Apple owns 75% of the entire profit share of the global smartphone business while making 13% of the phones. Tesla isn't even close to that kind of performance.
Not yet. But Tesla's P/E is 147 now at this quarters' rate of profit.
That's nothing for a company growing revenues at over 50% while still increasing its margins.
Also, Tesla is still production limited (i.e they would steal their competitors' market share if they have a few plants available). The only market where Tesla is not growing its share steeply is where they decided not to prioritize sales. Just look at the Model Y sales in Europe where they finally to make deliveries.
Tesla don't even have a pickup to sell yet, which is USA's #1 model.
Totally, and at some point in the future, if they're super lucky, they might be worth something around half of what they're worth today lol. I don't think they're going to grow the car market, which means they're worth at most what the car market is today. Further, I sincerely doubt theres a world in which they own 100% of the car market, so that means it's overvalued both now and into the future.
Toyota's worth 300B and they have excellent industry-leading margins. Tesla is priced at 900B while shipping a tiny fraction of the cars.
[edit] Tesla shipped 241,000 cars this quarter. Toyota shipped 2.2M. Tesla's car deliveries are literally a rounding error against Toyota's. It would take 6 years of 50% YoY growth to match Toyota's shipments alone this year.
[edit2] Toyota's PE is 9.6, so once mature, Tesla should also trade right around a 9.6 p/e, if they're really lucky.
Market valuation depends on expected future profit margin per car. Not on how many million low margin cars you have already shipped. Walmart has the highest revenue, while Apple has the highest profit. Shipping a bunch of low margin stuff is of little value.
The market expects tesla to beat Toyota by an order if magnitude on profit margin per car. As simple as that.
TBH, that's a prediction of the future that you haven't substantiated.
The fact that the have insane YOY growth with 14B quarterly revenue, are supply constrained - not demand constrained, have very high profit margin per car if you exclude new giga factory investments is sufficient to justify the stock price.
Again, that doesn’t make sense. Apple being the obvious example. You don’t necessarily revert to a market cap maximum. EVs can have high margins and scale. Tesla is positioned as the Apple of its market.
And its business is more than vehicles - a lot more. Stationary batteries also have fat margins.
> Once every other company is releasing high quality electric cars?
Like who exactly? Only the American automakers are taking this seriously. Most have them have a target of maybe 50% of their offerings to be electric by 2030. Some European brands are now starting to play serious VW at the forefront of it. And the ones resisting the most are the Japanese. Mazda doesn’t even commit to a hybrid and realizing more efficient ICs coming soon in 2024. Toyota and Honda are actively seeking to block incentives to EV makers.
And even if startups like Rivian or big players like Ford,GM and VW eventually start making cars at a much better quality, they still have to match the level of vertical integration that Tesla has. The lead they have is no joke.
Audi doesn't even have an R&D team for engines at this point. They're all in on electric, Mercedes is on a similar track. I'm not saying other companies will catch up soon, but Tesla needs to sustain their advantage for literally decades for this valuation to make sense. 10 years isn't enough.
I've heard very good things about Fords EVs. Battery tech way behind Tesla, but they're already starting to take some of Tesla's market.
Audi is a VW subsidiary. And VW's CEO (Herbert Diess) has said they don't expect to overtake Tesla, they just hope not to die trying to survive the transition.
> Like who exactly? Only the American automakers are taking this seriously.
Sorry, what now? In Europe, Tesla's market share is below 20%, because they're being outcompeted by Volkswagen and Renault. But European car makers aren't taking EVs seriously?
Couple of things. 1. I acknowledged VW as the only group seriously invested in EV 2. The statistics you mention only Europe, but if you look at US market, two thirds of the first half sales this year was Tesla, the next two Chevy (GM) and ford. Total accounting for 80% of the sales. 3. In your statistics, Tesla + VW account for 40% of the market share in EU, but your statistics is based on including PHEVs which lets be honest, isn’t exactly the same product as a BEV. If you remove the PHEVs, then Tesla suddenly starts looking a lot better. 4. And even if PHEVs were part of it, the top selling cars include ford, Kia and Hyundai. Yeah, European car makers are definitely playing catch up (with the exception of VW like I said)
Why now? Tesla are also improving and, from what we know, they're making bigger better (megacasting, cell to pack, FSD computers, etc). What's the competition's plan exactly? They'll be hard at work to try not to cannibalize their ICE sales in the meantime, too, since their resources to invest in BEV comes from ICE sales.
You think Tesla will have cheaper batteries than literally everyone else forever? Incredibly hard for me to believe that at least one company won't be able to create a competing battery. Differentiating on hardware has never been a way to create a trillion dollar company. It requires lock in via incredibly brand loyalty and Tesla doesn't have a big enough customer base atm.
What current margins? At what scale? Toyota has a best-in-class 6% profit margin, substantially better than its competitors sitting at 3%, and earns 20 billion dollars. Even at the most optimistic margins Tesla is vastly overvalued.
Ok, so what margin do you see justifying their valuation? 10%? 15%? The margins of a company like Microsoft who makes their money on software (30%)? Even if you used that last figure, they'd more than 80x over valuation on current earnings. This is a car company. There are fundamental limits on how much money you can make.
I think this really captures my view on the stock. There is one electric car in outer space right now, one premium brand. Everyone else is going to be in a race over market share and Tesla has a shot to keep high margins and use those margins to keep finding its lead.
I'll be up front in that I've never sat in either for more than in a showroom, but tell me the Taycan is not premium and the Tesla is. I have never heard of fit and finish issues like I hear Tesla customers complaining about, for example.
I think premium brands aren’t about the materials as much as they are about signaling brand values. A Porsche draws on foreign luxury ideas for playing a rich man, but a Tesla is for role-playing iron man with fancy new tech.
The taycan is not appealing to people who want a car of the future in the way the model s is. This value is intrinsic to the Tesla brand and the utility those customers get (over the costs of maintaining that brand halo) can be captured as margin for a long time to come.
Porsche is doing good, they plan to sell over 40,000 BEVs this year and 60-80,000 cars next year. Their growth rate looks good but that is still a far cry from what Tesla already sells and plans to sell next year.
I'm guessing Panasonic will prefer having more then a single costumer but regardless - that's quite a different narrative then "Tesla has a 5 year lead in battery tech".
How does Apple's profit compare to every other cell phone maker?
And how does Tesla's profit compare to every other car manufacturer?
Clearly Tesla is very early in their journey, and their valuation and PE is wildly different from Apple, they're not even in the same ballpark. The equivalent in Apple's trajectory would be Apple being valued in 2008 say after the promising iPhone launch at almost 1 trillion, does that sound reasonable to you? In fact they were valued in 2008 at 80 billion, 1/10 of Tesla at present.
I think it's too high, the parent thinks it's too high, and even Elon Musk thinks the valuation is too high (as he said twice earlier this year).
For cellphones, there is value in having the same phone as your peers, it gives you status.
For cars, there is value in having a different car than your peers, it gives you status.
The larger Tesla's market share grows, the more boring it will become to own one, and the more exciting the competition is going to get in the public mind. With comparable competition, Tesla will never ever get a total car market share over 30%.
