and they’ll never live up to their valuation.
Tesla has atleast a 3 year advantage, a very strong hold on battery production, extreme brand loyalty, and an iteration cycle that puts all other car companies to shame. They’ve caught an entire industry with their pants down.
Do I think Tesla is overvalued? Yes, but I find it laughable that you think Tesla has no competitive advantages. Off the top of my head I can think of their battery production + supply chain, direct sales to consumers, world class electrical engineering, best in class safety, and over the air software updates. All of those factors would be extremely hard or impossible to duplicate at an existing car manufacturer.
In fact, Michael Burry from the Big Short has been tweeting about this lately. It's actually more valuable the all WORLDWIDE auto makers combined, and sells <1% of global volume.
Because the bet is that in 30 years, Tesla will still be here and the legacy companies will not, having failed to pivot to the emerging markets.
Yours is the same logic that has been deployed against tech industry P/E ratios for decades. No, it doesn't make "sense" per the balance sheet. But it's clear what the bet is.
Well, it doesn't bet that they'll "fail" exactly. It's simply betting that they aren't going to grow. The collective opinion of Wall Street is that the only value to owning Toyota or GM or Volkswagen stock is the immediate value: dividend payments, the value of liquidatable assets, etc...
But with Tesla, the bet is that in 30 years that company is going to own most of the market all these existing firms do. That may be wrong, but like I said it's clear that this is the bet.
There are articles from "real institutions" saying it is him, for example: https://www.bloomberg.com/news/articles/2020-04-07/michael-b.... It wouldn't surprise me that it is him, he seems like a contrarian in nature (if the movie did his personality any justice) and what he's been saying this year is pretty in line with that.
I follow the account and thought the same thing as you for a while. The name and picture are always changing, but then I saw several huge publications cite his account. It made me rethink that it was either a) him, b) he doesn’t care that someone is impersonating him and getting cited, or c) he has no idea about the account or any articles referring to it.
Serious question: does the same aspect scare you with most tech startups, which have valuations well beyond the actual value they produce (often losses) at the time of their IPOs?
Tesla is being valued based on its potential future, not present.
> Tesla is being valued based on its potential future
This is what I don't get. Tesla's potential (but unlikely) future is that of replacing some of its competitors. And yet it's valued more than all its current competitors combined. Something just doesn't add up.
Tech startups are valued that way because software has [approximately] zero marginal cost. If everyone in the world wants to install Tiktok tomorrow, they can. If everyone in the world wants to buy a Tesla tomorrow, it would be impossible to fulfill that demand.
But if half of people in the world have Teslas with self driving, Tesla can also sell entertainment (they've already started, with video games!). They can also sell fancier version of self driving where you can "rent" your car (Uber-like). The hardware is a gateway to potentially more services.
I still feel that Tesla is overvalued, but there exists a potential future where it still has room to grow (I'm not sure I'd like that future - so this, coupled with the stock volatility, kept me from investing in Tesla. Which, TBH, was a poor decision so far :D )
I agree, but then let's stop pretending that there's an underlying value which the price of Tesla shares reflect. If Tesla is like Bitcoin, then it's an asset with no intrinsic value except for its rarity. And the only reason people buy it is that they hope reselling it at a higher price. Nothing wrong with it, just let us be clear about that.
Difference is that for anyone paying attention it has been clear for years that Bitcoin was hijacked by corporate interests (Adam Back's Blockstream) years ago and intentionally crippled in order to push their own "second layer" solutions to problems they themselves created.
Tesla's controlling interest at least wants Tesla to succeed, the people that hijacked the Bitcoin GitHub repo specifically want it to fail as, "Digital Peer-to-Peer Cash".
Just look into nonsense like "Replace by Fee", Greg Maxwell and the company Blockstream itself. All social engineering to get Bitcoin to fail.
So Bitcoin? More seriously, if Tesla can ramp up Model SUV tech with 400+ miles they can revamp the whole model. I would buy an electric suburban with 300+ max range with a 15 year lifespan tomorrow.
Bitcoin is equally in "Ponzi" territory. When devs like Greg Maxwell and Adam Back social engineered the GitHub repo away from the original contributors they more or less killed the idea of Bitcoin as a currency and have since been pushing the idea that it is a "settlement" layer, or something like digital gold, not Digital Cash as it was intended.
Without any real world use case and intentionally high fees Bitcoin, like Tesla, is pointlessly overvalued by people who could care less about the underlying technology and just hope to get rich off the hype train and sell to a greater fool.
Real users and developers moved to projects like Ethereum, Bitcoin Cash and Monero years ago. All that are left are fan boys and marketers.
Or gain. Nobody knows; it's the definition of a speculative stock this past year. But to the amazement of all, it just seems to go up and up in the long term.
And he still thinks it's too high. There was an internal email basically saying "investors are trusting us" meaning that they are no where near as valuable as the stock price says unless they execute perfectly (which he goes on to say is why everyone must work harder, smarter, etc.).
Wave of better built electric cars is coming from all the regular car manufactures. The Ford mach e is the latest one. Better made car. But ford doesn't yet have fast charge network built out.
I simply don’t understand what Tesla’s moat is once the other companies have the same range / performance.
The build quality and ride comfort of my gas Audi surpass that of an equivalently priced Tesla by miles, once they have a comparable electric car, that’s what I’ll buy.
The current e-tron is not it, but VAG built the super impressive Taycan, they’ll figure it out.
> I simply don’t understand what Tesla’s moat is...
You said it yourself, no other car maker has their range, performance, and price.
An Audi priced similarly to a Tesla has a better trim because EVs cost more.
Audi couldn't built anything with comparable price, performance, range, and Audi interior trim quality.
> VAG built the super impressive Taycan, they’ll figure it out.
What's super impressive about it? I'm not saying it isn't nice but only manages to beat a Model S on track performance. In all other aspects, it's inferior.
I think whats impressive about the Taycan is that the performance is reproducible time and time again, like an ICE car. It doesn’t overheat. So you can cane it on the Autobahn for 45mn until the battery runs out, instead of for 5mn until it overheats.
I agree that there isn’t any impact to real world driving, but then again any car above 200hp isn’t really making a difference to real world driving
In what regards? Teslas are mechanically sound, the paint and panel gaps seem to be the biggest complaint.
> The Ford mach e is the latest one.
Is the build quality different than what's in their current car and truck lines? Ford interiors have always been utter garbage IMO. There's nothing like plugging a USB cable into a USB port and then trying to unplug it and the whole interior trim panel comes off instead. And the squeaks and creaks...
We could compare to Fiat Chrysler who is "Highest in Initial Quality" by JD Powers. The chrome starts to rub of the interior finishes inside 18 months. The paint oxidizes on the exterior in roughly the same time.
Does anyone have good numbers on the brand loyalty to Tesla? If I’m a Tesla owner, what’s the chance of me buying Tesla again? Historically Mercedes and Lexus lead with ~40%. I won’t be surprised if Tesla beats them by a margin. Alas, Tesla is a young company and I couldn’t find any reliable numbers.
Extreme brand loyalty could explain why Tesla could be so big (in addition to other reason such as owning the vertical of selling insuring and energy being a possible outcome, which is not the case for traditional automakers)
It’s all going to end in tears in the days following wide deployment of FSD beta. Just one pedestrian death was enough to end Uber’s autonomy program and the political dynamics haven’t really changed since then.
Original poster here -- is there a reason this was flagged? I thought it was interesting that Tesla stock has done so well, in what is a very different year to that which everyone expected back in Jan.
Lol, no it's just off topic. What are hackers supposed to with the information in this article? How does it inspire you to start a new business, make an invention or apply technology? It's just meaningless banter over stock prices. Sure that's fun, and I partake, but it's not what HN is for.
>On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.
I wonder what happens if Tesla doesn't achieve full self-driving for the lifetime of current cars where the owners paid for it after all the annual "it'll be ready by the end of the year" promises
I wonder how Tesla will incentivize the employees who joined circa 2016~2017 to stick around. As they would be fully vested with offers given before the 700% increases. They probably have base salaries in the 100k range but would have equity in the 10m. I could foresee some pretty big turnover as those employees practically retire or head into angel investing. I mean it’s not like Tesla’s Hr is going to refresh their equity anywhere near what they already have.
Yeah, and hopefully a lot of them sell more quickly that the bitcoin folks did. Tesla’s stock priced in a way that suggests the market will never catch up. I think betting against any given car company is fair, but betting against all of them is completely foolish.
I like what Tesla has done for the electric car market. They’re at least smart enough to have issued a bunch of stock at these crazy prices to keep them afloat for a while.
Sometimes you get lucky with a stock and this is one such scenario. Another is Apple back in the early 2000s. Not everybody will win big. I made only $278 from TSLA.
The guy in the article should definitely sell half his shares and put them into an ACWI index fund or something. Super scary seeing these people apparently not hedging.