1) If they win the self driving race that will be incredible value beyond just manufacturing cars.
2) Battery manufacturing in general is huge on its own.
3) The roof top combined with domestic battery side is potentially significant in replacing (full or part?) domestic power companies
4) Insurance - Musk said this could grow into 30-40% of their business
5) Super charger network gives them a first advantage to replace petrol stations to a degree.
6) Elon factor of what's next.
And dont get me wrong, I do feel its gone beyond reasonable value, but there is more than a car company there.
Many potential Tesla solar customers (that I know of) have ended up using other solutions as Tesla simply didn’t have stock availability - it’s a novelty product line.
Many “investors” do not know the ground reality and base their decisions on the Twitter feed of an individual.
I order a system from Tesla on Sept 30th, it was installed Nov 3rd, and I received permission to operate on Nov 23rd.
Other quotes I received were targeting installation Jan or Feb 2021.
Unproven insurance model with a 40% potential.
Insane demand causing shortages in solar panels is a great company to give money to.
Remember the goal of investing in the market is to know where the market is going and to get there quickier. You are saying the market is wrong on valuation.. you can't really bet on that only market players reactions.
There is just a ton of money looking for a place to invest, and Tesla is certainly telling a higher growth story than any of the existing car companies.
Tesla has been growing revenues 50% on average for the past 10 years.
Most other car makers are roughly flat. This year ICE cars, globally, are in decline.
Tesla will grow 50% on average for at least next 5 years.
Also, there has been a ton of money looking for a place to invest for the past 20 years. And there are plenty companies that are investable. Just recently we had monster IPOs from DoorDash, AirBnb, Snowflake and others.
At the same time there are many more companies that one could invest in but doesn't so it's lazy to attribute "lost of money available" to outsized successes like Tesla or Snowflake.
If I understand this correctly, they'll be able to write their own checks because they will essentially...
1) Own self-driving and thus, most personal transportation
3) Own / replace a large segment of public utility / power companies
4) Own / replace a large segment of insurance
5) Own / replace transportation power network
Right now, it's silly to think of Tesla as some kind of mega-monopoly across industries. So we invest in them betting on them becoming that. Is that what we want?
My counter-argument is that one of the bigger markets for automobiles, the U.S., is designed around personal choice, personal autonomy, etc. Many people just want a working car to give them freedom, and will buy whatever popular, trusted brand is available. The rest want one of the smaller brands, something that seems different from the mainstream (even if it's really barely skin deep). That has kept quite a few big players in the automotive marketplace, and despite consolidation over time, there's still variety, which buyers want. This argument really only addresses them as a car maker, though... and not at all for their spread across industry lines.
The goal for Tesla is to accelerate transition to electric vehicles. Once that is completed Elon will move on to another project similarly to when he transitioned from X.com/Paypal to something else.
Ford had an oh-my-God enormous first mover advantage with the production line. Japanese car companies started literally from nowhere, in an economy shattered by war. VW was literally kickstarted quite late into the game.
I don’t think it is right to assume that, even if Tesla makes the first affordable, good range electric cars, then the rest of the market can just fold. Especially since electric cars are simpler than ICEs so surely it’s easier to catch up.
The only pro Tesla argument that I hear is that they are gathering more data. This is entirely fallacious because there are no meaningful milestones for data gathered, and it's not true. Google has orders of magnitude more of driving data from Android, Maps, and Waze.
[1] https://www.washingtonpost.com/technology/2020/10/21/tesla-s...
Tesla is doing a limited beta of full self driving now which will be widely expanded in just a few months. I don’t understand how anybody but Tesla is poised to have self driving cars in the near future.
Nobody takes this into account. They just claim: "Tesla has this and that potential", "this and that market could be huge". Okay, this should give the stock price a significant boost, but not 10x. It's a bit like crypto speculation.
https://www.investopedia.com/terms/m/marketcapitalization.as...
> doesn't take into account any other factors such as projections, profitability or debt
You seem to confuse a few things here.
Explain how Amazon could ever be worth more than zero for most of its existence, then?
Price of stock is largely dependent on people willing to buy it and sell it. When more people want to buy it, the stock price generally goes up.
Why do people want to buy more than sell? Generally, it's when they think the future price will be higher. Projections, sort of.
Similar to how Apple thinks of itself as a hardware company, but also created iOS/macOS to sell those hardware.
In the coming years there will be so much competition in this space.
And then you have Elon snubbing California, one of the largest consumer markets in the space.
I'd short.
https://www.cnn.com/2020/12/04/investing/tesla-short-sellers...
And then you look at them as one of the few American brands absolutely killing it in China right now. Not as simple as it seems.
> I'd short.
Everyone who has done this so far as lost their shirt.
There's a good chance that "old" manufacturers with decades-old processes will have a harder time adjusting to an electric world than the hard time Tesla will have figuring out the rest.
Also, Tesla isn't just a car company, they're also a energy storage company. Which I suspect is a massive market too.
Can you link to some sources, please?
The only one that actually seems like it might be going into Volume production is the VW ID.3. There are plenty of articles from 2019 talking about how they'll be building TONS in 2020... but there are no articles in 2020 talking about how many they've built.
No other auto maker has any EV on the books they plan to actually mass produce, they're all just "limited volume".
A model s has a footprint of about 4m^2. In ideal conditions that would net you maybe 800W during daylight hours... 6.4kWh over the day. That would give you around 30 miles of driving range. Solar on personal vehicles will never be anything more than a gimmick.
The intuition is that Tesla cars are like iPhones. I think it's wrong. This is a low-margin business, where you increasingly compete with all of the goods and services people buy, like housing, education, healthcare. It's not a "buy a new phone for Christmas every 2 years" business.
People are on the phone all the time, so paying $200 more for an improved experience for several hours per day is justified. But paying $5k or $10k more for an improved experience for 1 or 2 hours per day? If you're rich, maybe. If not, why not move closer to your work instead, so you don't have to use the car? Why not take a longer vacation, or eat out every day, or retire earlier, or pay for your kid's college education?
In the last year they've announced and built most of the Berlin factory. It seems on track to start producing next year. That's on the home turf of Volkswagen, Daimler, and BMW. Pretty big news. The same year also saw the announcement of the Texas factory where they are also executing rapidly. And that of course came on the back of the Chinese factory. The news for Tesla in the last few months has been of them executing extremely well. They're growing production and turning profits in a market where all their competitors are shrinking production and losing money. There's also been some minor news about them ramping up production of their in house designed batteries a few new models and model variants. The cyber truck announcement was only a year ago; so that counts as well and half a million reservations for such a thing is nothing to sneeze at. Then there was a minor thing called Corona which should have put the brakes on profits; except it didn't in Tesla's case.
Tesla's valuation is based on their historic ability to execute and their competitors apparent struggle to do so. Turning profits in the middle of two major lock downs is pretty hard evidence that they are doing something right. So, maybe it's not that irrational for investors to look at Tesla and see a strategy that while ballsy is apparently working and looking like it might be just the right strategy for the foreseeable future as well.
Your picking nits over government subsidies. Everybody else has that same advantage. In any case, without government subsidies, most of the Detroit based car manufacturers would have gone bust around the 2008 crisis already. I'd say 700M is peanuts compared to that probably; and they are still losing money. General Motors' losses alone this year exceed that.
I think the evidence proves otherwise. It's the other automakers that have had no news.
1. They announced and are rapidly building a factory in China
2. They announced the Cybertruck, and are rapidly building a factory in Texas to build it.
3. They held "battery day" where they deep dived into how they're streamlining the production of cells to crack the $100/Kwh mark
4. Factory in China is now building over 20k vehicles/month.
What really happen was: for several years Tesla was executing very well but faced unprecedented amounts of FUD. That kept (many but not all) investors away.
But you can only fool people for so long.
Investors finally realized that none of the FUD of imminent bankruptcy etc. is happening and things flipped.
That was the reason for the 10x run up of the stock price within 1 year.
Not Tesla is fairly valued based on modest assumption about the future 5 years out and doing DCF (Discounted Cash Flow analysis).
I think the narrative flip really came down to — “oh they may always be on the verge of bankruptcy, but they can always raise from the public because the public loves Elon”
So really they will always have runway to get to those goals, timelines really don’t matter.
Plus, millennials seem to greatly prefer the Tesla buying experience over traditional dealerships.
Margins.
GM, Ford, Honda, Toyota, etc. are competing with a commodity product in a commodity market. There's no big difference between a Toyota Yaris, a Honda Fit, a Kia Rio, a Ford Fiesta, and similar cars from every other brand.
They're all within a few hundred bucks of $15k. They all cost do the same thing, cost the same to produce, and I imagine the margins are razor-thin. If any of the brand could lower prices by $500, they'd own the market.
Tesla sells a unique product, with unique technologies.
If Tesla has 5% of the market, but 10x the margins of its competitors, which doesn't seem an unlikely outcome:
1) Its profits will be roughly 1/3 of the total profits of the whole market
2) It will be much more stable. Razor-thin margins mean companies go bankrupt with even minor instability. If Ford's costs rise by 5%, it's dead. If Tesla's costs go up 5%, it's a almost a rounding error.
I think the key question is whether Tesla can execute, but right now, things look promising, although far from certain.
[1] https://www.cnbc.com/2018/03/14/fords-f-150-truck-franchise-...
Yes they will. I'd bet that the price of oil is not going to go above $80 or so in the next twenty years.
Two major reasons, and a bunch of minor ones.
1: massive quantities of non-OPEC oil are available in shale and tar sands. Right now these are only barely profitable, but if the price of oil increases production there will increase, stabilizing prices.
2: renewable energy is now just barely cheaper than other forms of energy, but they're projected to drop dramatically over the next years, radically transforming the energy market.
Some uses of hydrocarbon cannot be easily replaced by renewable electricity but most can. When a cheaper substitute is available, demand and price drop.
The only way the consumer price of oil is going to go up over the next few years is if governments come their senses and put in place a carbon tax or equivalent. (And that's reason #3 -- the environmental movement will demand that the world use fewer hydrocarbons, forcing less demand, forcing prices before the carbon tax to go down.)
Assuming they can maintain that level of supply as demand drops. Some the economies of scale they operate with will be lost as demand slows and then the logistics that requires large and ongoing investment may slow considerably, although much of the latter is probably outside the 20 year horizon.
It could play out very differently on the consumer side though. If electric vehicles became 50% (or some arbitrary significant percentage) of the market then a lot of local gas stations will close, the ones that remain may have to start charging higher prices (again losing the logistics and scale advantages of today). There may be some tipping point where the whole retail side of the industry finds itself in a death spiral where gas stations are charging more and in less locations, making oil powered cars less convenient and driving more people to electric vehicles.
You can get this at any dealer, just pay sticker price. They'll love you.
This really has nothing to do with it. An optioned out Model X costs as much as a house. The type of person who can afford that couldn't care less if gasoline were $10/gallon. It's a status symbol, on top of just being a great car. It wont be until they are competing in the sub $30k market that an EV purchase will ever be driven by economics.
I’ve yet to read a comparison of Tesla to the sum of all those different markets.
If retail, grocery, hotels, restaurants, and other traditional industries are any indication, an inability to innovate is deeply entrenched to the point that even knowing that Amazon or Airbnb or DoorDash was coming to eat them, they did/do squat.
I think the market is drastically underestimating how seriously the entrenched automakers are taking electric. They are coming from behind for sure, but I think one of the things you see consistently with Tesla is they are still very much trying to figure out the manufacturing and logistics pieces of building cars (rolling out new lines, scaling them, etc). The existing automakers know how to do all that. Are they going to make mistakes? Sure, but in 5 years you will see dozens of electric models spread through out them, and that will hurt Tesla.
Usual disclosure: TSLA investor, owner
Most of them include banks, for example. They usually started out financing their customers' car purchases but in many instances have expanded beyond that.
Peugeot makes pretty nice bicycles :)
Tesla building parts that most companies outsource isn’t that profitable on it’s own, but it’s likely to scale with increasing EV sales and future repairs.
Etc etc. If you want to do in depth analysis it takes a lot more time than simple direct comparisons suggest.
It also has, I would bet without having actually done the comparison, much more stock market volatility than the overall industry, because assessment of Tesla's likely future state fluctuates a lot more than assessment of the likely future state of the incumbent major automakers.
2. Their investments in research there are basically 0, compared to big players.
3. Even if they would magically capture large market there, it’s a business that operates on razor thin profits (expect for scams like Enron), that doesn’t drive high valuations.
Tesla car production (2020) about 600,000 (?)
So Tesla makes around 0.7% of the world's cars. Something is wrong here.
Cars are the horse and buggy market. Electric Vehicles are the entirety of the future car market. If you have 0% of the horse and buggy/car market today, but have over 50% of the electric car market, you are very well positioned for the future.
I'm exaggerating. The horse and buggy analogy is flawed (VW, BMW, GM, Ford, Toyota, Honda, etc are all real electric car competitors). But just looking at Tesla vs the petroleum car market is also flawed. The reality is in the middle, with Tesla well positioned to be a top electric car manufacturer, but not to dominate the market.
They have more vertical integration, less reliance on suppliers.
They own their 'dealership', charging network and are also getting into auto insurance.
Also, residential solar and energy storage. Oh yeah and they are getting into mining as well to ensure they can keep up the battery production.
How many of those 92 million cars are EV? Tesla isn't really in competition with ICE car production - the next ten years is all about EV production and legacy car makers are off the back.
If that expectation holds, the current high price may be sustainable. If it becomes clear that it won’t, there will be a big sell-off
There are gigantic segments, like trucks in the US, they they don't even have an offering in yet.
Tesla also controlled a huge amount of the global battery supply and threw its own production will control even more.
This transition will take another 10 years, what matters is not now, but what the situation will be in 2030.
2) Cars are just one thing in Tesla's portfolio. Both home and grid scale energy storage is another.
This is also true of other companies.
Honda also makes jets, watercraft, ATVs, aircraft, mountain bikes, lawn equipment, and solar cells.
Toyota also makes homes.
It feels like a bubble to me too, but on the other hand, the failure of traditional car manufacturers to deliver electric cars leaves the possibility open that Tesla will be the next Toyota/GM.
Tesla might just be the next MySpace or Friendster. They're coming in, figuring out how to get the technology to work, paying for the infrastructure (or getting others to pay), and setting it up so that Toyota can come in and scoop up the market.
I think Tesla is in for a difficult future. They seem to not understand that the people that buy Camry are not the same that buy Mercedes. Playing the same brand to the luxury crowd and the cost-conscious crowd has never, to my knowledge, worked. People will probably point to Apple, but Apple isn't luxury. It's premium. You really have to compare Rolex or Patek to Apple Watch to see where the rubber meets the road. The Model 3 is about $10k over the price point they need to be, and rolling that out just about damn near killed Elon from reports I've read. As they target the cheaper market, their margins drop and then they risk losing the Mercedes crowd entirely. So there go their fat margins. I'd imagine their warranty costs also increase and will squeeze them as well.
I can't imagine Panasonic, LG, etc. sitting around while Tesla whips them around on the battery tech front, either. Tesla is like a toddler trying to be a conglomerate. Elon is stretched so thin he's going to have a mental breakdown.
Their entire product line is available in hybrids with a low speed EV mode. Most of their competitors don't seem to be offering hybrids of larger vehicles like SUVs. But if you need a third row seat car that gets 50% better gas mileage than anything else in it's class... Toyota can sell you one.
I suspect the only reason they aren't selling full EVs is that the number of people willing to shell out for them is still so small.
What do low interest rates have to do with this?
All stocks are up somewhat due to low interest rates -- why should Tesla's stock be an outlier unless something else explains its rise over the past year?
I'd like to see some numbers on this, but I don't think most Tesla buyers finance their cars. I bet most pay cash. So low interest rates don't really explain their sales numbers either.
So, how do you think low interest rates help Tesla?
If their hardware QA is bad, what makes you think their software QA won't fail and one day drive you into a barricade it thinks is a highway exit?
Would you get in an airplane that had daily software updates? It has more capabilities right?
Therefore to make a fair comparison you'd have to add in the rest of the global automotive supply chain, not just the OEMs. Add in the valuations of all the dealers and retailers on Earth (some of which are publicly traded), add in Nvidia and other chip makers' automotive businesses, add in the market cap of Waymo, Cruise, Zoox and all those major hardware and software players that plan to compete with Tesla's Autopilot / FSD software. Add in the market cap of all the charging networks in China. In an apples to apples comparison Tesla's market cap would be less than one third of the global market.
They have a chip team in Austin which is lead by Pete Bannon, formerly of PA Semi (which Apple acquired to build their A series chips, and now their M series chips). The chips they designed are fabricated by Samsung in Austin.
The "FSD Computer" that they have in their cars now has an Intel Atom board to run the user interface, and then dual arm SoCs to run the Autopilot stack. Each arm SoC has a special ASIC to hardware accelerate certain common neural net inference functions (I.e. dot products and other matrix math).
I don’t think it justifies their current market cap, but plenty of companies looked over priced 10 years ago yet ended up being great investments. Hell, I remember thinking Bitcoin was pricy at 30$, watching it crash etc.
Although TSLA's market cap is down a bit from when I wrote the article, it still makes up something like 30% of the global automaker market, despite only publicly listing 10 years ago!
Is it overvalued or in a bubble? I'll leave that for you to decide.
It's all this frothy fed money and Elon, the guy steering the damned ship, doesn't even think the value is warranted. He's been saying for a year that the company literally cannot live up to the hype and the price will need to correct. I think investors are going to lose out big and Elon is going to look like the bad guy. After all, he kept irresponsibly using the Reality Distortion Field Generator which Jobs, peace be upon him, left him in his estate.
In the year 2017, Musk claimed that by 2019, the world would have cars that can drive itself while the passenger sleeps. He just didn't mention it would drive you into a highway divider head-on at 80mph.
Damn these rants.
Nope.
Seems like a major disruptor.
^ in industries that meet the following criteria:
- Customer base has always-on internet connectivity
- Integration points into meat space are already digitized
- Is not regulated, or is regulated in such a way that regulations can be ignored / externalized
Or neither...
To keep this valuation assumption in place, tesla can lose a lot of market share and only "keep" 20%-30%.
In this case it will outsold any other car brand and will outperform it's valuation.
They could remain their share higher. In this case they are undervalued.
They obviously can loose competition to traditional players, but also to emerging Chinese brands. Musk himself consider them a bigger competitor.
The market itself can shirk a lot, due to robotization, in this case you don't have to own a car in most of the cases. In this case the entire market will be changed dramatically and current valuation doesn't make any sense.
On the other hand Tesla market share of EV cars in Germany in 2020 is barely 12% (in terms of unit, certainly higher in EUR) [1]. I expect numbers to be worse in countries that favor smaller cars (France, for instance).
Most European auto makers are barely starting to release EV cars, and Tesla is already close to single digit market shares. They are here to stay, but like other US brands I don't think they have such a bright future outside of the US.
[1] https://cleantechnica.com/2020/11/22/18-plugin-vehicle-share...
Battery technology is also, of course, critical to get the right balance of price, range, charging speed, production numbers, etc.
So given global regulations putting pressure on industry conversion from ICE to electric powertrains, there is zero doubt that investments will be made by big players and they will have to stop playing games and putting out weird-looking vehicles they do not really intend to sell. This will have an impact on Tesla's presumed dominance of electric cars, but how much of an impact is hotly contested!
Many of those cars in Europe are also plug-in hybrid, a pass over solution that also has to be replaced. Even more of them are small city cars with short range.
The same stories btw were going around about China. Tesla is losing market share in China and so on. And then Tesla opened a factory there, and guess what happened.
The same thing will be with Europe, once Tesla has a huge factory there, their market share will grow again.
That Tesla has even 12% (again with plug-in hybrids) share in Europe with a factory in California, compared to all the German and French companies who are producing locally is actually impressive.
Tesla globally has 28% of the pure BEV market, and that what matter the most.
The magic ingredients at Tesla are just not that magic.
Their vision is much bigger than the auto industry. It is to accelerate the world’s transition to sustainable energy.
I like their execution so far with the model 3, model y, and their focus on making a ton of batteries efficiently.
They seem to be one of the most innovative companies in the world: superchargers, solar roofs, power walls, energy storage, electric cars, self driving cars, etc... and their innovation seems to be based on inventing on principle as coined by Bret Victor.
The environment may be in flux with the financial markets frothy and governments are devaluing money, but I sure like this company’s prospects. I assign them many multiples over GM, Ford, etc... In the last 10 years, Tesla has started selling energy storage, power walls, solar roofs, etc.. . What have Ford and GM done in the same timeframe? Project out relative innovation rates over the next 5-10 years.
Just concede that you invested because you felt like it. It's probably okay, you very well might end up making a ton, and honestly who's to say the traditional methods are correct or are even applicable in 2020? But let's not kid ourselves trying to justify Tesla's value using traditional metrics.
And you try to tell me to concede. Do you not have any other way to evaluate stocks than traditional metrics?
You had no idea at what price point I invested. I mostly invested in the 200s and 300s pre-split. It split 5/1. It is over 600 today. Does a 60b valuation of Tesla sound like a deal?
When all you have is a hammer, everything that isn’t a nail must be bad.
https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-rat...
Ford's success with the F-150 line might be an exception here, but the pickup truck market will always be much smaller than the rest of the automobile market.
So watching the Model Y is probably a better indicator for the long-term growth of Tesla, and there's plenty of competition.
Just as a data point... GM's 15% profit margin[1].
[0] https://www.statista.com/statistics/276506/change-in-us-car-...
[1] https://www.cfo.com/financial-performance/2020/11/gm-posts-4...
https://finance.yahoo.com/news/ford-motors-debt-overview-120...
Ford is at 142B net debt. So if you add the debt to the market cap, you get about 177B.
https://m.benzinga.com/article/16826282
GM is around 88B net debt. Add to market cap to get 148B.
Tesla is probably close to 0 net with the latest raise.
https://finance.yahoo.com/news/teslas-debt-overview-12061451...
Money is cheap, so it makes all the sense to buy risky assets. What has the best chance at growth, Tesla or BWM, Airbnb or Hilton ...and so on. Tesla could be overvalued by 100x, and be still undervalued because its expected growth is still much higher than that of your other alternatives.
At the end of the day, Tesla futuristic, exciting, and keeps innovating. Every one else is just playing catch up. What is more likely, old school car companies learn to innovate, or Tesla learns to produce cars with less defects and for less? They seem like equally likely, but one is a much harder problem than the other as it is rooted in the very origins and goals of the company.
it is interesting to see all the justifications people are giving for Tesla's completely irrational valuation
Solar Roof/Solar Energy -> Solar City was going bankrupt and had to be bought by Tesla to save Musk's cousins (Rive) and his ownership stake in Solar City
Electric Cars -> Check out what is happening on Europe. People keep saying Tesla is doing very well in China, without understanding that Tesla has a very small share of China and BYD is the largest EV maker in China
Battery Storage -> So something that is a very small share of Tesla revenues will magically one day become a massive business?
It's one thing to say - It will add $50 billion to the company Completely different thing to say it will add half a trillion
Self Driving and Robotaxis - This has been the dream for the last 5 years Tesla said 1 million robotaxis by end of Dec 2020
Where are they?
The combination of messianic leader who claims he is doing it only to save the planet and the human race
combined with Fed printing money like its going out of fashion and investors desperate for returns
Is a very dangerous combination
Toyota produce the same number of cars they did 10 years ago, and their stock price is the same as it was 10 years ago. Yes, Toyota make an insane number of vehicles and make profit doing so, but chances are they'll be doing basically the same thing 10 years from now.
The article says Tesla's Revenue grew 28x in 10 years from 100M to 28B. The market is hoping/predicting/betting that will be the same in the next ten to roughly equal VW and Toyota at 280B by 2030. The ten years after that might see similar growth too..
For example another weird stock is Snowflake, which is currently at 100B but they themselves claim their total addressable market size is only 70B. Ditto for airbnb and doordash.
The money flow used to be pension fund - > some middle men - > financial assets.
Now it is consumer on an app - > financial asset.
While I do not think `app traders` account for a huge chunk of investments, I still think more people are now shopping for stocks as consumers and not as traditional investors. People are picking stocks like they were goods. And they seldom move the markets.
Tesla as a brand is loved. The love for that brand transpires to the stock
You add to that the poor yield on nation bonds, the volatility, the multiple billions pulling out of the dollar, the value of city center real estate crumbling with WFH... there is a lot of money in the market right now. It's time to build.
.
Tesla is tough to value, but I hang onto my shares for a few reasons.
#1 I've profited enough that I've been able to cash out my original stake. Right now any investment in Tesla is house money.
#2 Tesla is in a fairly unique position to gain from a lot of strong trends right now. Electric cars are just part of it. Tesla has their hands in a lot of the technology required for green power. Energy storage, solar, Tesla has their hands in it all. We're at the beginning of the curve on almost all of these technologies and Tesla has a pretty strong competitive advantage.
#3 Elon Musk. I'm not a fan of many of the things he says and does, but he seems to have a talent for coming out on top and being ahead of the technology curve. I would honestly prefer owning SpaceX to Tesla, but since Tesla is the only Musk company which is public, I'm content with a piece of it.
#4 Cars. The idea that VW/ GM/ Ford would leap frog Tesla once they started competing hasn't happened. Almost all the Tesla competitors either have far lower ranges, higher prices, or sometimes both.
I have no idea if Tesla is worth 1/3 of what the rest of the auto industry is worth. But a giant chunk of auto industry infrastructure is going to be obsolete within the next 30 years even as Tesla is perched to continue growing so perhaps this isn't too odd.
The EV market will grow as fast as the battery market can support it, and Tesla is by far the largest current buyer of batteries and they will continue to expand that. While at the same time also attempting to be one of the biggest battery companies in the world.
The Tesla 'pilot plant' they have in California, is targeted to be the 15 biggest battery factory in the world by end of next year. Its the same size as the plant VW and Northvolt have planned in Germany by 2026.
Tesla will in start building multiple huge battery factories next year, in Berlin and in Austin, Giga Nevada (biggest battery factory in the world, with Panasonic cooperation) will continue to grow and they will also continue to be one of the biggest costumers for LG and CATL.
We are quickly at the point where the raw material inputs will have a seriously hard time keeping up. Massive amounts of new nickel, lithium, cobalt and battery grade graphite need to be minded and refined. Nickel is the best investment, as there is basically no way around massively increasing nickel in the next 10 years.
This is before we even consider grid batteries. Li-Ion grid batteries, even when not able to be a backup for the cities are seriously useful for basically every grid operator in the world. While other storage mechanism exists, li-ion batteries are arguable the best in the market and will be for a long time.
Tesla is already a serious contender in that market (largest market share by far) both in terms of home and grid batteries. They already have all the software and electronics required, and already are in contact with utilities around the world.
People are very fast to claim 'bubble bubble bubble' but I would push people to seriously consider the market dynamics at play and how the transition EV and renewable energy will play out in the next 15 years. Tesla if you like them or not, is well positioned, in terms of EV, Grid Batteries and Solar installation, all of these will grow globally and exponentially over the next 10-15 years.
Just how many company buy outs are done via cash?
