Author Topic: Is Tesla a good investment?  (Read 410323 times)

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1400 on: December 16, 2022, 12:55:45 PM »
So your forecasts, based on a report stating 30% CAGR, with Tesla achieving 50% CAGR into 2026. Vs estimates from other automakers as they ramp up. Let's put a pin in this and revisit it next year and see where the market is.

Qualitative analysis (features, technology, branding, etc.) isn't the same as anecdote or gut feelings - these things matter even if they are very difficult or impossible to fully quantify. I think TSLA fans are ignoring (or severely underestimating) the implications of the Musk-Twitter-Tesla association in the mind of consumers. At some point people are going to feel uncomfortable being seen in Twitter cars.

With that simple chart, I was trying to present an argument for why Tesla will sell their cars AND also believe the OEMs will sell their cars too. You have not acknowledged Tesla's targets and don't take them face value. That's fine. But you're not taking in EV TAM growth into your argument at all. It's like a static thing. GM sells more cars so Tesla sells less. In a static market, that makes sense, but EV TAM is growing rapidly.

I agree qualitative analysis matters. I've posted a lot about Tesla's feature and product differentiation in the past. I own a Model Y. Some of my buddies own other EVs. But if you say they will sell so much that Tesla won't grow, that's the tough claim based on anecdotes and gut feelings.
"This car is great!"
"Does it sell well?"
"No!"
If the products were so good, why are Ioniq 5s on the lots here? That's my question to you. How does qualitative analysis fit there?

I do agree that the Tesla brand is being damaged in a way, but it's not showing up in numbers yet. Agree to wait and see.

As mentioned up thread, I have reasons for not taking Musk (and by implication, Tesla) at face value.

I understand your forecast and acknowledge it, but also recognize that this is based on a 30% CAGR for the BEV market AND Tesla's volume growing faster than the total market at 50%. Whereas S&P estimates that Tesla's market share will drop to 20% by 2025. I think we'll have to wait and see who is right.

To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.

Depends on what S&P has as their total market for EVs which they don't say. I think it'll be around 20% or 3,000,000 units. So they're saying Tesla's US sales could be 20% of that or 600,000 in 2025. I think that's unlikely. They're going to get well over 500,000 this year before tax credits and new models in 2023. Semi is in production. Cybertruck is very close to production. Model 3 Long Range hasn't been on sale. Model Y SR hasn't been on sale. Their compact vehicle is scheduled for 2024.
https://www.spglobal.com/commodityinsights/en/products-services/energy-transition/european-long-term-power-forecast
If this company is right, Tesla 2025 would be 1.4 million units at 20%, haha. That would be something.
 
I get the PE argument, but I don't agree with it based on growth (which I know you don't agree with). PE has been done dozens of times in the thread and 50 PE is before they deliver 425,000 this quarter. Forward PE is more important for growth, but it's also a subjective metric. Porsche has 20 PE because they have good earnings like Tesla. If they were growing top line too, it'd be up there.

In general, if the brand is irredeemably damaged in 2023, EV TAM doesn't grow, or something else catastrophically bad, I'll reexamine the investment. Companies have to execute. Tesla has been executing like crazy, but that can always change and inevitably always does, but in this decade, it's hard to see Tesla not be a major auto manufacturer. But isnt just a car company, Tesla Energy is also growing 38% year over year right now also before 2023 credits. I've invested where I think appropriate and am still grabbing Tesla shares right now because it's so cheap to me. But of course you could be more right in the end.
« Last Edit: December 16, 2022, 12:57:25 PM by lemonlyman »

achvfi

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Re: Is Tesla a good investment?
« Reply #1401 on: December 16, 2022, 02:20:32 PM »
Tank, I'm in. >)^[  <---attempt at stern face emoji with matrix shades....??.>


Just picked up my Model 3!

I took existing inventory, demo car with 1100 miles on. 2,450 discount for demo. 3750 Dec delivery discount, so 6200 off what the build price would be.

White, black and white interior, 19" sport wheels, rear wheel drive, enhanced autopilot.

Maybe I should have done a build and canned autopilot? idk! I do eventually want FSD, so a step in that direction? But I was thinking the demo discount paid for the interior and wheel upgrades.

I've got one :)

First impressions, Nice car, love the look of the white car/white interior, everything nice and sleek, some very neat features. Old car was a 2013 corolla base model, so quite an upgrade for me. Driving home it was still just a car, lol! Guess I'll have to live with it a bit through thick and thin and see how it goes.

Very happy with the purchase so far! Next step is tesla roof and get my own charger in 23. Hopefully the powerwall too, or maybe put that for a 2024 purchase, depending on how things go.

They had two chargers suggested when I was online buying but I wasn't sure what the deal was, if I need an electrician to install or what? Yep online said electrician needed.

Theres a supercharger about 6 miles away, so not a huge deal but certainly perfer to get my house outfitted!

Nice! Have fun.

One thing that contributed to Tesla's success so far is gaining customer base from people who used to buy hondas and toyotas and make them spend 50-60k on their cars. A customer base that didnt exist before and would not spent that much on a car.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1402 on: December 16, 2022, 03:46:16 PM »
I like to imagine at some point in the 1920ís investors sat around and said things like, ďhow can you justify Fordís valuation, itís worth more than the top for livery companies combined!Ē

There are only two companies on the planet that are currently selling EVs for a profit, Tesla (28% margin) and BYD (barely). It is estimated that Ford is losing roughly $10k on every Mach-e they sell. They will continue to lose on each vehicle until they reach the scale Tesla has reached (roughly 1 million plus EVs/Year). At current projections that wonít happen until 2024 at the earliest. In the meantime, 90% of new EV customers are replacing an ICE vehicle. Meaning nearly every unprofitable EV sale the legacy autos make is also costing them a profitable ICE vehicle sale. The legacy autos are also sitting on billions of debt and soon to be stranded ICE manufacturing assets. Tesla has neither. For good measure throw in an unpopular dealership network that is reluctant to sell EVs and dependent on servicing ICE vehicles (oil changes, etc.) for a majority of their profit. Add that all up and you start to see why Tesla valuation relative to the ďcompetitioní is justified. Thatís just for starters, doesnít even consider battery manufacturing capabilities, Tesla energy revenue, supercharger network, etc.

FINate

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Re: Is Tesla a good investment?
« Reply #1403 on: December 16, 2022, 04:20:45 PM »
I like to imagine at some point in the 1920ís investors sat around and said things like, ďhow can you justify Fordís valuation, itís worth more than the top for livery companies combined!Ē

The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV. And the real secret sauce with Ford was the standardization of parts and the mass assembly line. Tesla mainstreamed BEVs, which is a big accomplishment, but it's essentially taking the existing concept of the car and replacing the drive-train.

There are only two companies on the planet that are currently selling EVs for a profit, Tesla (28% margin) and BYD (barely). It is estimated that Ford is losing roughly $10k on every Mach-e they sell. They will continue to lose on each vehicle until they reach the scale Tesla has reached (roughly 1 million plus EVs/Year). At current projections that wonít happen until 2024 at the earliest. In the meantime, 90% of new EV customers are replacing an ICE vehicle. Meaning nearly every unprofitable EV sale the legacy autos make is also costing them a profitable ICE vehicle sale. The legacy autos are also sitting on billions of debt and soon to be stranded ICE manufacturing assets. Tesla has neither. For good measure throw in an unpopular dealership network that is reluctant to sell EVs and dependent on servicing ICE vehicles (oil changes, etc.) for a majority of their profit. Add that all up and you start to see why Tesla valuation relative to the ďcompetitioní is justified. Thatís just for starters, doesnít even consider battery manufacturing capabilities, Tesla energy revenue, supercharger network, etc.

About 2/3 of Ford's dealerships have opted to sell EVs, which requires them to invest a significant amount to become EV certified (https://www.thestreet.com/technology/ford-motor-gets-a-big-win). This is a large advantage for Ford, as it means an instant network of showrooms and sales folks, but also certified service centers. So I don't think it's accurate to claim dealerships don't want to sell EVs.

It took Tesla 17 years to turn a profit, whereas GM expects to reach EV profitability by 2025 (https://www.autoweek.com/news/industry-news/a42053077/gm-ev-profitability-investor-day-wall-street/). In the meantime, legacy automakers will fund EV initiatives via profits from their established ICE business. They're clearly playing a long game here, phasing in changes to their fleets to match consumer demand and new government mandates.
« Last Edit: December 16, 2022, 04:23:01 PM by FINate »

TomTX

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Re: Is Tesla a good investment?
« Reply #1404 on: December 16, 2022, 04:30:41 PM »
Agree, volume and ramping matters a lot. But this is something legacy automakers are experienced with.
Yet other than (possibly) VW, none of the legacy Western automakers have successfully ramped an EV. Tesla's growth rate of ~50% unit increase per year has been steady for a decade.

TomTX

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Re: Is Tesla a good investment?
« Reply #1405 on: December 16, 2022, 04:36:10 PM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

TomTX

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Re: Is Tesla a good investment?
« Reply #1406 on: December 16, 2022, 04:38:31 PM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

FINate

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Re: Is Tesla a good investment?
« Reply #1407 on: December 16, 2022, 04:57:08 PM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

Horses are living creatures that require effort to keep alive even when not in use. As living creatures they're limited to a daily range of 10-20 miles, depending on load and conditions. Automobiles don't have any of these limitations, but are a lot more technologically sophisticated. A horse drawn buggy is relatively simple to create and assemble, which was typically created by a craftsman. Whereas the automobile required thousands of moving parts, specialized engineering, factories, and assembly lines.

Other than the drive-train, the manufacturing process for BEV and ICE vehicles is more-or-less the same. Suspension, body, seats, interior, etc.  An ICE drive-train has around 2000+ moving parts, whereas a BEV has around 20, so the complexity of the BEV supply chain and manufacturing process is actually lower, which means a lower barrier to entry for competitors.

I'm not a legacy fanboy, but neither am I a Tesla fanboy. It's worth noting that legacy makers aren't the only competition, as Rivian and others also enter the fray. I simply don't buy the narrative that Tesla is SO far ahead of the competition that other manufactures cannot catch up. The Mach E is a darn good EV, especially for Ford's first iteration. The legacy companies are already ramping up, not yet to Tesla's level, but I believe they will get there relatively soon.

mistymoney

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Re: Is Tesla a good investment?
« Reply #1408 on: December 16, 2022, 05:14:21 PM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

I'd be curious to hear more on this too. The first decade or two of automobiles......some thought horse drawn were superior.....they were like motorized bicycles......

mistymoney

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Re: Is Tesla a good investment?
« Reply #1409 on: December 16, 2022, 05:18:46 PM »
Tank, I'm in. >)^[  <---attempt at stern face emoji with matrix shades....??.>


Just picked up my Model 3!

I took existing inventory, demo car with 1100 miles on. 2,450 discount for demo. 3750 Dec delivery discount, so 6200 off what the build price would be.

White, black and white interior, 19" sport wheels, rear wheel drive, enhanced autopilot.

Maybe I should have done a build and canned autopilot? idk! I do eventually want FSD, so a step in that direction? But I was thinking the demo discount paid for the interior and wheel upgrades.

I've got one :)

First impressions, Nice car, love the look of the white car/white interior, everything nice and sleek, some very neat features. Old car was a 2013 corolla base model, so quite an upgrade for me. Driving home it was still just a car, lol! Guess I'll have to live with it a bit through thick and thin and see how it goes.

Very happy with the purchase so far! Next step is tesla roof and get my own charger in 23. Hopefully the powerwall too, or maybe put that for a 2024 purchase, depending on how things go.

They had two chargers suggested when I was online buying but I wasn't sure what the deal was, if I need an electrician to install or what? Yep online said electrician needed.

Theres a supercharger about 6 miles away, so not a huge deal but certainly perfer to get my house outfitted!

Awesome! Iíve never needed a charger. 120 outlet does 50 miles a night. Iíll do it eventually.

Thereís a new tax credit next year for home charger installation.

More on this.....looks like this is what I'd need to charge from house outlet?

https://shop.tesla.com/product/mobile-connector?sku=1763817-00-A

FINate

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Re: Is Tesla a good investment?
« Reply #1410 on: December 16, 2022, 05:26:29 PM »
So... this thread has been around since 2018.

For sure, TSLA was a good investment from 2018 until relatively recently.

However, the stock is down 57% in 2022 (vs. 18% for the S&P 500). Losing almost 60% is a very bad investment.

If you thought TSLA was a good investment in, say 2021 (cause, you know, its on the record in this thread), do you still believe this was an accurate forecast? If you were wrong then, why should we listen to you now?

FINate

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Re: Is Tesla a good investment?
« Reply #1411 on: December 16, 2022, 05:38:40 PM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.
« Last Edit: December 16, 2022, 05:42:18 PM by FINate »

mistymoney

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Re: Is Tesla a good investment?
« Reply #1412 on: December 17, 2022, 11:30:21 AM »
sorry to clog the thread with my quesitons, but wanted to get some input from tesla owners here, if the participants will indulge me. I have a long driveway and can't turn around in it or garage due to some "stuff", unless I drive onto the grassy/planted part and unsure what is under there right now......or how car would behave.

So it's about 100-125 feet out to the street, And there is some shrubbery lining both sides of the driveway (have not parked in garage in years and years....so have not driven down this area). I cut shrubbery back yesterday before leaving (after having got warnings and sume swiping on the sides of car when pulling in), but still had a lot ot trouble and some shrubbery swiping.

The visibility with the turn around and look out the back to reverse is not good (but of course what I am most comfortable with after so many years of driving that way!). Using the screen, this early on with the tesla, I'm not surewhat all the yellow/red lines are meaning, it keeps making noises but I never know how close things are, which things are most worrisome. There are a few hard things to avoid backing out, edge of fence for one, but I never know if it is that or these shrubbery things causing the clamor/warnings. It's a learning curve which I'm sure I'll get eventually...

Can enhanced autopilot or summons get the car through this better? Or would that not work on a private drive? Or how could I get the car to map this? Is enhanced autopilot only for highway?

Any info from expenienced users appreciated!!

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1413 on: December 17, 2022, 11:30:36 AM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

Horses are living creatures that require effort to keep alive even when not in use. As living creatures they're limited to a daily range of 10-20 miles, depending on load and conditions. Automobiles don't have any of these limitations, but are a lot more technologically sophisticated. A horse drawn buggy is relatively simple to create and assemble, which was typically created by a craftsman. Whereas the automobile required thousands of moving parts, specialized engineering, factories, and assembly lines.

Other than the drive-train, the manufacturing process for BEV and ICE vehicles is more-or-less the same. Suspension, body, seats, interior, etc.  An ICE drive-train has around 2000+ moving parts, whereas a BEV has around 20, so the complexity of the BEV supply chain and manufacturing process is actually lower, which means a lower barrier to entry for competitors.

I'm not a legacy fanboy, but neither am I a Tesla fanboy. It's worth noting that legacy makers aren't the only competition, as Rivian and others also enter the fray. I simply don't buy the narrative that Tesla is SO far ahead of the competition that other manufactures cannot catch up. The Mach E is a darn good EV, especially for Ford's first iteration. The legacy companies are already ramping up, not yet to Tesla's level, but I believe they will get there relatively soon.

So you think ICE vehicles and EV vehicles will reach some equilibrium state where we have both in significant numbers 15-20 years from now? Thatís not how disruptions works Iím afraid. Flip phones had all the same basic functionality as smart phones (calls, texts, pictures, internet access), but I donít know anyone under the age of 75 that still has a flip phone even though. theyíre cheaper. EVs are simply a superior product. Cheaper to operate, better performance, quieter, less polluting, fewer parts, longer lasting, etc. Battery prices continue to drop and economies of scale continue to ramp. EVs are reaching price parity as we speak. Itís game over. But you enjoy your ICE, inner-tube box TV, Kodak camera, flip phone, and CDs cause thereís no real difference, right?

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1414 on: December 17, 2022, 11:41:49 AM »
I like to imagine at some point in the 1920ís investors sat around and said things like, ďhow can you justify Fordís valuation, itís worth more than the top for livery companies combined!Ē

The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV. And the real secret sauce with Ford was the standardization of parts and the mass assembly line. Tesla mainstreamed BEVs, which is a big accomplishment, but it's essentially taking the existing concept of the car and replacing the drive-train.

There are only two companies on the planet that are currently selling EVs for a profit, Tesla (28% margin) and BYD (barely). It is estimated that Ford is losing roughly $10k on every Mach-e they sell. They will continue to lose on each vehicle until they reach the scale Tesla has reached (roughly 1 million plus EVs/Year). At current projections that wonít happen until 2024 at the earliest. In the meantime, 90% of new EV customers are replacing an ICE vehicle. Meaning nearly every unprofitable EV sale the legacy autos make is also costing them a profitable ICE vehicle sale. The legacy autos are also sitting on billions of debt and soon to be stranded ICE manufacturing assets. Tesla has neither. For good measure throw in an unpopular dealership network that is reluctant to sell EVs and dependent on servicing ICE vehicles (oil changes, etc.) for a majority of their profit. Add that all up and you start to see why Tesla valuation relative to the ďcompetitioní is justified. Thatís just for starters, doesnít even consider battery manufacturing capabilities, Tesla energy revenue, supercharger network, etc.

About 2/3 of Ford's dealerships have opted to sell EVs, which requires them to invest a significant amount to become EV certified (https://www.thestreet.com/technology/ford-motor-gets-a-big-win). This is a large advantage for Ford, as it means an instant network of showrooms and sales folks, but also certified service centers. So I don't think it's accurate to claim dealerships don't want to sell EVs.

It took Tesla 17 years to turn a profit, whereas GM expects to reach EV profitability by 2025 (https://www.autoweek.com/news/industry-news/a42053077/gm-ev-profitability-investor-day-wall-street/). In the meantime, legacy automakers will fund EV initiatives via profits from their established ICE business. They're clearly playing a long game here, phasing in changes to their fleets to match consumer demand and new government mandates.

Tesla is also disrupting auto manufacturing. They are more vertically integrated with far fewer suppliers than legacy auto. They introduced gigapress to create aluminum castings, and structural battery packs that reduce vehicle weight and the number of welds and parts needed for the frame. Tesla is manufacturing their own batteries and have brought innovation into play as well there with there 4680 cells and dry manufacturing process. Thatís just a few for starters.

Have you ever walked into a legacy dealership and asked to test drive an EV? I have and its comical. They typically have one EV sales guy, who may or may not be working that day. If youíve done any homework ahead of time, you will already know more abouth the EV than the salesperson. There will only be a couple of EVs on the lot and within 5 minutes of walking in the door the salesperson will try to steer you towards an ICE purchase. The above is an accurate description of the dealership EV experience in 90% of the country right now, with exceptions in high density EV areas. Compare that experience to ordering a Tesla and not having to run the dealership gauntlet.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1415 on: December 17, 2022, 11:49:06 AM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.

Hard to argue that legacy autos arenít good investments at the same time arguing Tesla is a bad investment. Tesla bears routinely point to the imminent competition coming from legacy auto as proof of Teslaís inflated valuation. Isnít good and bad largely dictated in relative terms by the competition in this case?

MustacheAndaHalf

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Re: Is Tesla a good investment?
« Reply #1416 on: December 17, 2022, 11:58:53 AM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.

Hard to argue that legacy autos arenít good investments at the same time arguing Tesla is a bad investment. Tesla bears routinely point to the imminent competition coming from legacy auto as proof of Teslaís inflated valuation. Isnít good and bad largely dictated in relative terms by the competition in this case?
Legacy autos have to compete with Telsa, but Tesla stock has to compete with.. it's CEO?  Elon Musk is dumping Tesla stock, so buying now seems like fighting the Fed.  But once that ends and we have certainty on a recession, Tesla could bounce back.

Quote
Multi-billionaire Elon Musk has sold another 22 million shares, worth $3.58bn (£2.9bn), in the electric car maker Tesla.

The shares were sold on the Monday, Tuesday and Wednesday this week, according to a filing with a US financial regulator.

It brings the total of Tesla stocks sold by Mr Musk over the past year to almost $40bn.
https://www.bbc.com/news/business-63981767

FINate

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Re: Is Tesla a good investment?
« Reply #1417 on: December 17, 2022, 11:59:05 AM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

Horses are living creatures that require effort to keep alive even when not in use. As living creatures they're limited to a daily range of 10-20 miles, depending on load and conditions. Automobiles don't have any of these limitations, but are a lot more technologically sophisticated. A horse drawn buggy is relatively simple to create and assemble, which was typically created by a craftsman. Whereas the automobile required thousands of moving parts, specialized engineering, factories, and assembly lines.

Other than the drive-train, the manufacturing process for BEV and ICE vehicles is more-or-less the same. Suspension, body, seats, interior, etc.  An ICE drive-train has around 2000+ moving parts, whereas a BEV has around 20, so the complexity of the BEV supply chain and manufacturing process is actually lower, which means a lower barrier to entry for competitors.

I'm not a legacy fanboy, but neither am I a Tesla fanboy. It's worth noting that legacy makers aren't the only competition, as Rivian and others also enter the fray. I simply don't buy the narrative that Tesla is SO far ahead of the competition that other manufactures cannot catch up. The Mach E is a darn good EV, especially for Ford's first iteration. The legacy companies are already ramping up, not yet to Tesla's level, but I believe they will get there relatively soon.

So you think ICE vehicles and EV vehicles will reach some equilibrium state where we have both in significant numbers 15-20 years from now? Thatís not how disruptions works Iím afraid. Flip phones had all the same basic functionality as smart phones (calls, texts, pictures, internet access), but I donít know anyone under the age of 75 that still has a flip phone even though. theyíre cheaper. EVs are simply a superior product. Cheaper to operate, better performance, quieter, less polluting, fewer parts, longer lasting, etc. Battery prices continue to drop and economies of scale continue to ramp. EVs are reaching price parity as we speak. Itís game over. But you enjoy your ICE, inner-tube box TV, Kodak camera, flip phone, and CDs cause thereís no real difference, right?

No that's not what I think, nor is it what I said. Nice straw man you have there :) I expect EV drive-trains will replace ICE relatively soon (like within 10-20 years) for the vast majority of every-day driving. EVs are more efficient, economical, and reliable. I don't expect ICE vehicles to completely disappear in within that time frame. Issues around towing/hauling (much higher coefficient of drag and rolling resistance) will likely necessitate a small percentage of ICE vehicles for moving large loads long distances. Battery capacity and charge rates will eventually overcome this, but I'm not sure this will happen in 10-20 years. I could be wrong about this, not going to die on this particular hill, but I think there are some difficult engineering issues to overcome for this narrow use case, so I'm somewhat skeptical.

The introduction of the automobile completely remade American society. From a new push for road networks to suburbs and car travel. It was completely revolutionary. Don't get me wrong, BEVs are great and I'm a big supporter. But let's be honest here, replacing one mode of mechanical power with another is evolutionary, not revolutionary. 

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1418 on: December 17, 2022, 11:59:52 AM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

Horses are living creatures that require effort to keep alive even when not in use. As living creatures they're limited to a daily range of 10-20 miles, depending on load and conditions. Automobiles don't have any of these limitations, but are a lot more technologically sophisticated. A horse drawn buggy is relatively simple to create and assemble, which was typically created by a craftsman. Whereas the automobile required thousands of moving parts, specialized engineering, factories, and assembly lines.

Other than the drive-train, the manufacturing process for BEV and ICE vehicles is more-or-less the same. Suspension, body, seats, interior, etc.  An ICE drive-train has around 2000+ moving parts, whereas a BEV has around 20, so the complexity of the BEV supply chain and manufacturing process is actually lower, which means a lower barrier to entry for competitors.

I'm not a legacy fanboy, but neither am I a Tesla fanboy. It's worth noting that legacy makers aren't the only competition, as Rivian and others also enter the fray. I simply don't buy the narrative that Tesla is SO far ahead of the competition that other manufactures cannot catch up. The Mach E is a darn good EV, especially for Ford's first iteration. The legacy companies are already ramping up, not yet to Tesla's level, but I believe they will get there relatively soon.

I will buy the competition is coming narrative as soon as someone points to a realistic pathway for another EV manufacturer to produce a  million EVs in 2023 or 2 million in 2024. Tesla will produce 1.45 million this year, around 2.5 million in 2023, and close to 4 million in 2024. And most importantly, Tesla has the EV dedicated factories, raw materials, supplier contracts, battery cell/pack supply, and logistics already in place to achieve those production numbers. No other manufacturer does, which is why theyíre playing catch-up and will be for years. You donít just wake up one day flip a switch in the factory from ICE to EV.


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Re: Is Tesla a good investment?
« Reply #1419 on: December 17, 2022, 12:10:38 PM »
I like to imagine at some point in the 1920ís investors sat around and said things like, ďhow can you justify Fordís valuation, itís worth more than the top for livery companies combined!Ē

The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV. And the real secret sauce with Ford was the standardization of parts and the mass assembly line. Tesla mainstreamed BEVs, which is a big accomplishment, but it's essentially taking the existing concept of the car and replacing the drive-train.

There are only two companies on the planet that are currently selling EVs for a profit, Tesla (28% margin) and BYD (barely). It is estimated that Ford is losing roughly $10k on every Mach-e they sell. They will continue to lose on each vehicle until they reach the scale Tesla has reached (roughly 1 million plus EVs/Year). At current projections that wonít happen until 2024 at the earliest. In the meantime, 90% of new EV customers are replacing an ICE vehicle. Meaning nearly every unprofitable EV sale the legacy autos make is also costing them a profitable ICE vehicle sale. The legacy autos are also sitting on billions of debt and soon to be stranded ICE manufacturing assets. Tesla has neither. For good measure throw in an unpopular dealership network that is reluctant to sell EVs and dependent on servicing ICE vehicles (oil changes, etc.) for a majority of their profit. Add that all up and you start to see why Tesla valuation relative to the ďcompetitioní is justified. Thatís just for starters, doesnít even consider battery manufacturing capabilities, Tesla energy revenue, supercharger network, etc.

About 2/3 of Ford's dealerships have opted to sell EVs, which requires them to invest a significant amount to become EV certified (https://www.thestreet.com/technology/ford-motor-gets-a-big-win). This is a large advantage for Ford, as it means an instant network of showrooms and sales folks, but also certified service centers. So I don't think it's accurate to claim dealerships don't want to sell EVs.

It took Tesla 17 years to turn a profit, whereas GM expects to reach EV profitability by 2025 (https://www.autoweek.com/news/industry-news/a42053077/gm-ev-profitability-investor-day-wall-street/). In the meantime, legacy automakers will fund EV initiatives via profits from their established ICE business. They're clearly playing a long game here, phasing in changes to their fleets to match consumer demand and new government mandates.

Tesla is also disrupting auto manufacturing. They are more vertically integrated with far fewer suppliers than legacy auto. They introduced gigapress to create aluminum castings, and structural battery packs that reduce vehicle weight and the number of welds and parts needed for the frame. Tesla is manufacturing their own batteries and have brought innovation into play as well there with there 4680 cells and dry manufacturing process. Thatís just a few for starters.

Have you ever walked into a legacy dealership and asked to test drive an EV? I have and its comical. They typically have one EV sales guy, who may or may not be working that day. If youíve done any homework ahead of time, you will already know more abouth the EV than the salesperson. There will only be a couple of EVs on the lot and within 5 minutes of walking in the door the salesperson will try to steer you towards an ICE purchase. The above is an accurate description of the dealership EV experience in 90% of the country right now, with exceptions in high density EV areas. Compare that experience to ordering a Tesla and not having to run the dealership gauntlet.

Automakers are known for their continual improvement processes, and they've been doing it for decades. Tesla didn't invent it. Compare the build quality of a 1990s vehicle vs. a modern one... night and day difference. They have been very good at continual improvement on the ICE drive-trains, with a large cumulative improvement in engines, transmissions, etc. No one though it was possible 20 years ago for a pickup truck to get combined 25 mpg. And Ford was the first to innovate using aluminum for the body at scale. These are all practices I expect will carry over into their BEV lines.

The two-thirds of Ford dealerships that are seeking EV certification are spending around $1M each for this. They will up their game to make the investment worthwhile. I agree, they aren't there yet. But they will get there. 

FINate

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Re: Is Tesla a good investment?
« Reply #1420 on: December 17, 2022, 12:15:29 PM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.

Hard to argue that legacy autos arenít good investments at the same time arguing Tesla is a bad investment. Tesla bears routinely point to the imminent competition coming from legacy auto as proof of Teslaís inflated valuation. Isnít good and bad largely dictated in relative terms by the competition in this case?

No, it's not! It's entirely possible that the entire auto industry is not a good investment. This is really basic stuff....

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1421 on: December 17, 2022, 12:17:03 PM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

Horses are living creatures that require effort to keep alive even when not in use. As living creatures they're limited to a daily range of 10-20 miles, depending on load and conditions. Automobiles don't have any of these limitations, but are a lot more technologically sophisticated. A horse drawn buggy is relatively simple to create and assemble, which was typically created by a craftsman. Whereas the automobile required thousands of moving parts, specialized engineering, factories, and assembly lines.

Other than the drive-train, the manufacturing process for BEV and ICE vehicles is more-or-less the same. Suspension, body, seats, interior, etc.  An ICE drive-train has around 2000+ moving parts, whereas a BEV has around 20, so the complexity of the BEV supply chain and manufacturing process is actually lower, which means a lower barrier to entry for competitors.

I'm not a legacy fanboy, but neither am I a Tesla fanboy. It's worth noting that legacy makers aren't the only competition, as Rivian and others also enter the fray. I simply don't buy the narrative that Tesla is SO far ahead of the competition that other manufactures cannot catch up. The Mach E is a darn good EV, especially for Ford's first iteration. The legacy companies are already ramping up, not yet to Tesla's level, but I believe they will get there relatively soon.

So you think ICE vehicles and EV vehicles will reach some equilibrium state where we have both in significant numbers 15-20 years from now? Thatís not how disruptions works Iím afraid. Flip phones had all the same basic functionality as smart phones (calls, texts, pictures, internet access), but I donít know anyone under the age of 75 that still has a flip phone even though. theyíre cheaper. EVs are simply a superior product. Cheaper to operate, better performance, quieter, less polluting, fewer parts, longer lasting, etc. Battery prices continue to drop and economies of scale continue to ramp. EVs are reaching price parity as we speak. Itís game over. But you enjoy your ICE, inner-tube box TV, Kodak camera, flip phone, and CDs cause thereís no real difference, right?

No that's not what I think, nor is it what I said. Nice straw man you have there :) I expect EV drive-trains will replace ICE relatively soon (like within 10-20 years) for the vast majority of every-day driving. EVs are more efficient, economical, and reliable. I don't expect ICE vehicles to completely disappear in within that time frame. Issues around towing/hauling (much higher coefficient of drag and rolling resistance) will likely necessitate a small percentage of ICE vehicles for moving large loads long distances. Battery capacity and charge rates will eventually overcome this, but I'm not sure this will happen in 10-20 years. I could be wrong about this, not going to die on this particular hill, but I think there are some difficult engineering issues to overcome for this narrow use case, so I'm somewhat skeptical.

The introduction of the automobile completely remade American society. From a new push for road networks to suburbs and car travel. It was completely revolutionary. Don't get me wrong, BEVs are great and I'm a big supporter. But let's be honest here, replacing one mode of mechanical power with another is evolutionary, not revolutionary.

You do realize Tesla is already supplying Pepsi with Class 8 semis capable of pulling full loads 500 miles on a single charge?

We werenít talking about transportation infrastructure being disrupted only the means of transportation. I you believe EVs will replace ICE within 10-20 years, as you say, then I donít understand how Tesla isnít a big winner because in that scenario every EV that every manufacturer can make for at least the next decade is going to be instantly purchased to replace an ICE vehicle, which puts Tesla on a glide path to selling 10 million vehicles/yr by the end of the decade (low estimate). You seem to be holding contradictory positions. EV disruption happens, but Tesla somehow doesnít reap huge benefits as the leader in EV tech and production capacity?

And sorry, if you think moving our entire ground transportation system from liquid fossil fuels to electricity is evolution and not revolution, I donít know that weíre on the same page. This has huge climate implications, huge geopolitical implications, huge urban health implications, and huge financial market implications. There are going to be big winners and losers and the losers arenít going quietly. Itís honestly hard to overstate the magnitude and implications of this disruption. Trillion dollar industries, utilities, oil and gas, and auto manufacturing are being disrupted simultaneously.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1422 on: December 17, 2022, 12:20:05 PM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.

Hard to argue that legacy autos arenít good investments at the same time arguing Tesla is a bad investment. Tesla bears routinely point to the imminent competition coming from legacy auto as proof of Teslaís inflated valuation. Isnít good and bad largely dictated in relative terms by the competition in this case?

No, it's not! It's entirely possible that the entire auto industry is not a good investment. This is really basic stuff....

So, weíre going to switch all the cars on the road from ICE to EVs in 10-20 years and not generate any winners in the process? I think weíre done here.

FINate

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Re: Is Tesla a good investment?
« Reply #1423 on: December 17, 2022, 12:27:13 PM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.

Hard to argue that legacy autos arenít good investments at the same time arguing Tesla is a bad investment. Tesla bears routinely point to the imminent competition coming from legacy auto as proof of Teslaís inflated valuation. Isnít good and bad largely dictated in relative terms by the competition in this case?

No, it's not! It's entirely possible that the entire auto industry is not a good investment. This is really basic stuff....

So, weíre going to switch all the cars on the road from ICE to EVs in 10-20 years and not generate any winners in the process? I think weíre done here.

If by "winners" you mean soaring stock price, yes! It's entirely possible that everyone switches over to EVs yet there's no single company that becomes fabulously wealthy in the process. Cars are physical things that are expensive to produce. As competitors step in to fill a market this drives down margins. This has happened repeated throughout history.

waltworks

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Re: Is Tesla a good investment?
« Reply #1424 on: December 17, 2022, 12:28:15 PM »
Airlines, as a whole, have returned investors exactly zero in their entire history.

So yes, there are scenarios where EVs are wildly popular, many companies are successful at making them, and they're all bad investments.

-W

FINate

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Re: Is Tesla a good investment?
« Reply #1425 on: December 17, 2022, 12:42:00 PM »
@ColoradoTribe To my question asked up thread that was ignored: You're on the record claiming TSLA was a good investment over the past several years. In the context of this thread, I believe this is understood to mean that TLSA was a good purchase at the time. Just a few samples:

Might be time to close this thread. As the stock prices closes in on $500 (currently $491), I think its safe to say TSLA has turned out to be a good investment for any true long-term investor. I'll continue to hold based on my investment thesis above.

Is Tesla a good investment?  Yes

It's taking me almost as much will power to not sell at $450 as it took to not sell at $180. Gotta stick to the investment thesis:

1) Is the future of energy and transportation battery electric and renewables?
2) Is Tesla the leader in EVs and battery tech?

I'll hold until the answer to either of those questions points towards no. The competition has yet to produce an EV that meets the price and specs of a 2013 Model S, let alone the 2019 variants. No other car company is building their own battery factory or a network of fast charging stations. There is no competition on the horizon (2 years out at least) and even then it doesn't matter, because a smaller percentage of a bigger pie is still more pie. Elon's goal is to push us towards a sustainable future and forcing other manufacturers to get serious about EVs is part of the plan.

Note: The bolded above is no longer true. It really didn't take the legacy company long to start producing true competitors.

I've made a 3,500% return on TSLA. I feel like that's a sign I should cash in, but its only 3.8% of my portfolio. What do you all think? I guess at this point I'm never going to lose money, so maybe just hold it until I need money (or forever and give it to my kid?).


I raise this question only because I'm not sure where something goes from an investment to speculation...I honestly don't think the company is worth 1 Trillion, but what do I know?

Tesla is a maturing company. Tesla as an investment has never been less risky or speculative. Demand is on the rise, margins are increasing, new models are on the horizon, two new factories will start production in the next 1-3 months. The energy storage and grid services side of the business is just getting started. FSD is more speculative, but could be massively profitable if solved fully. I personally wonít be shedding any of my shares in the next 2-3 years at least.

TSLA is down almost 60% for the year. Do you still consider this a good investment? Because those considering buying TSLA should be aware of your definition of a good investment before they put their little green soldiers at risk. If it hasn't been a good investment, what went wrong in your forecasting? Looking back in your history, you're making the same points about how far ahead Tesla is compared to others, battery tech, their production lines and innovation. And yet this hasn't translated to a growing stock price. What happened?

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1426 on: December 17, 2022, 01:39:07 PM »
Airlines, as a whole, have returned investors exactly zero in their entire history.

So yes, there are scenarios where EVs are wildly popular, many companies are successful at making them, and they're all bad investments.

-W

What if in theory, one company found a way to mass produce EVs with 30% margins. Theoretically speaking that company might reward investors handsomely.

Everyone switched from flip phones to smart phones, and Apple seemed profited from that transition by leading that the transition with a superior product and previously unheard of margins. Sound familiar...

It just flies against convention to think a disruption of this level happens without resulting in clear winners and losers.

Airlines are service providers. Theyíre not manufacturing a disruptive technology. Boeing or Airbus would be more comparable if youíre going to use air transport as any sort of analogous situation.

bacchi

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Re: Is Tesla a good investment?
« Reply #1427 on: December 17, 2022, 01:42:09 PM »
I will buy the competition is coming narrative as soon as someone points to a realistic pathway for another EV manufacturer to produce a  million EVs in 2023 or 2 million in 2024.
(bolded)

BYD delivered 114k BEVs in November (~147% growth from 11/21) and are on target to deliver over a million in 2023 (799k ytd through 11/30/22).

https://insideevs.com/news/626150/byd-plugin-car-sales-november2022/

They have the battery problem solved. Giga Berlin is even using BYD batteries.

https://www.electrive.com/2022/08/11/tesla-to-use-byd-batteries-in-german-gigafactory/

The top selling BYD is the Song crossover. The next selling BYD is the Han, which is a mid-size sedan.

FINate

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Re: Is Tesla a good investment?
« Reply #1428 on: December 17, 2022, 04:28:26 PM »
You do realize Tesla is already supplying Pepsi with Class 8 semis capable of pulling full loads 500 miles on a single charge?

You do realize that there's a huge difference between short haul and long haul trucking, right? Local area fixed routes will work well for Tesla Semi. That's not what I'm talking about. The 500 mile range is a best case scenario. Have you driven across the vast stretches of the west? Mountain passes, long gradients, headwinds, very cold winter temps -- these all significantly reduce range. Charging very large batteries at scale will require some grid level investments. Again, we'll eventually work out the details, but IMO it's going to take a while longer.

We werenít talking about transportation infrastructure being disrupted only the means of transportation. I you believe EVs will replace ICE within 10-20 years, as you say, then I donít understand how Tesla isnít a big winner because in that scenario every EV that every manufacturer can make for at least the next decade is going to be instantly purchased to replace an ICE vehicle, which puts Tesla on a glide path to selling 10 million vehicles/yr by the end of the decade (low estimate). You seem to be holding contradictory positions. EV disruption happens, but Tesla somehow doesnít reap huge benefits as the leader in EV tech and production capacity?

And sorry, if you think moving our entire ground transportation system from liquid fossil fuels to electricity is evolution and not revolution, I donít know that weíre on the same page. This has huge climate implications, huge geopolitical implications, huge urban health implications, and huge financial market implications. There are going to be big winners and losers and the losers arenít going quietly. Itís honestly hard to overstate the magnitude and implications of this disruption. Trillion dollar industries, utilities, oil and gas, and auto manufacturing are being disrupted simultaneously.

For sure, EVs will disrupt the energy market. But we're talking about the automotive industry here. Will the shift to EVs fundamentally change anything for the average driver? No, not really. They will mostly charge at home instead of filling up at a gas station. Vehicles will last longer (which is bad for the overall profitability of the industry). The air will be cleaner with less GHG emissions. All good things, but nothing revolutionary.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1429 on: December 17, 2022, 05:17:17 PM »
You do realize Tesla is already supplying Pepsi with Class 8 semis capable of pulling full loads 500 miles on a single charge?

You do realize that there's a huge difference between short haul and long haul trucking, right? Local area fixed routes will work well for Tesla Semi. That's not what I'm talking about. The 500 mile range is a best case scenario. Have you driven across the vast stretches of the west? Mountain passes, long gradients, headwinds, very cold winter temps -- these all significantly reduce range. Charging very large batteries at scale will require some grid level investments. Again, we'll eventually work out the details, but IMO it's going to take a while longer.

We werenít talking about transportation infrastructure being disrupted only the means of transportation. I you believe EVs will replace ICE within 10-20 years, as you say, then I donít understand how Tesla isnít a big winner because in that scenario every EV that every manufacturer can make for at least the next decade is going to be instantly purchased to replace an ICE vehicle, which puts Tesla on a glide path to selling 10 million vehicles/yr by the end of the decade (low estimate). You seem to be holding contradictory positions. EV disruption happens, but Tesla somehow doesnít reap huge benefits as the leader in EV tech and production capacity?

And sorry, if you think moving our entire ground transportation system from liquid fossil fuels to electricity is evolution and not revolution, I donít know that weíre on the same page. This has huge climate implications, huge geopolitical implications, huge urban health implications, and huge financial market implications. There are going to be big winners and losers and the losers arenít going quietly. Itís honestly hard to overstate the magnitude and implications of this disruption. Trillion dollar industries, utilities, oil and gas, and auto manufacturing are being disrupted simultaneously.

For sure, EVs will disrupt the energy market. But we're talking about the automotive industry here. Will the shift to EVs fundamentally change anything for the average driver? No, not really. They will mostly charge at home instead of filling up at a gas station. Vehicles will last longer (which is bad for the overall profitability of the industry). The air will be cleaner with less GHG emissions. All good things, but nothing revolutionary.

Keep moving the goal posts.

AS for your question. Yes Tesla is still a good investment. In my opinion the stock is on sale.

Iíve been invested since 2013 and have added shares steadily since, including just yesterday. The current SP in no way determines wether Tesla the company is a good long term investment. Tesla the company remains a good long term (no leverage, no options) investment because it still meets the simple investment hypothesis I established for myself in 2013.

I will remain invested in Tesla as long as EVs are the future of transportation and Tesla is the leader of this transition.

Tesla continues to execute, open new factories, roll out new vehicles, continuously innovate, and grow production 40-50% YOY. Nothing with respect to the company fundamentals or execution has changed (other than improving financials), only the short term stock price has changed. Holders should focus on the single and ignore all the noise.

FINate

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Re: Is Tesla a good investment?
« Reply #1430 on: December 17, 2022, 05:57:18 PM »
Keep moving the goal posts.

No goal posts have been moved. I thought "moving large loads long distances" would be understood as long haul trucking. Sorry if that wasn't clear.

I'm glad you're still happy with your stake in TSLA, you're a True Believer.

waltworks

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Re: Is Tesla a good investment?
« Reply #1431 on: December 17, 2022, 06:00:16 PM »
Airlines, as a whole, have returned investors exactly zero in their entire history.

So yes, there are scenarios where EVs are wildly popular, many companies are successful at making them, and they're all bad investments.

-W

What if in theory, one company found a way to mass produce EVs with 30% margins. Theoretically speaking that company might reward investors handsomely.

Everyone switched from flip phones to smart phones, and Apple seemed profited from that transition by leading that the transition with a superior product and previously unheard of margins. Sound familiar...

It just flies against convention to think a disruption of this level happens without resulting in clear winners and losers.

Airlines are service providers. Theyíre not manufacturing a disruptive technology. Boeing or Airbus would be more comparable if youíre going to use air transport as any sort of analogous situation.

Sure, sure, I was just pointing out that capitalism generally leads to lots of competition and limited/minimal margins. Tesla is probably not an exception to that. I think they'll be a leading auto company for my entire lifetime, but they're not going to take over the entire industry and cause every other car company to collapse. They'll be one among many leading auto companies, which is great. Making electric cars is just not something that is hard enough that nobody else is going to be able to compete. Margins for everyone will drop, just like any other mature industry.

-W

TomTX

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Re: Is Tesla a good investment?
« Reply #1432 on: December 17, 2022, 08:23:23 PM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.
Then I suggest not using them as your basis of comparison.

TomTX

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Re: Is Tesla a good investment?
« Reply #1433 on: December 17, 2022, 08:23:34 PM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

I'd be curious to hear more on this too. The first decade or two of automobiles......some thought horse drawn were superior.....they were like motorized bicycles......
Their comparison wasn't actually relevant, they jumped straight to mass produced, highly complex ICE vehicles for their comparison.

TomTX

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Re: Is Tesla a good investment?
« Reply #1434 on: December 17, 2022, 08:32:40 PM »
@ColoradoTribe To my question asked up thread that was ignored: You're on the record claiming TSLA was a good investment over the past several years. In the context of this thread, I believe this is understood to mean that TLSA was a good purchase at the time. Just a few samples:

TSLA is down almost 60% for the year. Do you still consider this a good investment? Because those considering buying TSLA should be aware of your definition of a good investment before they put their little green soldiers at risk. If it hasn't been a good investment, what went wrong in your forecasting? Looking back in your history, you're making the same points about how far ahead Tesla is compared to others, battery tech, their production lines and innovation. And yet this hasn't translated to a growing stock price. What happened?

Apparently you either forgot about the Tesla stock split, or just didn't bother looking at a chart. Even at today's lows, TSLA stock is worth ~5x as much as when @ColoradoTribe made those posts you are deriding.

Volatile stocks are volatile. Fixating on one-year performance of a volatile stock is just stupid.

FINate

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Re: Is Tesla a good investment?
« Reply #1435 on: December 17, 2022, 08:39:39 PM »
To be clear, I don't think Tesla will become unprofitable anytime soon, and I do believe their volumes will continue to increase. But will it increase fast enough to justify the stock's very high PE ratio. Put another way, TSLA's valuation is higher than the other top 4 automakers COMBINED. From an investment point of view, it's an outlier and not in a good way.
A forward PE of 28 for a company increasing unit growth 50% Y-on-Y and ~30% gross margin ain't that high.

Come back with a comprehensive analysis if you want to be taken seriously rather than dismissed as a legacy fanboy. You should probably start with relative debt load and other obligations, but you do you.

If you're really on top of things, you will also consider the "stranded value" of those manufacturer's ICE production facilities. Many, many billions of dollars of facilities, soon to be worthless.

The difference, of course, is that I'm not claiming Ford or any legacy automaker is a good investment. I can argue that TSLA isn't a good investment while remaining neutral on legacy companies as investments.
Then I suggest not using them as your basis of comparison.

Why? Please explain. I simply pointed out that TSLA is valued more than the top 4 other car companies combined. I don't have to claim these other companies are a good investment for this to be a meaningful comparison. In fact, if these other companies are overvalued (i.e. a bad investment, though I'm not making this claim) then TSLA's valuation relative to other (overpriced) competitors is even more concerning.

TomTX

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Re: Is Tesla a good investment?
« Reply #1436 on: December 17, 2022, 08:45:26 PM »
No goal posts have been moved. I thought "moving large loads long distances" would be understood as long haul trucking. Sorry if that wasn't clear.
I suggest doing an actual analysis under the trucking rules for a single driver in the USA and presume that (as promised) the Semi can get back up to 80% charge during the mandated 30 minute rest break. Does this require an appropriately placed charging facility? Of course. 

The only significant "long haul" category it would not be able to perform in is tandem drivers. Having tandem drivers is pretty rare (under 10%), even when just looking at the long haul fraction of trucking.

FINate

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Re: Is Tesla a good investment?
« Reply #1437 on: December 17, 2022, 08:49:15 PM »
@ColoradoTribe To my question asked up thread that was ignored: You're on the record claiming TSLA was a good investment over the past several years. In the context of this thread, I believe this is understood to mean that TLSA was a good purchase at the time. Just a few samples:

TSLA is down almost 60% for the year. Do you still consider this a good investment? Because those considering buying TSLA should be aware of your definition of a good investment before they put their little green soldiers at risk. If it hasn't been a good investment, what went wrong in your forecasting? Looking back in your history, you're making the same points about how far ahead Tesla is compared to others, battery tech, their production lines and innovation. And yet this hasn't translated to a growing stock price. What happened?

Apparently you either forgot about the Tesla stock split, or just didn't bother looking at a chart. Even at today's lows, TSLA stock is worth ~5x as much as when @ColoradoTribe made those posts you are deriding.

Volatile stocks are volatile. Fixating on one-year performance of a volatile stock is just stupid.

No, I did not forget about the stock split. Come now, this is getting ridiculous.

Quote
Tesla (TSLA) has been a monster stock over much of its history, especially from its stratospheric run from mid-2019 to late 2021. But in 2022, Tesla stock has been a big loser, on track to plunge 57% as of Dec. 16.
Source: https://www.investors.com/news/tesla-stock-on-track-for-worst-year-ever-elon-musk-ev-giant-faces-4-big-headwinds/

Or, just search Google for TSLA then click on YTD. As of today, down 62% for the year. Online graphs are adjusted historically for stock splits. Good lawd, and you guys are investors.

TomTX

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Re: Is Tesla a good investment?
« Reply #1438 on: December 17, 2022, 08:50:14 PM »
Then I suggest not using them as your basis of comparison.
Why? Please explain. I simply pointed out that TSLA is valued more than the top 4 other car companies combined. I don't have to claim these other companies are a good investment for this to be a meaningful comparison. In fact, if these other companies are overvalued (i.e. a bad investment, though I'm not making this claim) then TSLA's valuation relative to other (overpriced) competitors is even more concerning.
Your analysis is grossly oversimplistic. What's the growth rate of those companies (significantly negative, vs +~50% unit growth annually) - what about margins? Are any of them close to 30% gross margins? How about on their BEVs? Are they making any positive gross margin at all on their BEVs? What kind of assets do they have? Billions of dollars in soon-to-be-stranded ICE manufacturing? (Yep.) How about debt? Massive.

You don't have to do a better analysis, but we're free to ignore (or point out) a poor one.
« Last Edit: December 17, 2022, 08:56:29 PM by TomTX »

TomTX

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Re: Is Tesla a good investment?
« Reply #1439 on: December 17, 2022, 08:54:35 PM »
No, I did not forget about the stock split. Come now, this is getting ridiculous.
I absolutely agree this is getting ridiculous.

You totally blew off that TSLA is up 5x since that post was made, even accounting for recent (large!) losses.

If you didn't forget about it, you are being deliberately disingenuous.

Please show us which of your investments yielded 5x across the past 3 years.
Quote
Or, just search Google for TSLA then click on YTD. As of today, down 62% for the year. Online graphs are adjusted historically for stock splits.
I already addressed this - and you blew it off. Your fixation on YTD is amazing - I suggest a better home would be r/wallstreetbets.

FINate

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Re: Is Tesla a good investment?
« Reply #1440 on: December 17, 2022, 09:09:16 PM »
No, I did not forget about the stock split. Come now, this is getting ridiculous.
I absolutely agree this is getting ridiculous.

You totally blew off that TSLA is up 5x since that post was made, even accounting for recent (large!) losses.

If you didn't forget about it, you are being deliberately disingenuous.

Please show us which of your investments yielded 5x across the past 3 years.
Quote
Or, just search Google for TSLA then click on YTD. As of today, down 62% for the year. Online graphs are adjusted historically for stock splits.
I already addressed this - and you blew it off. Your fixation on YTD is amazing - I suggest a better home would be r/wallstreetbets.

Oct 26, 2021 (date of bullish comment to Abe) - $359.01
Dec 16, 20221 - $150.23

That's a 40% drop, not a 5x return.

FINate

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Re: Is Tesla a good investment?
« Reply #1441 on: December 17, 2022, 09:18:01 PM »
A couple more recent quotes from near the peak:

here ye! here ye! here ye!

let it be known i bought tesla today - 100 shares at 683.11 (on today's dip) - in my roth. I had sold my VSGAX last week

I will be answering the op questions daily. silently. to myself.

Welcome aboard. Canít say if youíll be up or down in two days or two months, but think youíll be pretty happy two years from now and beyond. Beyond making money the natural world needs Tesla to succeed, so take pleasure in that while we wait for the stock price to ramp up again. Bought a few more shares myself on this dip.

A few points that encapsulate Tesla's valuation relative to legacy autos.

Tesla total gross margin for 2021 will be in the neighborhood of 25%. Fordís total gross margin for 2020 was 10%.
Tesla sales are increasing at an average rate of 50% yoy. Legacy auto sales are stagnant to declining YOY.
Tesla is 100% EV and by this time next year will have 4 factories dedicated exclusively to cranking out EVs. Legacy auto will still be trying to balance ICE production and a transition to EVs. Placing billions into new EV infrastructure, battery procurement, and supply chain, while simultaneously trying to not strand their ICE infrastructure.

Anyone focusing on the number of vehicles sold currently to justify Teslaís valuation relative to legacy auto is missing or ignoring the yoy growth and increasing margins, which is the real driver behind Teslaís valuation. That's before you even start to consider software as a service, insurance, FSD, solar roof, energy storage and grid services.

Sounds familiar. Again, what happened to this thesis?

nick663

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Re: Is Tesla a good investment?
« Reply #1442 on: December 18, 2022, 12:36:07 PM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

Horses are living creatures that require effort to keep alive even when not in use. As living creatures they're limited to a daily range of 10-20 miles, depending on load and conditions. Automobiles don't have any of these limitations, but are a lot more technologically sophisticated. A horse drawn buggy is relatively simple to create and assemble, which was typically created by a craftsman. Whereas the automobile required thousands of moving parts, specialized engineering, factories, and assembly lines.

Other than the drive-train, the manufacturing process for BEV and ICE vehicles is more-or-less the same. Suspension, body, seats, interior, etc.  An ICE drive-train has around 2000+ moving parts, whereas a BEV has around 20, so the complexity of the BEV supply chain and manufacturing process is actually lower, which means a lower barrier to entry for competitors.

I'm not a legacy fanboy, but neither am I a Tesla fanboy. It's worth noting that legacy makers aren't the only competition, as Rivian and others also enter the fray. I simply don't buy the narrative that Tesla is SO far ahead of the competition that other manufactures cannot catch up. The Mach E is a darn good EV, especially for Ford's first iteration. The legacy companies are already ramping up, not yet to Tesla's level, but I believe they will get there relatively soon.

I will buy the competition is coming narrative as soon as someone points to a realistic pathway for another EV manufacturer to produce a  million EVs in 2023 or 2 million in 2024. Tesla will produce 1.45 million this year, around 2.5 million in 2023, and close to 4 million in 2024. And most importantly, Tesla has the EV dedicated factories, raw materials, supplier contracts, battery cell/pack supply, and logistics already in place to achieve those production numbers. No other manufacturer does, which is why theyíre playing catch-up and will be for years. You donít just wake up one day flip a switch in the factory from ICE to EV.
Tesla has launched 6 new vehicles in their entire history.  That is what GM or Ford does in a couple years.

If you think the other manufacturers cannot scale at a dizzying pace, you're in for a surprise.  There is a reason Ford and GM are beating the Cybertruck to market.

ATtiny85

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Re: Is Tesla a good investment?
« Reply #1443 on: December 18, 2022, 12:40:23 PM »

One thing that contributed to Tesla's success so far is gaining customer base from people who used to buy hondas and toyotas and make them spend 50-60k on their cars. A customer base that didnt exist before and would not spent that much on a car.

Yeah, this is part of Appleís magic also, among many others. So glad I get the benefit of these markets via total stock index.

When these vehicles are shown to last 15+ years with no major expenses I will be all in. Thatís what I have established as my metric, based on my experience. Iíd like to say 20 years, but things do generally need some wrenching by then. Until then, no product ownership, just investing.

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Re: Is Tesla a good investment?
« Reply #1444 on: December 18, 2022, 01:52:42 PM »
No, I did not forget about the stock split. Come now, this is getting ridiculous.
I absolutely agree this is getting ridiculous.

You totally blew off that TSLA is up 5x since that post was made, even accounting for recent (large!) losses.

If you didn't forget about it, you are being deliberately disingenuous.

Please show us which of your investments yielded 5x across the past 3 years.
Quote
Or, just search Google for TSLA then click on YTD. As of today, down 62% for the year. Online graphs are adjusted historically for stock splits.
I already addressed this - and you blew it off. Your fixation on YTD is amazing - I suggest a better home would be r/wallstreetbets.
This thread started 4 years ago, so I looked at 3 year and 5 year performance on Morningstar and raised it to the 3rd and 5th power, respectively.
TSLA  3 year: 80.77%/year ... 5.9x
TSLA  5 year: 45.68%/year ... 6.6x
https://www.morningstar.com/stocks/xnas/tsla/trailing-returns

For everyone else, there's no time machine to get those returns.  The interesting question is what happens next year, after -57% YTD is in the rear mirror.  If the market is wrong about mild/no recession, TSLA could drop further in 2023 (and it would not be alone).  The company can do well, but the stock is punished for the current financial conditions indepentent of Tesla.

A rough search says 1% of US vehicles are EV, which leaves a huge addressable market even before considering Europe and China.  If Tesla and legacy automakers all produce EVs, it seems like it will take a long time to saturate the market.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1445 on: December 19, 2022, 12:22:05 AM »
The transition from animal power to mechanized vehicles was a much larger shift in innovation than ICE -> BEV.
Is it? Doesn't seem obviously so to me. How about going through your rationale?

Be sure to keep in mind the "refuel at home" equivalence for animal power and BEVs, etc.

Horses are living creatures that require effort to keep alive even when not in use. As living creatures they're limited to a daily range of 10-20 miles, depending on load and conditions. Automobiles don't have any of these limitations, but are a lot more technologically sophisticated. A horse drawn buggy is relatively simple to create and assemble, which was typically created by a craftsman. Whereas the automobile required thousands of moving parts, specialized engineering, factories, and assembly lines.

Other than the drive-train, the manufacturing process for BEV and ICE vehicles is more-or-less the same. Suspension, body, seats, interior, etc.  An ICE drive-train has around 2000+ moving parts, whereas a BEV has around 20, so the complexity of the BEV supply chain and manufacturing process is actually lower, which means a lower barrier to entry for competitors.

I'm not a legacy fanboy, but neither am I a Tesla fanboy. It's worth noting that legacy makers aren't the only competition, as Rivian and others also enter the fray. I simply don't buy the narrative that Tesla is SO far ahead of the competition that other manufactures cannot catch up. The Mach E is a darn good EV, especially for Ford's first iteration. The legacy companies are already ramping up, not yet to Tesla's level, but I believe they will get there relatively soon.

I will buy the competition is coming narrative as soon as someone points to a realistic pathway for another EV manufacturer to produce a  million EVs in 2023 or 2 million in 2024. Tesla will produce 1.45 million this year, around 2.5 million in 2023, and close to 4 million in 2024. And most importantly, Tesla has the EV dedicated factories, raw materials, supplier contracts, battery cell/pack supply, and logistics already in place to achieve those production numbers. No other manufacturer does, which is why theyíre playing catch-up and will be for years. You donít just wake up one day flip a switch in the factory from ICE to EV.
Tesla has launched 6 new vehicles in their entire history.  That is what GM or Ford does in a couple years.

If you think the other manufacturers cannot scale at a dizzying pace, you're in for a surprise.  There is a reason Ford and GM are beating the Cybertruck to market.

Would you rather invest in a company that offers 10 different vehicles, but sells 200,000/year (at a loss) or invest in a company that offers 4 different vehicles but sells 1.4 million a year (for 30% margin)?

Tesla is supply constrained. The are selling every vehicle they can make. There are sunk costs to rolling out new vehicles. As a Tesla investor I donít want them rolling out new lines until they have the battery supply to support new vehicle lines. Why spend all the money rolling out a new vehicle if youíre already selling your existing vehicles for 30 margin as fast as you can make them? Who cares how many different vehicles Ford and GM are proposing to making if theyíre not making money on the ones they are selling.

Tesla will expand their vehicle offering as fast as the battery supply allows. The Semi truck wasnít delayed. Tesla had to choose between producing one semi or five Model Ys with the same available batteries. Pushing the Semi out was the better, more profitable business decision.

Same with the promised, cheaper sedan. Tesla could produce that vehicle today, no problem, but why would they? Why would they manufacture a cheaper vehicle with 20% margin instead of a more expensive vehicle with 30% margin when they are battery cell constrained?

Same folks criticizing Tesla for not bringing more vehicles to market sooner would be critiziing Tesla if the profit margins dropped.

AdrianC

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Re: Is Tesla a good investment?
« Reply #1446 on: December 19, 2022, 08:42:28 AM »
Tesla finances:

https://twitter.com/ChrisBloomstran/status/1603371089853382657

In the beginning, Tesla was a dream. From that point to today, the company raised $32 billion in equity capital and earned a cumulative profit of $9 billion. Book value, firm equity, sums to $41 billion. The CEO has sold $40 billion of shares (all given as options), and counting.

Does Musk selling at this level bother any holders?

bacchi

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Re: Is Tesla a good investment?
« Reply #1447 on: December 19, 2022, 09:01:55 AM »
Tesla will expand their vehicle offering as fast as the battery supply allows. The Semi truck wasnít delayed. Tesla had to choose between producing one semi or five Model Ys with the same available batteries. Pushing the Semi out was the better, more profitable business decision.

It might've been a good business decision to focus on the Model Y but you're not using the same definition of "delayed" as the rest of us. Pepsi was expecting a delivery last year. Note the date on the article (Nov 08, 2021).

Quote from: https://insideevs.com/news/546341/pepsico-tesla-semi-deliveries-q42021/
Earlier this year, the beverage giant said it expected to take delivery of those 15 Semi trucks by the end of 2021, but that was before Tesla confirmed another delay to the program.
(bolded)

Musk is a vaporware master.

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1448 on: December 19, 2022, 09:18:42 AM »
Tesla will expand their vehicle offering as fast as the battery supply allows. The Semi truck wasnít delayed. Tesla had to choose between producing one semi or five Model Ys with the same available batteries. Pushing the Semi out was the better, more profitable business decision.

It might've been a good business decision to focus on the Model Y but you're not using the same definition of "delayed" as the rest of us. Pepsi was expecting a delivery last year. Note the date on the article (Nov 08, 2021).

Quote from: https://insideevs.com/news/546341/pepsico-tesla-semi-deliveries-q42021/
Earlier this year, the beverage giant said it expected to take delivery of those 15 Semi trucks by the end of 2021, but that was before Tesla confirmed another delay to the program.
(bolded)

Musk is a vaporware master.


How is a delivered product vaporware?

GM was going to make the Nikola Badger. Gone.
Ford said they'd have autonomous vehicles by 2021 in 2018. They've since shuttered Argo AI.
Toyota said in 2019 50% of their sales would be EV by 2025.  Now it's 2030 and only 1/3.
Nissan said the Ariya would be released by the end of 2021. Now fall of 2022.
Honda has had more EV concepts than EV sales.
https://www.goodwood.com/grr/road/news/2021/4/nineteen-cars-that-were-never-built/
...10 minutes of looking.

Product delays are endless from many companies. Talking points implying this is unique to Tesla or even the auto industry is disingenuous at best.
« Last Edit: December 19, 2022, 09:28:36 AM by lemonlyman »

FINate

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Re: Is Tesla a good investment?
« Reply #1449 on: December 19, 2022, 09:38:15 AM »
How is a delivered product vaporware?

Let's see, still waiting for: Cybertruck (promised 2021, was clearly vaporware to take the wind out of Rivian's sails), Full Self Driving (what a rip-off for those that paid for this), 1M Robo Taxis by 2020 (nope!), and Semi that was promised 2019 but has just now (end 2022) delivered it's first vehicles. Always free superchargers. The $35k Model 3. And more! https://www.roadandtrack.com/news/a35350331/checking-in-on-all-the-promises-elon-musk-and-tesla-have-made/
« Last Edit: December 19, 2022, 09:47:13 AM by FINate »