Is Tesla a good investment?

[DarkandStormy]

I'll take the CEO's counsel - https://mobile.twitter.com/elonmusk/status/1256239815256797184

@elonmusk
Tesla stock price is too high imo

[Telecaster]

Didn't the SEC ban him from talking about stock prices?

[DarkandStormy]

Didn't the SEC ban him from talking about stock prices?

Either his twitter sitter approved the tweet or there's another lawsuit coming lol

[ColoradoTribe]

The tweet was stupid, but didn’t violate his SEC settlement.

I know haters gonna hate, but...

1-yr return
VTI, -5%
TSLA, +198%

5-yr return
VTI, +30%
TSLA, +221%

10-yr return
VTI, +230%
TSLA, +3,094%

Is Tesla a good investment? Yeah, I think so.

Note, I’m not trashing VTI, which is my largest holding.

[diggo]

The tweet was stupid, but didn’t violate his SEC settlement.

I know haters gonna hate, but...

1-yr return
VTI, -5%
TSLA, +198%

5-yr return
VTI, +30%
TSLA, +221%

10-yr return
VTI, +230%
TSLA, +3,094%

Is Tesla a good investment? Yeah, I think so.

Note, I’m not trashing VTI, which is my largest holding.

Tesla's price is way beyond fundamentals now. Irrational exuberance is driving the stock price. There's no way it is worth ~$145 billion. For that price you can own ALL of the following brands PLUS about $20B spare cash:

Mercedes, BMW, Audi, Volkswagen, Porsche, Lamborghini, Rolls Royce, Bentley, Mini, Bugatti, Skoda, many others.....

I really like what Elon is is doing and I hope Tesla succeeds. But huge competition is coming to the Electric Vehicle / Autonomous Driving space. Tesla's EV market share will diminish over time and there's not much you can do about it. The auto industry is a tough business to be in, you cannot monopolize it.

It's trading around $770 right now. I think it will be under $200 per share again in the not too distant future.

[DarkandStormy]

The tweet was stupid, but didn’t violate his SEC settlement.

I know haters gonna hate, but...

1-yr return
VTI, -5%
TSLA, +198%

5-yr return
VTI, +30%
TSLA, +221%

10-yr return
VTI, +230%
TSLA, +3,094%

Is Tesla a good investment? Yeah, I think so.

Note, I’m not trashing VTI, which is my largest holding.

You do realize you can cherry pick a bunch of stocks to make them look like incredible investments, right?

1-year return:
ISEE: +146%
DRRX: +196%
EVER: +367%

5-year return:
NFLX: +356%
MKTX: +413%

10-year return:
AVGO: +1,182%
NFLX: +2,611%
MKTX: +3,131%

Of course, you can back test any # of stocks and show that they're good investments, far outpacing the major indices, etc.

As diggo noted, normal fundamentals don't apply to TSLA.  It's basically a cult stock.  Whether that makes it a "good" investment is subjective.

[lemonlyman]

You do realize you can cherry pick a bunch of stocks to make them look like incredible investments, right?

Seems to me that those stocks you cherry-picked have clearly been good investments to their shareholders if those returns are accurate. Don't understand your point, though. ColoradoTribe has been arguing in the affirmative of the topic since the start of the thread 2 years ago. It's an irrefutable fact that shareholders since the start of the thread have benefited from Tesla stock appreciation.

Plenty of arguments and projections have been made in this thread for future valuations based on product and service growth so saying normal fundamentals don't apply, when stock prices reflect growth projections of institutional and retail investors, is disingenuous. I agree what's considered a good investment is subjective. You mentioned earlier that you don't buy individual stocks because all are too risky so by definition all stocks are cult stocks to you. Yet you know enough about TSLA to post short investment theory. Why?

[DarkandStormy]

You do realize you can cherry pick a bunch of stocks to make them look like incredible investments, right?

Seems to me that those stocks you cherry-picked have clearly been good investments to their shareholders if those returns are accurate. Don't understand your point, though. ColoradoTribe has been arguing in the affirmative of the topic since the start of the thread 2 years ago. It's an irrefutable fact that shareholders since the start of the thread have benefited from Tesla stock appreciation.

Plenty of arguments and projections have been made in this thread for future valuations based on product and service growth so saying normal fundamentals don't apply, when stock prices reflect growth projections of institutional and retail investors, is disingenuous. I agree what's considered a good investment is subjective. You mentioned earlier that you don't buy individual stocks because all are too risky so by definition all stocks are cult stocks to you. Yet you know enough about TSLA to post short investment theory. Why?

Did not realize ~2 years was the time horizon for what we determine to be a "good" investment.  As this forum is FI-focused, I imagine people have a longer timeline in mind, which is why many (most?) invest in index funds.

The entire basis of whether or not Tesla is a "good" investment is if you think the return/reward outweighs the risk.  Investing in a single company comes with inherently more risk than broad-based index funds.  That is all this is - do you think TSLA can outperform whatever index over the time period you want to be invested.  That's it.

I do not think all stocks are cult stocks.  That's a bit of a strawman, eh?

Just because I don't invest individually in TSLA (I probably have ~5 shares via index investing) means I suddenly can't or shouldn't be somewhat aware of its performance?  LOL what a crock of crap that is.  Sorry, didn't realize there were pre reqs to pass to be able to post about TSLA lmao.

I said it before, but I'll reiterate - I admire Tesla from a distance, from a "this is needed for the future of our planet and species" point of view.  I think the cars are cool.  I think Musk is a shit CEO and has developed a cult-like following not dissimilar from Pete.  I think Tesla routinely misleads the public about its timelines and overstates the functionality of "full self driving."  I think they are ahead of their competition in terms of EV range and ease of use (superchargers, app, etc.).  I can think all of these things about the company, some you may view as a positive and some you may view as a negative.  It's a fascinating company to observe.  I read the book on Musk several years ago and spent many hours reading about him on waitbutwhy.  I just don't happen to view TSLA as a sound investment for me and I think investing in any individual company as a material percentage of one's portfolio is risky.  It's why *most* FI bloggers, podcasters, etc. advocate all or nearly all investments to go to index funds.  I still fail to see why I can't comment on TSLA?  Heck, most of what I've posted barely scratches the surface - you can find much more in-depth analysis of the company out there.

[lemonlyman]

The cult stock comment wasn't fair. A good investment can be for any time horizon. Whatever desired gain over a time period. Not all have to be long term. IMO, the vast majority of FI bloggers say what's safe to bait affiliate clicks, churning out the same article every 6 months that someone else already wrote better 5-10 years ago. Of course I think TSLA will outperform the index over the next 5 years. 2 year time horizon on on this thread is just a fact.

I didn't say you couldn't comment on Tesla. I want to understand your valuation. If it's just that it's too risky and you don't like the CEO,
Ok, but you posted information about fraud in the 10Q. Do you agree that their current financials are fraudulent?

[ColoradoTribe]

The tweet was stupid, but didn’t violate his SEC settlement.

I know haters gonna hate, but...

1-yr return
VTI, -5%
TSLA, +198%

5-yr return
VTI, +30%
TSLA, +221%

10-yr return
VTI, +230%
TSLA, +3,094%

Is Tesla a good investment? Yeah, I think so.

Note, I’m not trashing VTI, which is my largest holding.

You do realize you can cherry pick a bunch of stocks to make them look like incredible investments, right?

1-year return:
ISEE: +146%
DRRX: +196%
EVER: +367%

5-year return:
NFLX: +356%
MKTX: +413%

10-year return:
AVGO: +1,182%
NFLX: +2,611%
MKTX: +3,131%

Of course, you can back test any # of stocks and show that they're good investments, far outpacing the major indices, etc.

As diggo noted, normal fundamentals don't apply to TSLA.  It's basically a cult stock.  Whether that makes it a "good" investment is subjective.

I'm not cherry picking. I've owned Tesla stock since 2013. It is the only individual stock I own. I could sell my holdings today and would have nearly tripled my investment. I didn't cherry pick my dates either, as 1, 5 and 10 years are pretty standard investment performance intervals.  You don't like Tesla or think its a good investment. The return numbers suggest otherwise. No one is forcing you to invest, so not sure why people not invested in Tesla have such strong feelings about the company.

[DarkandStormy]

I didn't say you couldn't comment on Tesla. I want to understand your valuation. If it's just that it's too risky and you don't like the CEO,
Ok, but you posted information about fraud in the 10Q. Do you agree that their current financials are fraudulent?

I believe multiple people with more time on their hands and who are smarter than me believe the current financials are misstated - fraudulent implies intent to mislead.  I also trust the auditors or SEC to catch any such fraudulence if random twitter users can point it out the day the 10Q is published.

[Daisyedwards800]

PwC is their auditor.  If there is intent to mislead it's tough for auditors to figure that out, but PwC is a top firm.

(Bought at $190 and $323).

[ColoradoTribe]

The tweet was stupid, but didn’t violate his SEC settlement.

I know haters gonna hate, but...

1-yr return
VTI, -5%
TSLA, +198%

5-yr return
VTI, +30%
TSLA, +221%

10-yr return
VTI, +230%
TSLA, +3,094%

Is Tesla a good investment? Yeah, I think so.

Note, I’m not trashing VTI, which is my largest holding.

Tesla's price is way beyond fundamentals now. Irrational exuberance is driving the stock price. There's no way it is worth ~$145 billion. For that price you can own ALL of the following brands PLUS about $20B spare cash:

Mercedes, BMW, Audi, Volkswagen, Porsche, Lamborghini, Rolls Royce, Bentley, Mini, Bugatti, Skoda, many others.....

I really like what Elon is is doing and I hope Tesla succeeds. But huge competition is coming to the Electric Vehicle / Autonomous Driving space. Tesla's EV market share will diminish over time and there's not much you can do about it. The auto industry is a tough business to be in, you cannot monopolize it.

It's trading around $770 right now. I think it will be under $200 per share again in the not too distant future.

Which of the car brands you listed is doubling sales year over year? In fact, Tesla is the only domestic manufacturer with increasing sales these days. Investing in any of those traditional car companies in 2020 would be like investing in the country's largest livery stables in 1910, while laughing at the puny new car companies and their small sales. You'd be talking about how "Ford is sooo over valued compared to the livery companies, which sell 100 horses for every new fangled car." Ten years later you would have been broke. Horses to cars might seem like a bigger shift than ICE to EV, but fundamentally it will be the same and many of the current car brands will not survive.  Tesla is priced higher than those companies because you invest based on future valuation and revenue and not the past.

No traditional manufacturer has come close to matching Tesla on performance, range and price. Some are cheaper with less range, poorer performance and faster battery degradation. Some can match performance and range, but at a higher price. People have been talking about how Tesla is going to get squashed by the competition for years and years, and Tesla's lead and market shares have expanded each year. In response to the pandemic all the major manufacturers are pulling in their EV investments, which means Tesla's lead and market share will only increase further going forward. That's the problem, the Fords and GMs of the world can't invest heavily in the future while also maintaining their core ICE business model and without pissing off their investors that only care about their dividend and the next quarterly earnings report.  They can't serve two masters and Tesla has no such conflict.

Its another misconception that Tesla needs to "monopolize" the EV market to succeed. A smaller slice of a growing pie still makes for a wildly profitable Tesla. Its also a misconception that Tesla is only an EV company.

Tesla is a volatile stock, so I know and expect more violent swings in the future. I'd say 400 is the floor unless the whole global economy goes down the shitter, than it doesn't really matter where you're invested.

[Telecaster]

Which of the car brands you listed is doubling sales year over year? In fact, Tesla is the only domestic manufacturer with increasing sales these days. Investing in any of those traditional car companies in 2020 would be like investing in the country's largest livery stables in 1910, while laughing at the puny new car companies and their small sales. You'd be talking about how "Ford is sooo over valued compared to the livery companies, which sell 100 horses for every new fangled car." Ten years later you would have been broke. Horses to cars might seem like a bigger shift than ICE to EV, but fundamentally it will be the same and many of the current car brands will not survive.  Tesla is priced higher than those companies because you invest based on future valuation and revenue and not the past.

The part in bold is the whole key.  You are absolutely right.  Over the long term you are buying the expectation of future earnings. 

So let's go back to the VW/Telsa comparison.  Tesla of course has a higher market cap than VW.  Now, Tesla hasn't yet posted a yearly profit, so we can't look backwards.  But let's assume at some point Tesla makes the same number of cars as VW, and makes the same amount of money on each car.  At that point they would be worth about the same amount of money.  If Tesla grew sales by 25% a year, it would take them 15 years to reach VW's sales last year.   And that's sales, Tesla would have to grow profits even faster.

Anything is possible I suppose, but you are paying an enormous premium for the expected growth. 

[aspiringnomad]

Which of the car brands you listed is doubling sales year over year? In fact, Tesla is the only domestic manufacturer with increasing sales these days. Investing in any of those traditional car companies in 2020 would be like investing in the country's largest livery stables in 1910, while laughing at the puny new car companies and their small sales. You'd be talking about how "Ford is sooo over valued compared to the livery companies, which sell 100 horses for every new fangled car." Ten years later you would have been broke. Horses to cars might seem like a bigger shift than ICE to EV, but fundamentally it will be the same and many of the current car brands will not survive.  Tesla is priced higher than those companies because you invest based on future valuation and revenue and not the past.

The part in bold is the whole key.  You are absolutely right.  Over the long term you are buying the expectation of future earnings. 

So let's go back to the VW/Telsa comparison.  Tesla of course has a higher market cap than VW.  Now, Tesla hasn't yet posted a yearly profit, so we can't look backwards.  But let's assume at some point Tesla makes the same number of cars as VW, and makes the same amount of money on each car.  At that point they would be worth about the same amount of money.  If Tesla grew sales by 25% a year, it would take them 15 years to reach VW's sales last year.   And that's sales, Tesla would have to grow profits even faster.

Anything is possible I suppose, but you are paying an enormous premium for the expected growth.

Not sure where you're getting your assumptions. But does VW generate 20-25% margins on the cars they sell? Do they have a fast growing battery storage and energy generation business? Do they collect revenue from software sales like Tesla does and a path to ramp up that revenue as quickly as Tesla does? Are they unencumbered by legacy ICE suppliers, labor agreements, and manufacturing investments like Tesla is?

Point is, you might be right but your back of the envelope analysis isn't more nuanced than the market's.

[lemonlyman]

Tesla's future revenue will be influenced as much by software as hardware so comparing its future revenue apples to apples with VW doesn't really make sense. It released utility scale energy software last week. VW isn't doing anything like that.

Today, primarily, Tesla develops hardware (the cars) that delivers software. Not much of the software has been released, but it'll grow very fast as more cars continually hit the road. For example, Tesla Maps will have a couple million mapping nodes constantly driving around gathering data in the next year or two. Where Google can infer an accident has occurred either through movement of devices using Google Maps or from user input, Tesla will be able to show images to the car console (or phone app) about what the accident looks like and the progress of restoring normal traffic from Tesla vehicles passing it allowing users to make better navigation decisions. Morgan Stanley estimates Google Maps provides $3-5 billion of high margin revenue. Google and Apple won't be able to compete with Tesla Maps visual data. That's just one small potential software product Tesla can do that VW can't.

[TomTX]

So let's go back to the VW/Telsa comparison.  Tesla of course has a higher market cap than VW.  Now, Tesla hasn't yet posted a yearly profit, so we can't look backwards.  But let's assume at some point Tesla makes the same number of cars as VW, and makes the same amount of money on each car.  At that point they would be worth about the same amount of money.  If Tesla grew sales by 25% a year, it would take them 15 years to reach VW's sales last year.   And that's sales, Tesla would have to grow profits even faster.

Anything is possible I suppose, but you are paying an enormous premium for the expected growth.

Since the launch of the Model S, Tesla has had an annual unit growth rate averaging above 50% per year.

Other than immediate COVID-19 impacts, why do you think their growth rate would be cut in half? Especially now that they've proven they can stand up a new factory (muddy field to Model 3 output) in less than a year.

In addition, they seem to be a leading performer in the rapidly expanding stationary storage market, and based on recent leaks - the incumbent old-school car manufacturers believe Tesla is far ahead of them in software.

[FrugalSaver]

Opportunity to get in much lower coming up soonish

[kenmoremmm]

i've never been on the tesla-train, but after reading more about EV's lately, youtube recommended this fine video for me:
https://www.youtube.com/watch?v=pP971PYzQJs

sure looks like a good long term plan.

[medinaj2160]

The tweet was stupid, but didn’t violate his SEC settlement.

I know haters gonna hate, but...

1-yr return
VTI, -5%
TSLA, +198%

5-yr return
VTI, +30%
TSLA, +221%

10-yr return
VTI, +230%
TSLA, +3,094%

Is Tesla a good investment? Yeah, I think so.

Note, I’m not trashing VTI, which is my largest holding.

You do realize you can cherry pick a bunch of stocks to make them look like incredible investments, right?

1-year return:
ISEE: +146%
DRRX: +196%
EVER: +367%

5-year return:
NFLX: +356%
MKTX: +413%

10-year return:
AVGO: +1,182%
NFLX: +2,611%
MKTX: +3,131%

Of course, you can back test any # of stocks and show that they're good investments, far outpacing the major indices, etc.

As diggo noted, normal fundamentals don't apply to TSLA.  It's basically a cult stock.  Whether that makes it a "good" investment is subjective.

I'm not cherry picking. I've owned Tesla stock since 2013. It is the only individual stock I own. I could sell my holdings today and would have nearly tripled my investment. I didn't cherry pick my dates either, as 1, 5 and 10 years are pretty standard investment performance intervals.  You don't like Tesla or think its a good investment. The return numbers suggest otherwise. No one is forcing you to invest, so not sure why people not invested in Tesla have such strong feelings about the company.

I agree 100%. I was able to get VTI at $110 at the bottom of the COVID drop and Tesla....guess which one has doubled?

Tesla has become my largest holding and I am not planning on selling any of it any time soon but maybe in 10 years. My index funds will make me a millionaire but IMO will make me multiple millions. If I am wrong I will just work a few more years. My average cost is around $250 and I believe we might see $600 Tesla shares in the future but not much lower than that.

[FrugalSaver]

TSLA is worth more than every US auto maker and every US airline...combined

[waltworks]

TSLA is worth more than every US auto maker and every US airline...combined

I mean, to be fair, that's actually possible and even reasonable depending on your assumptions. Legacy automakers and airlines have HUGE liabilities (pensions, union contracts, etc). In the case of airlines, there's some uncertainty as to whether they will even exist without continued gov't intervention (in many cases a bailout will wipe out stockholders 100%, too).

So that comparison is IMO a bit silly right now. A lot of the automakers and airlines could have literally no future value if you're looking at it from the perspective of a stockholder.

That is not to say that Tesla is a screaming buy or anything.

-W

[MustacheAndaHalf]

TSLA is worth more than every US auto maker and every US airline...combined

There's dozens of companies larger than the entire airline industry: Oracle, McDonalds, Netflix, Intel, Visa, Apple... but it doesn't really mean anything about those companies.

How is the airline industry relevant to the stock price of a car marker?

[Pizzabrewer]

Broke $1000 today.

[talltexan]

I saw that Tesla passed Toyota to become the #1 car company in the world in market cap. Quite the milestone!

[effigy98]

Stacking Tesla's, Leverage up on options with fed bailing us out. 6 trillion gotta go somewhere. Fundamentals irrelevant. Outrageous optimism.

[lemonlyman]

I don't use leverage, but I did buy some TSLA leaps recently. I think the stock will be $2k by Q1 2021, but the leaps give more than 2021 to reach that and return 3x compared to 2x on holding the stock in that time.

[HPstache]

I saw that Tesla passed Toyota to become the #1 car company in the world in market cap. Quite the milestone!

Revenue on the other hand is 1/10th of Toyota, last time I checked.  Not going to lie though, wishing I would have dumped my money into Tesla during this most recent bottom!

[MustacheAndaHalf]

Looking at Tesla, I don't know if it will be up +50% or down -50% a couple years from now.  The bull case is the Tesla story, cemented by a new factory in China and inroads in the Chinese market.  The bear case could be financials and competitive risks.  Maybe the bull case plays out first, then the bear case?

[lemonlyman]

Bull case is 10+ years: technology disruption in transportation and energy. It's a long case. More near term: 1.5 million vehicles produced in 2022 from Fremont, China and Germany factories at 25%-30% margins possibly with new battery cell design ( to be detailed in Sept).  Semi at scale and possibly cybertruck at scale as well. Some monetization timeline for FSD. Nationwide insurance service. 1000/week solar roof installations (no clue what margins are). ~$600b market cap Q1 2023.

Bear case is rearview fundamentals analysis or financial fraud/conspiracies. A lot of bears expect a lawsuit or audit to blow everything up. If they're right, there's no timeline for something like that investment wise.

[sherr]

Bull case is 10+ years: technology disruption in transportation and energy. It's a long case. More near term: 1.5 million vehicles produced in 2022 from Fremont, China and Germany factories at 25%-30% margins possibly with new battery cell design ( to be detailed in Sept).  Semi at scale and possibly cybertruck at scale as well. Some monetization timeline for FSD. Nationwide insurance service. 1000/week solar roof installations (no clue what margins are). ~$600b market cap Q1 2023.

Bear case is rearview fundamentals analysis or financial fraud/conspiracies. A lot of bears expect a lawsuit or audit to blow everything up. If they're right, there's no timeline for something like that investment wise.

Lol, "the bear case" does not require some kind of fraud/conspiracy, simply an acknowledgement that TSLA is currently vastly overvalued and that it will be many years - even assuming things go well for the company - before its current valuation makes sense. Which is I suppose what you're calling "rearview fundamentals analysis". I own a Tesla and love it, but I think you're nuts to believe it'll be $2k a year from now. But who knows, I think the current price is nuts too, so maybe you'll be right.

[lemonlyman]

Lol, "the bear case" does not require some kind of fraud/conspiracy, simply an acknowledgement that TSLA is currently vastly overvalued and that it will be many years - even assuming things go well for the company - before its current valuation makes sense. Which is I suppose what you're calling "rearview fundamentals analysis". I own a Tesla and love it, but I think you're nuts to believe it'll be $2k a year from now. But who knows, I think the current price is nuts too, so maybe you'll be right.

Yeah, if you value based on historical financials and operations, it's overvalued. That's a rearview perspective and a legitimate bear case. It's the best way to value mature companies because there's very little change year to year. I am not of the opinion that Tesla is a mature company or should have a mature auto OEM multiple on projected earnings. What do you think it should be worth a year from now?

[sherr]

Lol, "the bear case" does not require some kind of fraud/conspiracy, simply an acknowledgement that TSLA is currently vastly overvalued and that it will be many years - even assuming things go well for the company - before its current valuation makes sense. Which is I suppose what you're calling "rearview fundamentals analysis". I own a Tesla and love it, but I think you're nuts to believe it'll be $2k a year from now. But who knows, I think the current price is nuts too, so maybe you'll be right.

Yeah, if you value based on historical financials and operations, it's overvalued. That's a rearview perspective and a legitimate bear case. It's the best way to value mature companies because there's very little change year to year. I am not of the opinion that Tesla is a mature company or should have a mature auto OEM multiple on projected earnings. What do you think it should be worth a year from now?

I don't know and I don't invest in individual stocks anyway. But almost certainly less than it's worth today.

[MustacheAndaHalf]

Bull case is 10+ years: technology disruption in transportation and energy. It's a long case. More near term: 1.5 million vehicles produced in 2022 from Fremont, China and Germany factories at 25%-30% margins possibly with new battery cell design ( to be detailed in Sept).  Semi at scale and possibly cybertruck at scale as well. Some monetization timeline for FSD. Nationwide insurance service. 1000/week solar roof installations (no clue what margins are). ~$600b market cap Q1 2023.

An analysis Elon Musk called "the best analysis to date" concluded the Tesla 3 cost $18,000 in materials and $10,000 in labor costs.  In the U.S., it doesn't seem like Tesla 3s have much of a profit margin (if any, after paying for dealerships and the like).
https://qz.com/1294282/the-tesla-model-3-cost-28000-to-build-german-engineers-say-and-it-still-may-not-be-profitable/
But you might be right about profit margins in China, where labor and batteries are both cheaper.  But how long can Tesla sell a car that costs 3.5 years of the average worker's salary?  (Tesla 3 costs $42,000 in China).

Now that I think about it, the Tesla semi truck is a really good idea.  Truckers have to limit their driving, and that probably means one recharge at lunch, and another when the day is done.  Plus it has autonomous features, which might grow over time.  Still, multiple companies are working to perfect fully autonomous long-haul trucking, which could undercut the market - and be a leap ahead of Tesla's technology.

If Tesla bets the company on the Cybertruck, then it could have problems.  Ford sells 900k F-150 a year, and has an all-electric version planned.  Elon Musk has targetted people like him with cars, which works.  I don't think he'll figure out what F-150 and Ram pickup truck owners like... and Ford already has an all-electric F-150 in the works.  Probably a steeper uphill battle than Tesla realizes.

So.. maybe a 5 year bull case that depends on exponential growth in car production and sales?

[lemonlyman]

Munro Associates did a 2 hours series on youtube comparing the Cybertruck to the F-150, Ram, and Silverado. Their conclusion was it's just a different type of vehicle. https://www.youtube.com/watch?v=YQSQYQ44Qco I think there's room in the market for both types. The 2021 Ford F-150 looks pretty great. They're really putting a lot of effort into that truck and am excited to see the electric version. How they access enough battery production to build a meaningful amount is a problem.

I think Tesla is actually betting the company on underlying technology: R&D in batteries and software. Once the million mile + batteries are released, the lifetime cost of their cars, especially for fleets, will be extremely low. That's a catalyst for very high sales as their new factories come online. It might just be smoke and mirrors, but they are building their own battery lines near Fremont right now.

Wedbush upped their price target to $2k this morning. A shocking raise. They typically trail the real price.

[vand]

I can't see a legitimate bull case for Tesla. Ignoring its ludicrous valuation, cars are not the same as big tech.

In technology being big is its own advantage - the more adopted Amazon/AWS is, or the more people are on Facebook then more more that confers benefits to the existing users, so scale becomes a very powerful moat.

In cars, mass production has the opposite effect. Nobody aspires to own a Ford or a Toyota because of what it says about the owner. In automobile market you aspire to luxury brands. Therefore as Tesla grows to justify the lofty market expectations that are placed on it and their models become more widespread, the lure of owning a Tesla loses its appeal. Success will be its own downfall.

Tesla may be the market leader in electric motors, but their know-how will be difficult to maintain in such a competitive industry.

[HPstache]

I can't see a legitimate bull case for Tesla. Ignoring its ludicrous valuation, cars are not the same as big tech.

In technology being big is its own advantage - the more adopted Amazon/AWS is, or the more people are on Facebook then more more that confers benefits to the existing users, so scale becomes a very powerful moat.

In cars, mass production has the opposite effect. Nobody aspires to own a Ford or a Toyota because of what it says about the owner. In automobile market you aspire to luxury brands. Therefore as Tesla grows to justify the lofty market expectations that are placed on it and their models become more widespread, the lure of owning a Tesla loses its appeal. Success will be its own downfall.

Tesla may be the market leader in electric motors, but their know-how will be difficult to maintain in such a competitive industry.

I aspire to own a Toyota Tacoma :shrug:

[JLee]

I can't see a legitimate bull case for Tesla. Ignoring its ludicrous valuation, cars are not the same as big tech.

In technology being big is its own advantage - the more adopted Amazon/AWS is, or the more people are on Facebook then more more that confers benefits to the existing users, so scale becomes a very powerful moat.

In cars, mass production has the opposite effect. Nobody aspires to own a Ford or a Toyota because of what it says about the owner. In automobile market you aspire to luxury brands. Therefore as Tesla grows to justify the lofty market expectations that are placed on it and their models become more widespread, the lure of owning a Tesla loses its appeal. Success will be its own downfall.

Tesla may be the market leader in electric motors, but their know-how will be difficult to maintain in such a competitive industry.

It's way more than just motors.

https://asia.nikkei.com/Business/Automobiles/Tesla-teardown-finds-electronics-6-years-ahead-of-Toyota-and-VW2

[TomTX]

If Tesla bets the company on the Cybertruck, then it could have problems.  Ford sells 900k F-150 a year, and has an all-electric version planned.  Elon Musk has targetted people like him with cars, which works.  I don't think he'll figure out what F-150 and Ram pickup truck owners like... and Ford already has an all-electric F-150 in the works.  Probably a steeper uphill battle than Tesla realizes.

Yep, only 650,000 preorders for the Cybertruck which will be far more rugged than any current thin-skinned painted pretty pickup truck. Definitely in trouble there...

[ender]

If Tesla bets the company on the Cybertruck, then it could have problems.  Ford sells 900k F-150 a year, and has an all-electric version planned.  Elon Musk has targetted people like him with cars, which works.  I don't think he'll figure out what F-150 and Ram pickup truck owners like... and Ford already has an all-electric F-150 in the works.  Probably a steeper uphill battle than Tesla realizes.

Yep, only 650,000 preorders for the Cybertruck which will be far more rugged than any current thin-skinned painted pretty pickup truck. Definitely in trouble there...

I have family who are uh, let's just say not exactly fans of Tesla/electric energy/etc but are super excited about the Cybertruck.

This includes someone who has owned 4 different pickups in the last 10 years (all newish, including F150s).

People who think that no one will want the Cybertruck are making bold statements which I do not think are backed by reality. The price point of the Cybertruck and its features are very competitive.

[MustacheAndaHalf]

If Tesla bets the company on the Cybertruck, then it could have problems.  Ford sells 900k F-150 a year, and has an all-electric version planned.  Elon Musk has targetted people like him with cars, which works.  I don't think he'll figure out what F-150 and Ram pickup truck owners like... and Ford already has an all-electric F-150 in the works.  Probably a steeper uphill battle than Tesla realizes.

Yep, only 650,000 preorders for the Cybertruck which will be far more rugged than any current thin-skinned painted pretty pickup truck. Definitely in trouble there...

"will be" sounds like counting chickens before they hatch.  That leads to situations where someone throws an object at a window during it's first public appearance, and the window unexpectedly cracks.  What you've heard, and what "will be", are two different things.

I would also point out that it's unclear if the Tesla 3 is profitable.  Producing a lot of something that isn't profitable might not be sustainable.  That may not be true for China and Germany, but the question is if Tesla can keep ahead of competition.

For the next few years, my guess is "yes".  By the time they make Cybertrucks, who knows.

[waltworks]

The window breaking was a publicity coup, though. A crapton of people who would never have heard of the damn thing were talking about the cybertruck.

Now, I have no plans to buy one, but if there's an "any publicity is good publicity" moment, that was it.

-W

[DarkandStormy]

If Tesla bets the company on the Cybertruck, then it could have problems.  Ford sells 900k F-150 a year, and has an all-electric version planned.  Elon Musk has targetted people like him with cars, which works.  I don't think he'll figure out what F-150 and Ram pickup truck owners like... and Ford already has an all-electric F-150 in the works.  Probably a steeper uphill battle than Tesla realizes.

Yep, only 650,000 preorders for the Cybertruck which will be far more rugged than any current thin-skinned painted pretty pickup truck. Definitely in trouble there...

Pre-order deposits are $100. Not exactly telling about how many will fulfill orders.

They had a 24+% cancellation rate with the Model 3 pre-orders.

[The_Big_H]

The window breaking was a publicity coup, though. A crapton of people who would never have heard of the damn thing were talking about the cybertruck.

Now, I have no plans to buy one, but if there's an "any publicity is good publicity" moment, that was it.

-W

There are those of us cynical enough to think it was staged and intentional (much like, say, I think that peloton ad was intended to be just controversial enough to start people talking about it).

[talltexan]

I can't see a legitimate bull case for Tesla. Ignoring its ludicrous valuation, cars are not the same as big tech.

In technology being big is its own advantage - the more adopted Amazon/AWS is, or the more people are on Facebook then more more that confers benefits to the existing users, so scale becomes a very powerful moat.

In cars, mass production has the opposite effect. Nobody aspires to own a Ford or a Toyota because of what it says about the owner. In automobile market you aspire to luxury brands. Therefore as Tesla grows to justify the lofty market expectations that are placed on it and their models become more widespread, the lure of owning a Tesla loses its appeal. Success will be its own downfall.

Tesla may be the market leader in electric motors, but their know-how will be difficult to maintain in such a competitive industry.

I had a dream a few years ago in which both my cars got stolen, but the insurance agent gave me as much money as I wanted to replace them. I bought a Honda Accord.

I must not be a car guy. Hopefully at least I fit in around here :-)

[TomTX]

If Tesla bets the company on the Cybertruck, then it could have problems.  Ford sells 900k F-150 a year, and has an all-electric version planned.  Elon Musk has targetted people like him with cars, which works.  I don't think he'll figure out what F-150 and Ram pickup truck owners like... and Ford already has an all-electric F-150 in the works.  Probably a steeper uphill battle than Tesla realizes.

Yep, only 650,000 preorders for the Cybertruck which will be far more rugged than any current thin-skinned painted pretty pickup truck. Definitely in trouble there...

"will be" sounds like counting chickens before they hatch.  That leads to situations where someone throws an object at a window during it's first public appearance, and the window unexpectedly cracks.  What you've heard, and what "will be", are two different things.

I would also point out that it's unclear if the Tesla 3 is profitable.  Producing a lot of something that isn't profitable might not be sustainable.  That may not be true for China and Germany, but the question is if Tesla can keep ahead of competition.

For the next few years, my guess is "yes".  By the time they make Cybertrucks, who knows.

You do realize these arguments are years old and a decade old respectively?

Heard all the same about preorders on the Model 3, and here it is the best selling EV in the world. The "Tesla isn't profitable" has been going on longer (nevermind that the last 3 quarters they posted a profit, despite the pandemic shutdown...)

[DarkandStormy]

If Tesla bets the company on the Cybertruck, then it could have problems.  Ford sells 900k F-150 a year, and has an all-electric version planned.  Elon Musk has targetted people like him with cars, which works.  I don't think he'll figure out what F-150 and Ram pickup truck owners like... and Ford already has an all-electric F-150 in the works.  Probably a steeper uphill battle than Tesla realizes.

Yep, only 650,000 preorders for the Cybertruck which will be far more rugged than any current thin-skinned painted pretty pickup truck. Definitely in trouble there...

"will be" sounds like counting chickens before they hatch.  That leads to situations where someone throws an object at a window during it's first public appearance, and the window unexpectedly cracks.  What you've heard, and what "will be", are two different things.

I would also point out that it's unclear if the Tesla 3 is profitable.  Producing a lot of something that isn't profitable might not be sustainable.  That may not be true for China and Germany, but the question is if Tesla can keep ahead of competition.

For the next few years, my guess is "yes".  By the time they make Cybertrucks, who knows.

You do realize these arguments are years old and a decade old respectively?

Heard all the same about preorders on the Model 3, and here it is the best selling EV in the world. The "Tesla isn't profitable" has been going on longer (nevermind that the last 3 quarters they posted a profit, despite the pandemic shutdown...)

A company currently worth ~$246bn has eeked out $264m in earnings the last 9 months.  Buy, buy, buy!

[waltworks]

A company currently worth ~$246bn has eeked out $264m in earnings the last 9 months.  Buy, buy, buy!

Sure, but you could have for years made the same argument about Amazon. People who bought the stock because they thought the business model/company were going to dominate weren't looking at earnings, they were looking a decade+ ahead.

I didn't invest in Amazon (except in index funds) back in the day, and I'm not investing in Tesla now. But if you are a Tesla diehard and expect Tesla tech/batteries/influence to dominate the car market in the future, earnings are mostly irrelevant.

-W

[theoverlook]

An analysis Elon Musk called "the best analysis to date" concluded the Tesla 3 cost $18,000 in materials and $10,000 in labor costs.  In the U.S., it doesn't seem like Tesla 3s have much of a profit margin (if any, after paying for dealerships and the like).

I'm curious about this claim. The model 3 starts at (base price) $38,000. A cost of $28,000 puts it at a much higher profit margin than other automakers. I don't know a lot about the auto industry but a quick search on automaker's margins shows a 13% - 21% gross margin. The $10k profit on a $38k model 3 is 26% gross margin, and that's the base model. Higher models have higher margin.

Tesla owns their dealerships. That's also gross vs gross comparison, so for the main line auto makers the same costs (or more!) would apply.

[robartsd]

I'm curious about this claim. The model 3 starts at (base price) $38,000. A cost of $28,000 puts it at a much higher profit margin than other automakers. I don't know a lot about the auto industry but a quick search on automaker's margins shows a 13% - 21% gross margin. The $10k profit on a $38k model 3 is 26% gross margin, and that's the base model. Higher models have higher margin.

Tesla owns their dealerships. That's also gross vs gross comparison, so for the main line auto makers the same costs (or more!) would apply.

This does make the assumption that Tesla's ownership of the dealerships is a cost advantage over the main line auto maker model. It could very well be that independent dealerships operate significantly more efficiently than Tesla's dealer network.