Tesla, the investment

[Jaqen Haghar MD]

As burritos said, Tesla's whole goal is the acceleration to sustainable transport and energy. They're obviously looking to make money along the way as well, but overall they want to make the world more sustainable.

Even if China does appropriate Tesla's tech and copies it, once implemented, Tesla will be on the next iteration of technology which is why they're so far ahead of other OEMs. Tesla had a 5-10 year head start. The other OEMs can emulate some stuff and start to catch up, but as long as Tesla keeps innovating, everyone else will remain years behind. During this pandemic, a lot of companies had to cut costs to survive which means reducing spending on areas that weren't making money (their EVs). So unfortunately that puts them even further behind.

'The competition is coming' has been said for at least 3 years now? So we'll see how the future plays out.

I doubt Tesla or Musk cares about sustainable anything. They are about making money and new exciting technology. Which is fine.

I’d bet musk would be willing to bulldoze every rainforest on the planet to get it done. Sustainable energy is popular right now, so it makes an excellent marketing anchor, and their product fits the description. Musk is a marketing genius.

I don’t believe competition is hot on their heels either. They have no serious competition as of yet. People don’t seem to want electric cars, they want Teslas. That’s what a lot of the major car companies don’t understand.

They want new, fancy tech. That’s why Nikola was a draw too. The Chevy electro-mobile just won’t have the draw because it reminds people of old motors.

GM might still be able to salvage value from the futuristic name and idea of the empty shell of Nikola, I hope they build great electric trucks under the name and don’t mention GM at all in association.

[mgchan]

I doubt Tesla or Musk cares about sustainable anything. They are about making money and new exciting technology. Which is fine.

I’d bet musk would be willing to bulldoze every rainforest on the planet to get it done. Sustainable energy is popular right now, so it makes an excellent marketing anchor, and their product fits the description. Musk is a marketing genius.

I don’t believe competition is hot on their heels either. They have no serious competition as of yet. People don’t seem to want electric cars, they want Teslas. That’s what a lot of the major car companies don’t understand.

They want new, fancy tech. That’s why Nikola was a draw too. The Chevy electro-mobile just won’t have the draw because it reminds people of old motors.

GM might still be able to salvage value from the futuristic name and idea of the empty shell of Nikola, I hope they build great electric trucks under the name and don’t mention GM at all in association.

I don't have much comment with regard to Musk's intentions, though I tend to believe that it's a combination of making money and a clear necessity to move toward sustainable energy. He has been pretty good about figuring out long term trends and how to make money off those trends.

Personally, as a recent Model 3 owner, the main reason I bought a Tesla is because it's relatively future proof with software updates, and because autopilot is way ahead of its competitors. The other companies want to just make their same cars but electric versions that cost more. Taking a fresh approach to things, rather than trying to modify existing products, is what is allowing relatively new companies around the world to disrupt existing industries with far more efficiency and efficacy.

[burritos]

While Tesla isn't a scientific truth and ev's may never replace ice in our lifetime, the above does apply to new innovations.

[Nysoz]

Well I don't know if it'll be a good investment or not, but Tesla released another limited run item. Teslaquila, basically branded tequila that was reportedly limited to 20k bottles. Bought it to collect and possibly sip on/sell. Sold out in hours.

https://teslatequila.tesla.com/

[Nysoz]

Well it finally happened after much speculation. Tesla to join the s&p 500 on dec 21

Up 13.5% in after hours trading. It’s going to be a crazy month for the share price lots of ups but then potentially back down to some unknown new baseline

[EntrepreneurMD]

NDX generally outperforms SP by capturing the meteoric appreciation of unicorns on the way to behemoth status.

NDX feels bad for SP, so Tesla will now be a part of SP with a roughly $400B valuation next month. Problem is given current size, future percentage gains will be more muted relative to the next TSLA.

Hence why I'm more a fan of NDX over SP during bull runs, but not bear runs.

[xraygoggles]

Upgrade today by Wall Street analysts. Nearing the previous ATH around 500.

Need more updates from BCBiker on his net worth.

Also need a few paragraphs from Nysoz .

[Kuratz]

Seemingly every month I think to myself "this is incredibly over-valued" and yet like clockwork it continues to go up.

Tesla manufactured 145,000 cars in Q3 2020
Toyota, the next largest by market cap, sold 670,000 cars in Q3 2020

Tesla has a market cap of $461B
Toyota has a market cap of $191B

That's almost and 11-fold difference in the valuation based on sales. To me, even for a revolutionary company this is insane.


I don't understand. And that's why I don't pick single stocks to invest in.

[Nysoz]

Well it's overvalued currently, but if you look forward 2-3-10 years it starts to look less crazy. Q3 they delivered 140k cars at ASP $52k or so ($55k if you include regulatory credits). They're continuing to ramp their production/deliveries and have a good chance to hit their 500k goal this year despite covid. Tesla is on track next year to deliver 500k this year, 800k-1M 2021, 2M+ in 2022-2023 once their factories (old and new) are optimized and running. 2M cars at a $45k ASP is $90B in revenue in cars alone and approaching a profit margin of 30% for them. Add on their growing energy/services and their p/e isn't astronomical anymore. Last quarter they delivered 140k cars and had $1.4B in free cash flow and ended with $14.5B with cash on hand. They did a capital raise of $5B not too long ago and was done in a week. Tesla's goal is 20M cars in 2030 which would be essentially $1T in revenue in cars (definitely lofty and not sure where they'll land there but shows their planned exponential growth).

So for their EV business, they're still the leader in EVs, especially mass market. Still the most efficient cars on the road. 'Competition is coming' but they've been saying this for years. All the OEMs are making plans for EVs but none have been able to scale yet. It's easy to say we'll have this many models and have these specs, but producing them, especially on a mass scale is hard (lol at the hummer being $80-110k and not the same specs as the cybertruck). The pure chinese EV companies (Nio, Xpeng, BYD) and VW probably have the best chance at making comparable mass production EVs. OEMs think of EVs as a car with an electric power train, Tesla thinks of EVs as a computer on wheels. Another problem is that the OEMs are announcing EV specs in 2022+ that are comparable to Tesla specs today. So if Tesla stands still, OEMs will make a comparable car in the future, but Tesla will keep innovating/improving.

To continue the computer on wheels, they're also selling software upgrades to the car. FSD package, acceleration boost (controversial) is pretty much pure profit/increased margin. Currently it's estimated around 25% of people get FSD. They're in a private beta with the new software now and it's capable of no intervention point a to b driving (still has a long way to go for full level 4-5). Once they fully solve FSD, they'll keep increasing the price to some unknown number (currently $10k) as well as have a subscription model. Since Teslas can update over the air, all already produced cars that don't have it is an untapped potential revenue/pure profit.

Once they solve FSD (years down the road) they can potentially start their 'robotaxi' network. Might only be in certain areas, or certain trucking routes at first but who knows if/when this will ever be a thing. In 10 years, if it's cheaper to ride hail a robotaxi, would anyone own a car anymore? Especially in cities.

To help solve FSD, they're building their Dojo neural network super computer. It's supposed to be better than current super computers and would potentially allow them to get into cloud computing as well.

I'm actually more interested in the energy storage side of their business now. Fossil fuel and coal plants doesn't make sense to me if we get unlimited free clean energy from solar, wind, hydroelectric. Solar and battery farms are getting cheaper and cheaper. Latest is that it's cheaper to build out solar than a new coal factory. Put solar on every roof, above parking lots, next to highways etc and that's more than enough energy. The trick is storing it and distributing it. Battery farms are nice, there's pumped water, concrete gravity options as well. A lot of the battery farms Tesla have installed have paid for themselves in like 2-3 years by replacing peaker plants.

It's not talked about much, but Tesla insurance is worth mentioning. Insurance is about data. As of now, insurance companies basically group you into a demographic and you pay insurance based off that. Tesla has so much data about how you drive your car, they can determine your personal risk of accident rather than your cohort. Think of how much you pay for car insurance. My old highlander was $30k and I kept it for 8 years. I paid around $100 a month in insurance or $1200 a year. Over 8 years, I paid $9600 or 32% of the car for insurance and never had a claim. With all the data they have, Tesla should be able to charge me less money because statistically I'll never get into an accident and therefore pure profit for them. Even if I do, they can do the repair themselves instead of having to hire out a 3rd party to fix it.

As for investing in the company, I only recommend it to people if you want to follow Tesla closely and will hold for 10 years through the 20%+ swings. They have to keep executing on their plans and you have to believe they can. If they stop their growth story then it'll lose that multiple/forward looking component of their valuation. Otherwise you'll own it via index funds now. It's hard to say when to get in though as they just announced S&P inclusion sparking this current run up (I'm not buying anymore currently). At a $400-500B market cap, it'll be 1% or so market weighted of the S&P 500. There's a total of $11.2T benchmarked to the S&P 500, $4.6T in indexed assets. To make up 1%, that's a potential $40-100B of shares of Tesla that would need to be bought to be correctly market weighted (if they haven't already bought in). There's a lot of speculation about this and no one knows the answer of how this will get done (jim cramer says they're baffled about how to do it). Retail investors are trying to buy in ahead of the institutions/indexes really running up the share price. More than likely the share price will spike up from this then settle back down somewhere.

It's definitely a risky stock/company to own, but I reduce my risk/cap profits by selling options which is profitable with the inherent volatility that comes with TSLA. I'll write up my strategy/results of this in march/april when I have a full year of options and 6 months of margin use. If Tesla executes on all their plans, it'll be the most valuable company by 2030. To me, Tesla is a once in a generation company that's revolutionizing transport and energy. The same way Amazon changed online retail/web services, Apple with the phone, Google with search/ads.

[Tim]

Might want to take a look at a market analysis. Vehicle volumes are like computer sales but a little more complex due to the new/used volumes.
Each needs to be forecasted. Funny thing with forecast of the EV market is the "life" that Elon touts so much.
Take total car sales, divide it into the two segments, adjust for the "new long lasting EV's" and get back with a realistic market share by model.
Just some stats that seem to indicate that the EV market is currently "tilted" to California. The volumes are global that you seem to be referencing. Not saying they are wrong, just seem to be Elon extrapolations.

https://policyadvice.net/insurance/i...es-statistics/

[Nysoz]

From your link, Hopefully, the US auto sales statistics featured in this article have expanded your understanding of the car market in the US as well as around the globe. Most trends indicate that in the future, the number of gas, petrol, and diesel-based vehicles will fall considerably, giving way to electric vehicles. Most manufacturers will remain in business, yet market changes will also favor electric-focused brands such as Tesla and other relevant competitors, which will be responsible for a significant percentage of future American cars’ sales.

It’ll be a question of how long it takes for mass adoption, if the infrastructure will be expanded to support it by that time, if there will enough raw materials to create the batteries for all these cars.

If the argument that an ev is essentially better than ice vehicles in most scenarios isn’t good enough, some governments are pushing/encouraging/forcing people to make the change in the future (for better or worse). More and more places are banning new ice sales by 2030.

With minimal used evs on the market people will be pushed towards new in the short term. Most evs are on the expensive side so Tesla’s planned $25k car is even more important. Also by that time, evs will have been out long enough and continue to prove that total cost of ownership is cheaper for evs. Hopefully people will start realizing that and factor that into purchasing cost.

[Tim]

competitive market share and data are in terms of volumes and market share. I had my fill, not going to take a look at cars, pickups, etc.
Over estimate and there is a huge fixed cost and underutilized capacity. Under estimate and a huge opportunity lost. That is IF you can execute at peak efficiency.
If the number are wrong, (total vehicles, EV/Ice/, new/used , geographic, model/type) . There are some real questions about whether governments can survive with their ultimatums. How many weeks was Paris shut down with riots? This ability of forcing people has lit a fuse in western civilization. Particularly the EU. There is political risk that is tough to measure in China/EU/NA. Do you think the California enforcement model is going to fly in the USA? I doubt it. I don't see the USA following the California regulation model. Maybe, no telling.

[Tim]

https://www.cnbc.com/2020/12/12/tesl...ays-email.html

Production shutdown at the end if a quarter is not a positive sign. Actually, it is a red flag regarding a capacity problem. Last resort for these lines. End of life management shifts to cost containment. Huge cost factor with zero revenue. Without aftermarket suppliers, there are warranty and parts availability issues legally and customer relations. “My door latch broke” and no part available is not a good reason to total the car. Junkyard time? Hope Tesla has some ingenuity, like logistics folks the know how to forecast 5 year supplies.

[Nysoz]

Rumor is possible model s and/or x refresh. They’ve looked the same for quite some time now and are due for an update. Other possibilities are line optimization, manufacturing improvement, other additions like the heat pump. I think it’s too early for the plaid powertrain but who knows.

they still have parts so they’re still able to repair any broken door latches?

[Random1]

Walmart is the largest company in the US , if it had the same valuation of Tesla , it would list for $5000 a share. They obviously have two completely different business , but eventually price will normalize to earnings.