Author Topic: Please teach me about TSLA  (Read 5309 times)

LWYRUP

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Please teach me about TSLA
« on: August 17, 2020, 10:13:33 AM »

So TSLA today has a P/E ratio of $917.2.  My understanding of this is that this means you need to pay $917.2 to get one dollar of earnings. 

Maybe this is why I am a real estate lawyer and not a finance or tech genius, but I'd want some sort of reasonable expectation of return on my investment.  I could see see investing in a high growth company with a P/E of like 40 or 50, but $917.2? 

Does this mean the market expectation is basically that TSLA is going to quickly become the largest car company in the world?

For those that currently own TSLA, what is the cap on how high you think it can go?

I am solidly team VTSAX so I have no specific dog in this race but I don't really understand what's going on and am wondering if I just have no vision or if this is a "bubble indicator" so to speak. 

Montecarlo

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Re: Please teach me about TSLA
« Reply #1 on: August 17, 2020, 10:20:52 AM »
I did some rough math a while back.  It seemed the valuation makes sense if thereís a reasonable chance to dominate the us auto market, plus they have solar and trucking divisions as well that are largely ignored.

That being said, the space they are in is highly competitive and imo will be commoditized.  I am on the side that says Tesla is way overvalued, but if I could pick winners Iíd probably be with Russian models on a private island, and not typing this out.

GreenEggs

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Re: Please teach me about TSLA
« Reply #2 on: August 17, 2020, 10:28:54 AM »
Cathy Wood of ARK funds invests heavily in TSLA.  You can listen to her on YouTube about her thoughts about TSLA.  Her funds have been at the top of the ETF world since inception in 2015.  The ARK funds that hold TSLA limit their individual holdings of any one stock to 10%, so they have be selling off TSLA regularly to comply.  ARKW is up 67+% YTD.

It gained 87% in 2017 from a 2% holding in Bitcoin. 


btw, If you're interested in alternative energy you should have a look at TAN.  It's done quite well the past couple of years.  I'm not sure, but I don't believe it holds any TSLA.
« Last Edit: August 17, 2020, 10:32:03 AM by GreenEggs »

theoverlook

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Re: Please teach me about TSLA
« Reply #3 on: August 17, 2020, 12:17:04 PM »
P/E means little when you're talking about a massively growing company. They're spending hand over fist building factories and infrastructure. Their p/e was infinite (err, an asymptote? Zero?) until very recently because they hadn't turned a profit. Whether Tesla is overvalued or not is a valid question but basing it on the P/E seems like the wrong part to debate.

ctuser1

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Re: Please teach me about TSLA
« Reply #4 on: August 17, 2020, 12:19:21 PM »
People paying the $1800 price for Tesla are not rationalizing it by thinking about PE.

Technology generally creates one winner in every field, with maybe one more also ran as distant second. If Tesla was to become such a winner in one or more spaces (cars? battery tech? Solar? something else that Musk dreams up?) then a $340B market cap would very much be worth it - and possibly much more.

So the real question is what is the probability that Tesla will become THE winner in at least one such space? People buying Tesla seem to think there is a rather high probability.

Current Earning is just a (small) factor in trying to predict if Tesla will even survive at all till that promised land arrives. So PE is not material in this type of analysis.

Mashayoshi Son of Softbank build his entire career by doing this type of analysis. It is very risky and bubble prone - but not irrational. 

lemonlyman

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Re: Please teach me about TSLA
« Reply #5 on: August 17, 2020, 05:19:28 PM »
Tesla is a company with multiple growth avenues.

1. Auto - facilities under way to enable 2 million vehicle production by the end of 2022. 25%+ margins on those at scale with asp of $50k. $22 billion in gross profit at that runrate. They won't stop at 2 million.
2. Energy - Their residential solar panels are the cheapest I've seen. $1.49/kwh installed and before tax credits. If they were in my state already, I wouldn't hesitate at that price. Currently scaling utility software and battery installations. Coal is under and batteries are beating natural gas peakers in price. Who else can make so many batteries for utilities?
3. Batteries - This is the real key to their dominance. Battery production is difficult. Tesla is by far the largest b2b consumer of batteries in the world. Next month theyre going to reveal how theyre going to take battery production in house and scale to a Terrawatt+ of annual production. Other automakers are making plans for a fraction of that in partnerships with suppliers who may or may not be able to deliver. Part of how they plan to achieve that is custom cell, manufacturing and chemistry design that could be a great deal more advanced than those from Panasonic, Catl or LG chem. We'll learn next month. The production lines are already up for the new cells on Kato Rd in Fremont.
4. FSD - solving full self driving is just absurd fully valued. I think they'll solve it faster than people think but even late 5 - 10 years doesn't matter. Potential value proposition is too high to care about product delays. The package released now is really good and gets better consistently.
5. Ancillary products - once they're scaled to millions of vehicles per year, Tesla will make a lot from an in car app store, car insurance, premium internet, supercharger network fees, and a parts supply for a fleet (making parts is a huge business for automakers with large used car fleets needing repairs).

Short term catalyst but their impending addition to the s&p 500 is the largest market cap company to ever be added not from a lower midcap index and maybe ever added. It will cause demand on the stock and stabilize it some.

I thought my $2k target for spring was likely but now it seems inevitable. The battery aspect detailed in Sept could be an energy game changer.

achv_fcku-mny

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Re: Please teach me about TSLA
« Reply #6 on: August 17, 2020, 07:21:15 PM »
Every segment they are in is very crowded and demand not robust either. That gives me pause. May be my opinion is due to sour grapes, because I didnít buy at $30 a share. ;)

ColoradoTribe

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Re: Please teach me about TSLA
« Reply #7 on: August 17, 2020, 10:45:07 PM »
The competition has been preparing to crush Tesla any day now for years.

The best the competition has to offer now has just reached parity with the specs and price of the 2013 Tesla Model S. Tesla has at least a five year lead and continues to innovate.  Anyone looking critically at the competition quickly comes to realize there is none.

Iíve been long since 2013 and wonít be selling any of my shares soon. My initial investment in Tesla represented 5% of my net worth. At todayís closing price its roughly one-third.

My investment calculus is simple.

Is the electrification of transportation and grid-scale battery storage (paired with increased renewables) the future?
Is Tesla the leader in EV and battery technology?

If the answer to both is yes then I keep my money invested. Autonomous vehicles will likely be wildly profitable, but isnít even factored in my investment thesis, its basically gravy. Same with the solar roof, Tesla insurance, etc.

Tesla is the first tech company I ever felt I understood well enough to invest in. My confidence came from my 2103 purchase of a Nissan LEAF. The LEAF is rubbish compared to Teslaís vehicles, but the experience of driving even a sub-par EV far exceeded any previous ICE car Iíd owned. I knew then...
« Last Edit: August 17, 2020, 11:31:56 PM by ColoradoTribe »

Abe

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Re: Please teach me about TSLA
« Reply #8 on: August 17, 2020, 10:58:28 PM »
I bought a fair amount of stock at their IPO and am somewhat surprised theyíve done so well with the car market. But as others note, if you add the potential of their other technologies, their value is probably appropriate in the long term. I expect a flattening over time as they become a more stable, somewhat boring energy/battery company with  a division of mobile batteries that drive you places. Iíve not bought additional stake in the company since the IPO to limit exposure, but donít think they are overvalued and probably wonít sell for some time. Maybe one day thereíll be dividends.

moof

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Re: Please teach me about TSLA
« Reply #9 on: August 18, 2020, 01:33:17 AM »
Reminds me of all the rationalizing I heard about JDS Uniphase 20 years ago.  Just buy the damn index.

vand

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Re: Please teach me about TSLA
« Reply #10 on: August 18, 2020, 06:31:25 AM »
p/e is fairly meaningless without understanding how a company is operationally geared and where in a typical cycle it sits.

That said, TSLA is a bubble. No question.

NorCal

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Re: Please teach me about TSLA
« Reply #11 on: August 18, 2020, 07:22:31 AM »
I don't follow TSLA deeply, but I have a general idea what's going on.

Your math is correct that you are paying $900+ for $1 of earnings.

This is why the P/E ratio is typically good for analyzing large companies with a history of earnings.  It's not so good for analyzing younger growth companies without a track record of earnings.

Tesla is growing very rapidly and building lots of new factories.  They are taking nearly everything they earn and re-investing it in the business.  If my memory of the news articles is correct, their most recent fiscal year is the first year they've ever had four consecutive quarters of profit.  And it was a negligible profit.  The "E" in your P/E ratio is essentially a rounding error, which makes it not very useful.

The valuation stems from their growth rate.  As a simple example, right now they have ~$25B in revenue.  If they grow that at 30% annually for 5 years (a made up growth rate), they will have ~$93B in revenue at that time.  Tesla is one of the few companies that seems able to sustain this type of growth rate.

Of course, TSLA is still likely over-valued by a lot.  But I don't care enough to do the math myself.


vand

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Re: Please teach me about TSLA
« Reply #12 on: August 18, 2020, 12:37:31 PM »
I don't follow TSLA deeply, but I have a general idea what's going on.

Your math is correct that you are paying $900+ for $1 of earnings.

This is why the P/E ratio is typically good for analyzing large companies with a history of earnings.  It's not so good for analyzing younger growth companies without a track record of earnings.

Tesla is growing very rapidly and building lots of new factories.  They are taking nearly everything they earn and re-investing it in the business.  If my memory of the news articles is correct, their most recent fiscal year is the first year they've ever had four consecutive quarters of profit.  And it was a negligible profit.  The "E" in your P/E ratio is essentially a rounding error, which makes it not very useful.

The valuation stems from their growth rate.  As a simple example, right now they have ~$25B in revenue.  If they grow that at 30% annually for 5 years (a made up growth rate), they will have ~$93B in revenue at that time.  Tesla is one of the few companies that seems able to sustain this type of growth rate.

Of course, TSLA is still likely over-valued by a lot.  But I don't care enough to do the math myself.

Is Tesla really growing that quickly though? They doubled revenue in the last year. Plenty of companies have done that and don't trade on 900 p/e and 20 times revenue.

hodedofome

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Re: Please teach me about TSLA
« Reply #13 on: August 18, 2020, 02:18:41 PM »
Reminds me of all the rationalizing I heard about JDS Uniphase 20 years ago.  Just buy the damn index.

Just buy the FANG 3x index - FNGU.

2019 Return - 117.25%
2020 Return YTD - 125.71%

bacchi

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Re: Please teach me about TSLA
« Reply #14 on: August 18, 2020, 02:47:52 PM »
Reminds me of all the rationalizing I heard about JDS Uniphase 20 years ago.  Just buy the damn index.

Just buy the FANG 3x index - FNGU.

2019 Return - 117.25%
2020 Return YTD - 125.71%

JDS-U, which made network routers and switches for the growing internet, had an 830% gain in 1999. It split 3 times that year.

During the dot bomb, less than 2 years later, it lost 98% of its value and laid off 24,000 employees.


Montecarlo

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Re: Please teach me about TSLA
« Reply #15 on: August 18, 2020, 03:38:28 PM »
Cathy Wood of ARK funds invests heavily in TSLA.  You can listen to her on YouTube about her thoughts about TSLA.  Her funds have been at the top of the ETF world since inception in 2015.  The ARK funds that hold TSLA limit their individual holdings of any one stock to 10%, so they have be selling off TSLA regularly to comply.  ARKW is up 67+% YTD.

It gained 87% in 2017 from a 2% holding in Bitcoin. 


btw, If you're interested in alternative energy you should have a look at TAN.  It's done quite well the past couple of years.  I'm not sure, but I don't believe it holds any TSLA.

Iím not sure you are advocating for Tesla, or just laying out some interesting info.  But assuming the former...

This is a bit circular, isnít it?

ďTesla isnít bubbly, look at this person whose funds went up while holding Tesla!  Arenít they smart!Ē

Using the fund to justify Tesla, when itís Tesla thatís moving the fund...


GreenEggs

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Re: Please teach me about TSLA
« Reply #16 on: August 18, 2020, 03:51:05 PM »
Cathy Wood of ARK funds invests heavily in TSLA.  You can listen to her on YouTube about her thoughts about TSLA.  Her funds have been at the top of the ETF world since inception in 2015.  The ARK funds that hold TSLA limit their individual holdings of any one stock to 10%, so they have be selling off TSLA regularly to comply.  ARKW is up 67+% YTD.

It gained 87% in 2017 from a 2% holding in Bitcoin. 


btw, If you're interested in alternative energy you should have a look at TAN.  It's done quite well the past couple of years.  I'm not sure, but I don't believe it holds any TSLA.

Iím not sure you are advocating for Tesla, or just laying out some interesting info.  But assuming the former...

This is a bit circular, isnít it?

ďTesla isnít bubbly, look at this person whose funds went up while holding Tesla!  Arenít they smart!Ē

Using the fund to justify Tesla, when itís Tesla thatís moving the fund...




No, I'm not really advocating for Tesla, but Cathy Wood has been asked about Tesla in a number of interviews & she says that she believes it will reach $7000 or more per share.  I didn't buy Tesla, and won't at $1800+, but I have bought some of the ARK funds.  I don't trust my nerves or investing skills to put much into individual stocks. 

TomTX

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Re: Please teach me about TSLA
« Reply #17 on: August 19, 2020, 12:06:37 PM »

So TSLA today has a P/E ratio of $917.2.  My understanding of this is that this means you need to pay $917.2 to get one dollar of earnings. 

Maybe this is why I am a real estate lawyer and not a finance or tech genius, but I'd want some sort of reasonable expectation of return on my investment.  I could see see investing in a high growth company with a P/E of like 40 or 50, but $917.2? 
TSLA is being priced primarily based on growth potential and future earnings, not today's earnings.  They are in a very capital-intensive industry and are plowing billions of dollars back into growth.

This time last year, they had one active car factory (Fremont, CA) and one which had been under construction for ~6 months (Giga Shanghai.)

Today both of those car factories are producing well, and both are getting significant upgrades to throughput. Giga Shanghai is getting capacity doubled by duplicating the same factory next door, but will produce Model Y. Current factory there produces Model 3.

PLUS they have 2 additional car factories under construction: Giga Berlin and Giga Texas (Austin). Both should be producing by next year.

Based on an independent industry expert (Sandy Munro) - they have had massive improvements in manufacturability/simplification with the Model Y, and there is plenty of indication they are continuing to innovate rapidly in this area.

Note that it's a lot easier to be profitable when your R&D costs are spread over multiple factories instead of just one.

This is entirely ignoring their expertise in stationary storage (just became profitable), solar installs (turning the corner), autonomous driving and their custom microprocessors for autonomous driving.

*From muddy field to production vehicles coming off the assembly line in ~10 months at Giga Shanghai. Unprecedented.

MustacheAndaHalf

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Re: Please teach me about TSLA
« Reply #18 on: August 25, 2020, 01:21:53 AM »
I currently hold two contrary views of Tesla, which I suppose puts me at neutral.

When I've asked "Tesla should be compared against which other company?", I don't get a reasonable answer - usually no answer, or maybe a tech company.  Tech companies sell software, which doesn't require factory and a supply chain to assemble.  Comparing on fundamentals or valuations, especially to other car makers, will lead you to avoid TSLA stock.

Here's the new thing I realized: Tesla's competitors simply can't get it right.  Tesla designed it's cars from scratch, while it's competitors partially redesign existing models.  That could be why Tesla's cars are far more popular than the competition - which are mostly forgotten.  (Note the Toyota Prius is a hybrid gas/electric car, not all electric).

Because of Tesla's valuations, any mistake they make is highly magnified.  There's a significant risk Musk says/does something that harms the stock.

Procter and Gamble is one of the 10 largest stocks in the S&P 500.  Tesla is bigger, but hasn't been added to the S&P 500.  So it might make sense to own some Tesla stock until it gets added to the S&P 500, then sell into the buying pressure of every S&P 500 fund.

So I'm somewhere near neutral... buy Tesla because it should be added to the S&P 500 soon and lacks competition... or avoid Tesla because valuations are too high and any misstep risks a large drop.

lemonlyman

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Re: Please teach me about TSLA
« Reply #19 on: August 25, 2020, 06:40:30 AM »
Here's the new thing I realized: Tesla's competitors simply can't get it right.

Right, they have a hard problem to solve in this decade. Years behind in drivetrain efficiency, and they're getting further behind.


After researching the charging infrastructure advantage and wildly better software, there is not much of a choice for consumers wanting to purchase a new EV.

Paper Chaser

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Re: Please teach me about TSLA
« Reply #20 on: August 25, 2020, 12:59:10 PM »
I currently hold two contrary views of Tesla, which I suppose puts me at neutral.

When I've asked "Tesla should be compared against which other company?", I don't get a reasonable answer - usually no answer, or maybe a tech company.  Tech companies sell software, which doesn't require factory and a supply chain to assemble.  Comparing on fundamentals or valuations, especially to other car makers, will lead you to avoid TSLA stock.

Here's the new thing I realized: Tesla's competitors simply can't get it right. Tesla designed it's cars from scratch, while it's competitors partially redesign existing models.  That could be why Tesla's cars are far more popular than the competition - which are mostly forgotten.  (Note the Toyota Prius is a hybrid gas/electric car, not all electric).

Why wouldn't Tesla be compared to another car company?
VW is currently making clean sheet EVs (VW ID3 and ID4, plus Porsche's Taycan). They've dedicated around $35 Billion to EVs in the next 5 years. They'll have 3 dedicated EV manufacturing plants (Germany, China, US). They're predicting around 330k units per year from the German factory alone, which would slightly exceed Tesla's current capacity. They have their charging infrastructure in the US (Electrify America) growing at a rapid pace and it can be used by any EV or PHEV from any manufacturer unlike Tesla's.

Ford will be selling their clean sheet Mach E (Model Y competitor) later this year. The electric F150 pickup is slated for "Mid 2022" availability. And they're rebranding some VW EV stuff and Rivian tech too. They've devoted $11 billion to EVs.

GM has been selling the Bolt on a dedicated EV platform for years now. They have new, more desirable EVs (trucks and CUVs) hitting the market in the next 2 years on dedicated EV platforms. They're investing $20 Billion in EVs including dedicated EV plants. Cadillac will likely be an all EV brand in a few years. The company has set a goal of "zero crashes, zero emissions, zero congestion", their Cruise division has tons of successful miles of fully autonomous driving and they've developed the first fully autonomous taxi concept that we've seen (their Origin concept has no steering wheel or pedals and is summoned through their app).

All of these companies have tons of brand equity and vast dealer and parts networks to get their product into people's hands and keep them serviced/maintained which has been an issue for Tesla. I think any of them could be a more profitable investment at this point than TSLA which seems highly overvalued by comparison.

MustacheAndaHalf

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Re: Please teach me about TSLA
« Reply #21 on: August 26, 2020, 07:12:04 AM »
Using data from Yahoo Finance, I get the following valuations:
Ford:  forward P/E 6.5 , price/book 0.90
VW:  forward P/E 26.0, price/book 0.61
Tesla: forward P/E 303.0, price/book 37.9
https://finance.yahoo.com/quote/TSLA/key-statistics?p=TSLA

That's why I said looking at valuations would dissuade people from buying TSLA.  To be clear, Tesla isn't just outside the range of value stocks - it's valuations are even extreme for growth stocks, like two of the big tech companies listed below:
Amazon:  forward P/E 111.1, price/book 22.4
Google: forward P/E 37.3, price/book 5.3
https://finance.yahoo.com/quote/GOOG/key-statistics?p=GOOG

TomTX

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Re: Please teach me about TSLA
« Reply #22 on: August 26, 2020, 08:32:53 AM »
Why wouldn't Tesla be compared to another car company?
VW is currently making clean sheet EVs (VW ID3 and ID4, plus Porsche's Taycan). They've dedicated around $35 Billion to EVs in the next 5 years. They'll have 3 dedicated EV manufacturing plants (Germany, China, US). They're predicting around 330k units per year from the German factory alone, which would slightly exceed Tesla's current capacity.

Why are you comparing Tesla's prior capacity to VW's 2022 capacity and pretending it is equivalent?

Tesla delivered 367k vehicles in 2019 (about 10% higher than the future VW capacity you are claiming) and has been rapidly ramping capacity.

Tesla should be able to produce over 1 million vehicles in 2021.

Paper Chaser

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Re: Please teach me about TSLA
« Reply #23 on: August 26, 2020, 09:09:16 AM »
Why wouldn't Tesla be compared to another car company?
VW is currently making clean sheet EVs (VW ID3 and ID4, plus Porsche's Taycan). They've dedicated around $35 Billion to EVs in the next 5 years. They'll have 3 dedicated EV manufacturing plants (Germany, China, US). They're predicting around 330k units per year from the German factory alone, which would slightly exceed Tesla's current capacity.

Why are you comparing Tesla's prior capacity to VW's 2022 capacity and pretending it is equivalent?

Tesla delivered 367k vehicles in 2019 (about 10% higher than the future VW capacity you are claiming) and has been rapidly ramping capacity.

Tesla should be able to produce over 1 million vehicles in 2021.

VW's German plant is expecting equal production to what Tesla currently does in a year @ Freemont. By 2023, VW's total production will be larger of course, as will Tesla's. Point being that Tesla isn't going to be the only company mass producing dedicated EVs at scale in another year or two. GM is partnering with LG on a battery production facility capable of producing 30 GW hrs annually as well.

When you have multiple companies each producing around 1 million EVs per year (VW's expectation is 1 million per year by 2023 and 1.5 million by 2025) the small but growing EV market segment can get a little crowded. I think Tesla loses market share as a result, so valuations that involve them completely ruling the EV market segment seem overly optimistic to me. Musk has stated that a primary goal was to get the big manufacturers to take EVs seriously, and it seems like that's finally coming true. That could make the world a much nicer place, but it doesn't make the road for Tesla any easier or more profitable. In fact, besides possibly reduced market share through competition, increasing electrification from other automakers reduces the demand for Tesla's highly profitable emissions credits.

Tesla clearly leads the industry at the moment. They have some really elegant engineering, impressive tech and they've got tons of equity and brand loyalty among early adopters. They also frequently have quality issues in the design and manufacturing processes that most mainstream buyers are less likely to overlook than the gung-ho early adopters are (paint quality, panel fitment, interior materials, early failures like the MCU fiasco, frequent control arm problems, etc). The companies entering this market segment have tons more experience building, testing and supporting vehicles than Tesla does, and if EVs are to become mainstream, rather than a novelty for early adopters I think advantages in those areas are what's likely to do it.
« Last Edit: August 26, 2020, 09:35:54 AM by Paper Chaser »

KungfuRabbit

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Re: Please teach me about TSLA
« Reply #24 on: August 26, 2020, 01:54:06 PM »
P/E is meaningless in fast growing companies.

Tesla is currently doubling the number of vehicles they have for sale (right now they have S, 3, X, Y, they are developing C, A, R, S) and tripling their manufacturing capacity (currently ~600,000 / year, end of next year will be ~2,000,000).

The fact that they are doing that while making any profit at all is just unbelievably amazing. 

I bought Tesla at $200 / share, and I intend to not sell a single share until over $20,000 / share (pre-split price...), which I'm confident will happen this decade.   

Also, my Tesla experience follows that of many Tesla fans:

1) I heard of them, knew nothing and didn't care

2) My friend convinced me to test drive one, so I did

3) Broke every mustachian rule that exists and bought one

4) Realized the cars are beyond amazing and no one will EVER buy a gas car EVER AGAIN if they have ridden in a Tesla, because gas cars are just plain inferior in every single measurable way.  If you are a gear-head reading this saying I'm full of crap and gas cars are awesome and blah blah blah, feel free to test my theory and go test drive one. 

5) Bought the stock. 

6) Will hold the stock, ignoring the short term volatility, because I understand electric cars will take over the world.  And there aren't ANY "Tesla Killers" as the media keeps saying, there are only "ICE killers" - there is still 98% gas car market share to go after, plenty of room for all of the other EV car makers to be successful as well, on top of the fact Tesla indisputably makes the best EV. 

bacchi

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Re: Please teach me about TSLA
« Reply #25 on: August 26, 2020, 02:29:06 PM »
P/E is meaningless in fast growing companies.

While true, market cap does matter.

Tesla has a higher market cap than VW. VW sold 14M cars last year; Tesla sold 360k.

Quote
The fact that they are doing that while making any profit at all is just unbelievably amazing. 

Tesla doesn't make money from car manufacturing; it's not a cash-flow profitable activity in and of itself. They make money from selling pollution credits to other companies. That's the only reason they're profitable.

Tesla recognizes this and has set guidance on that source of income going away.

Montecarlo

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Re: Please teach me about TSLA
« Reply #26 on: August 26, 2020, 03:23:10 PM »
And there aren't ANY "Tesla Killers" as the media keeps saying, there are only "ICE killers" - there is still 98% gas car market share to go after, plenty of room for all of the other EV car makers to be successful as well, on top of the fact Tesla indisputably makes the best EV.

I agree that P/E is meaningless.  Any company that can rapidly increase market penetration and drive long-term revenues can easily have a very high, or negative, P/E.

But, let's say they kill ICE and they become the worlds largest auto manufacturer.  The world's top two auto manufacturers, Toyota and VW, have a market cap of 220B and 85B.  Combined for 305B.

Tesla has a market cap of 400B.  Let's play out a 10 year scenario.

1) Internal Combustion Engines decline in popularity and are ultimately outlawed under the Greta Thunberg United Nations Green Peace Accord
2) Tesla gobbles up the market share, dominating competitors
3) Tesla ends up with 25% of the global auto market, similar to if Toyota and VW merged today
4) With a superior product, Tesla maintains in dominance, but market penetration slows and P/E settles at a normal level for a large industrial bluechip

This seems like a success story.  But I don't think this works out super well the for average tesla stock holder today.  Their market cap is already beyond what you would expect from a dominant company.

So the market is pricing in much MORE than this.  It is pricing in:
  • ICE goes away
  • Tesla becomes the dominant auto manufacturer
  • Market fragmentation decreases
  • Rapid growth and profitability in autonomous, solar, and truck business units
  • And the risk premium, because there is a staggering amount of uncertainty and the competition is going to fight tooth and nail

This is what I said, if you think Tesla is reasonably going to be a market leader in four different businesses, sure, maybe the stock price makes sense.  But it's not for me.

PDXTabs

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Re: Please teach me about TSLA
« Reply #27 on: August 26, 2020, 03:51:21 PM »
I am on the side that says Tesla is way overvalued, but if I could pick winners Iíd probably be with Russian models on a private island, and not typing this out.

Me too, but I also thought that Amazon was way overvalued 12 years ago.

KungfuRabbit

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Re: Please teach me about TSLA
« Reply #28 on: August 27, 2020, 12:50:02 PM »
The regulatory money was about 7% of the total money flowing into Tesla in Q2 of this year.  So if you want to look at it being "100% of the profit" you are welcome to, but its fairly silly logic.  When they aren't literally doubling their line-up and tripling their manufacturing capacity in a single year their profits won't be so washed out by those expenses. 

Anyhow, I have already put my money where my mouth is with the purchase of the stock, you are welcome to disagree and you certainly don't have to buy it - time will tell who is right.  However, it seems quite likely it'll join the S&P500 next month, so you are pretty much 100% guaranteed to own Tesla in the near future if you own broad index funds :)

However, you clearly are against Tesla....have you done #4 on my list?  Go test drive one, it will only cost you an hour or two of your time.  You'll struggle finding reasons to hate them after you drive one, and you might just might follow the same path I did.   

Paper Chaser

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Re: Please teach me about TSLA
« Reply #29 on: August 27, 2020, 02:00:39 PM »
The regulatory money was about 7% of the total money flowing into Tesla in Q2 of this year.  So if you want to look at it being "100% of the profit" you are welcome to, but its fairly silly logic.  When they aren't literally doubling their line-up and tripling their manufacturing capacity in a single year their profits won't be so washed out by those expenses. 

Anyhow, I have already put my money where my mouth is with the purchase of the stock, you are welcome to disagree and you certainly don't have to buy it - time will tell who is right.  However, it seems quite likely it'll join the S&P500 next month, so you are pretty much 100% guaranteed to own Tesla in the near future if you own broad index funds :)

However, you clearly are against Tesla....have you done #4 on my list?  Go test drive one, it will only cost you an hour or two of your time.  You'll struggle finding reasons to hate them after you drive one, and you might just might follow the same path I did.   

What did you love so much about the Tesla, and are those attributes specific to the Brand, or are they available in EVs in general? Because the most common praises that I hear about Teslas (quiet, torquey, no stopping for gas, etc) can be done in any EV from any manufacturer. Meanwhile the most common complaints (panel gaps, improper equipment specified, stark/low grade interiors) are things that more experienced vehicle manufacturers aren't likely to struggle with.

I understand that you're a fan of the brand and their products, but does that make the stock a good investment at its current price? In other words, would you buy more TSLA right now? I think that's the idea behind the thread.

LWYRUP

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Re: Please teach me about TSLA
« Reply #30 on: August 27, 2020, 02:53:46 PM »
I understand that you're a fan of the brand and their products, but does that make the stock a good investment at its current price? In other words, would you buy more TSLA right now? I think that's the idea behind the thread.

Yep, that was my intent.  Not looking back to past performance (obviously it was a very good decision to buy TSLA last year) or to how much people like the cars, just to simply at this point in time will TSLA have the ability to generate the growth and profits necessary to justify its current price plus at least match the S&P on a go-forward basis. 

It seems to me like they'd both need to absolutely dominate the car space and make significant progress in other business lines to do so.  Basically, they'd need to become a hugely profitable conglomerate, along the lines of Amazon or Microsoft. 

That's possible but it does seem to me to be a big bet.  I thought @lemonlyman gave the best pro-bull analysis, that they will continue to gain market share in the automotive space but also expand outwards into adjacent, profitable business lines.  I think they pretty much have to justify the current price as a rational. 
« Last Edit: August 27, 2020, 02:55:59 PM by LWYRUP »

bacchi

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Re: Please teach me about TSLA
« Reply #31 on: August 27, 2020, 03:19:32 PM »
However, you clearly are against Tesla....have you done #4 on my list?  Go test drive one, it will only cost you an hour or two of your time.  You'll struggle finding reasons to hate them after you drive one, and you might just might follow the same path I did.   

I'm not "against" Tesla; nor do I hate them. It's just an overvalued stock.

Yes, I've driven both the S and 3. I wasn't awed enough to buy the stock.

Abe

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Re: Please teach me about TSLA
« Reply #32 on: August 27, 2020, 10:55:40 PM »
It's important to separate Tesla's product branding from their overall strategy. I've driven several of their models and am not impressed. I'm not into accelerating fast, and the interiors left much to be desired. However, I think their plan makes sense, especially in the energy & battery markets. I also do think they are relatively overvalued compared to most stocks, but the market forces seem to give tech stocks a lot more leniency. Hence companies that barely make a profit being valued at several billion dollars after years of barely being profitable. If Tesla joins the S&P I'll probably sell my existing shares to compensate and buy some more tech index fund ETFs to reduce overall exposure.
« Last Edit: August 27, 2020, 10:57:34 PM by Abe »

AdrianC

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Re: Please teach me about TSLA
« Reply #33 on: August 28, 2020, 07:11:16 AM »
4) Realized the cars are beyond amazing and no one will EVER buy a gas car EVER AGAIN if they have ridden in a Tesla, because gas cars are just plain inferior in every single measurable way.  If you are a gear-head reading this saying I'm full of crap and gas cars are awesome and blah blah blah, feel free to test my theory and go test drive one. 
Every single measurable way? I think youíre forgetting something. My $26k VW GTI has a highway range of over 400 miles and a refuel time of 2 minutes.

I rode in my neighbors Model 3 and the acceleration was awesome. Was. Even Teslaís obey the laws of physics. To be fair, he walked away without a scratch.

Iím in the market for a new car in about 5 years time, hopefully by then thereíll be an electric at my end of the market that can compete with ICE cars on price. Will it be a Tesla? I doubt it. I expect it will be a VW, Ford or Chevy. Tesla will still be awesome, and still more than Iím ever going to pay for a car.

lemonlyman

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Re: Please teach me about TSLA
« Reply #34 on: August 28, 2020, 08:05:17 AM »
What did you love so much about the Tesla, and are those attributes specific to the Brand, or are they available in EVs in general? Because the most common praises that I hear about Teslas (quiet, torquey, no stopping for gas, etc) can be done in any EV from any manufacturer. Meanwhile the most common complaints (panel gaps, improper equipment specified, stark/low grade interiors) are things that more experienced vehicle manufacturers aren't likely to struggle with.

I understand that you're a fan of the brand and their products, but does that make the stock a good investment at its current price? In other words, would you buy more TSLA right now? I think that's the idea behind the thread.

I think if other EV manufacturers were so equivalent/superior with their products, it would be unlikely that Tesla would have 80% market share in the US and 26% globally. I would in return ask what software advantages do other manufacturers have? Does the range/$ equal or exceed Tesla's? Do you see any product differentiation at all? We know GM's future Ultium platform doesn't exceed Tesla's current vehicles. We know Ford's upcoming releases don't either based on their released specs. What we don't know is what Tesla's future battery platform looks like but we will next month. I expect it to be a significant improvement. Overall, I agree that share will decline by 2025. Not because competitors pushing them out, but because general EV demand will be so high as a % of the overall auto market. Tesla will sell everything they can possibly produce.

For investment, Tesla will be producing 2 million vehicles in 2022. By 2025, can't say what the production will be, but I think it'll be closer to 4 million with the company earning $100/share (pre-split) just on autos. Tesla Energy will be ramping more. VW Electrify America recently has been discovered using Tesla Power Packs in their locations, ha.
https://www.torquenews.com/11681/breaking-news-vw-apparently-using-tesla-powerpack-batteries-electrify-america
If you discount a 2025 tech multiple on $100+EPS at 10%, you get higher than the current price today. With all their other platforms, software packages, future app store, mapping products (millions of camera nodes all over the world), residential energy, utility energy products, I don't see how the stock isn't a good investment over the next 5 years, but there are no certainties.

KungfuRabbit

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Re: Please teach me about TSLA
« Reply #35 on: August 28, 2020, 09:02:18 AM »
Most of the advantages of the car are based on electric cars in general, though Tesla has a few boosts specifically.  I fully support other EV companies as well, unfortunately so many of the big brands are doing them quite poorly.  For example the Hyundai ones are quite good from what I read, but they just don't make any real quantity of them and you can't buy one if you wanted to.

-Instant torque / acceleration / handling are good across all EVs, but the Model 3 has the best of all of them for a "reasonable" price tag (I've heard the Taycan is super fun to drive as well, but is over $100,000...and of course ignoring the various small volume $1,000,000+ super cars people are making).  Though I do know people with a bolt and an i3 and they are both happy with them.
 A lot of people talk about the software updates and such, which is certainly nice but not really life changing, and I'm confident others will catch up on that eventually. 

-My first car was an Oldsmobile that I got relatively new when my Grandfather passed away.  It was a fine car, treated me well-ish, but the crash test ratings on that car were HORRIBLE, it was something like an average of 1.3 stars.  I'm not going to say I'm risk adverse or unnecessary scare of death / getting injured, but Teslas are the safest cars ever made, by a fairly substantial margin, and I like that.  Personally I'm a good driver with 20 years of driving and zero accidents, but you never know.  Thats the kind of thing that 99+% of the time has no real value, but on that 1% of the time when it matters it is priceless. 

-Thanks for the good morning laugh about panel gaps.  That phrase was literally invented by people desperate for things to find wrong with Teslas.  Feel free to walk around a showroom / lot around a service center and see if you actually see any of those famous "panel gaps", or if you care unless you are 6" away and holding a ruler.  This also comes back to my "try it on your own instead of believing the negative press" opinion. 

-I'm not sure I understand your comment about a $26,000 car with 400 miles of range.  I'm sure if your goal is price per range you could get a used car for $5,000 that could go 300 miles!  Its always the first question I get "how much mileage do you get?  How often do you run out of batteries on the highway?", etc, etc.  I don't know about the rest of the country, but personally I don't drive more than 300 miles on a single day very often, perhaps a few times per year.  Here's some math for you:

-It takes me about 10 seconds to plug in my car in my garage.  Doing that weekly is approximately 9 minutes of my time per year.

-I used to stop at the gas station about every 10 days, taking about 10 minutes to drive out of my way / wait at 2 stoplights / fill up / pay / etc.  That's approximately 365 minutes of my time per year.  I'm not sure how you did that in 2 minutes, unless you literally have a race track pit stop on your way home.  Maybe call it 5 minutes if you have a super convenient one.

-I've done half a dozen trips that I needed to charge mid trip, however none of them added any time at all.  I have charged overnight at campsites (zero extra time), charged in parking lots of places I was going anyhow (zero extra time), or charged at hotels (zero extra time) - side note the campsites and hotel charging were also FREE CHARGING - how many times have you gotten free gas on a roadtrip????  If you happen to be driving 600 miles in a single day non stop, yes you have to stop for 30-60 minutes mid trip to charge, but could easily line that up with a lunch break or stretching break or something. 

-Lets say you don't do that, and you literally wanted to drive 600 miles non stop without resting, you'd have to do that 5-10 times per year before your net time breaks even compared to a years worth of gas station stops.  Do you drive 600 miles without resting 10 times a year or more?  If so, yes the EV will add net time to your life.  If not, you need to look at the broader overall picture, not the once a year that it is slightly inconvenient. 

Honestly, please give me a good rebuttal to this, because I really truly don't understand why people care about range and charging time so much, its just silly. 

Also, if you do happen to drive 500 miles per day on a regular basis and are pushing 30,000+ miles per year, yes you would have to use some time charging, however the savings of gas and maintenance would be MASSIVE at that point.  That's a whole different discussion though.

The only good argument against a Tesla is for people buying a low cost used car and driving it minimally.  Yes, obviously that is way cheaper and help you on your MMM journey very efficiently, and no I wouldn't even consider changing your mind against doing that.  But if you buy a new car over ~$30,000 ish there just isn't a debate you should have purchased an EV or Tesla specifically if you really truly look at the facts instead of focusing on these arguments that are just plain silly.  There is a guy in my group that recently bought a new Audi, I debated with him about the various details and you know what his only argument at the end of it was?  He likes the noise of the engine. 

So there it is.  If you are willing to give up all of the benefits because you like the noise of the engine, that is your personal decision to make.   

Paper Chaser

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Re: Please teach me about TSLA
« Reply #36 on: August 28, 2020, 10:39:22 AM »
What did you love so much about the Tesla, and are those attributes specific to the Brand, or are they available in EVs in general? Because the most common praises that I hear about Teslas (quiet, torquey, no stopping for gas, etc) can be done in any EV from any manufacturer. Meanwhile the most common complaints (panel gaps, improper equipment specified, stark/low grade interiors) are things that more experienced vehicle manufacturers aren't likely to struggle with.

I understand that you're a fan of the brand and their products, but does that make the stock a good investment at its current price? In other words, would you buy more TSLA right now? I think that's the idea behind the thread.

I think if other EV manufacturers were so equivalent/superior with their products, it would be unlikely that Tesla would have 80% market share in the US and 26% globally. I would in return ask what software advantages do other manufacturers have? Does the range/$ equal or exceed Tesla's? Do you see any product differentiation at all? We know GM's future Ultium platform doesn't exceed Tesla's current vehicles. We know Ford's upcoming releases don't either based on their released specs. What we don't know is what Tesla's future battery platform looks like but we will next month. I expect it to be a significant improvement. Overall, I agree that share will decline by 2025. Not because competitors pushing them out, but because general EV demand will be so high as a % of the overall auto market. Tesla will sell everything they can possibly produce.

Tesla has 80% of the EV market in the US because:
1) They've been doing it the longest. They're the proverbial big fish in a small pond. As such, they've been able to dominate with the "early adopters". Those people are less sensitive to price than more maintstream buyers, and they're more likely to tolerate issues. But there are a limited number of early adopters out there. To continue growth, they'll eventually have to draw in the mainstream buyers. That's an area where I think the mature makers have some advantages.

2) They're the only company whose shareholders don't balk at losing money on vehicles over an extended time. I know that they supposedly make a nice profit per vehicle now, but for several years that wasn't the case. GM or VW shareholders for example aren't going to tolerate that.

3) Other brands have been more likely to prioritize existing, higher profit vehicles because they have them right there. Especially at the dealer level. If you're a GM dealer and you have a customer in your showroom with a $35k budget, does it make sense to push the low margin Bolt that's pretty different from the status quo, or the higher margin Equinox with an ICE that everybody involved is more comfortable with? If you're GM, do you want your dealers selling a ton of low margin hatch backs or higher margin stuff? There's little incentive there for GM to make something like the Bolt into a huge seller given the prices of EV components ~5 years ago when they were being developed. So you make it a small hatch that's not likely to sell a ton of units. That lets you dip your toe into the EV pool (Keeping regulators happy and giving you a test bed for the tech) while waiting for $ per KWH to drop to something more reasonable and the market demand for EVs to grow or become more clear.

4) Nobody else made an EV in a form factor that people wanted. EVs from mature car makers have mostly been dorky hatch backs geared toward efficiency. Tesla has appealed to our lizard brains and made good looking (subjective of course) performance EVs, and EVs in a form factor that people want (CUVs). Part of that is likely mature companies not knowing the EV customer, and part of it is probably the desire to keep sales relatively modest for a vehicle that doesn't make them much profit in a segment with uncertain demand.

Times have changed for everybody in the last 5 years. Battery costs have gone down. Demand for EVs is more clear. Tesla has played a large role in both of those things. I think the mature companies are more comfortable with the financial case for EVs now than they've been in the past. And I think as a result they're coming to market with more compelling vehicles than they have in the past, and expecting (hoping?) to actually sell a bunch of them.


I also think that it's worth mentioning that using only quoted range figures can be pretty misleading. Real world range and rated range can vary a lot. For example, the Porsche Taycan has a much lower EPA rated range than a Model S, but the EPA cycle has an average speed of 35mph. If you're doing something like a roadtrip, (the most common situation where range would actually be a concern) you're probably traveling more like 70mph, and the Model S gets well under it's rated range at that speed, while the Taycan actually exceeded it's rated range. They averaged nearly identical MPGe, so all of the efficiency advantages of the Tesla on paper may not actually amount to anything in the real world:

https://www.thedrive.com/new-cars/32868/how-i-got-295-miles-of-range-out-of-the-porsche-taycan-turbo

https://www.caranddriver.com/reviews/a30874032/porsche-taycan-range-test-tesla-model-s/

https://insideevs.com/reviews/395038/porsche-taycan-road-trip-240-mile-range/

https://nextmove.de/autobahn-reichweitentest-taycan-vs-model-s/

« Last Edit: August 28, 2020, 11:04:12 AM by Paper Chaser »

lemonlyman

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Re: Please teach me about TSLA
« Reply #37 on: August 28, 2020, 11:22:33 AM »
I think your arguments are good reasons those manufacturers are going to struggle in the next 5 years. Just buying battery cells from LG, CATL, or Panasonic as a commodity isn't the only factor for performance. There's power management software, power draw of components, motor efficiency and pack design. They've got big investment $ to use, but not the kind of battery science infrastructure Tesla has been cultivating for a decade. Tesla and SpaceX are the top 2 destinations for engineering talent in the US.

I agree EPA isn't perfect, but the Taycan Turbo is 2x the price of the Model S and the Model S runs on an older battery standard. It's expected to get a refresh next month. Maybe on their new in house cell design/chemistry. Maybe on the same cells the Y uses. I don't know. There will definitely be a new motor though. That's already been announced.

hodedofome

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Re: Please teach me about TSLA
« Reply #38 on: August 28, 2020, 11:32:04 AM »
Don't think of Tesla as a car company with low margins. Think of them as a software as a service company who also makes cars. When Tesla pulls off the impossible and makes self driving a reality people will pay for a subscription or just rent a car by the mile from Tesla. Software as a service valuations are 2-3.5x the valuation of an on-premise software company, so you can transfer this valuation somewhat to Tesla as well.

No other car manufacturer has this offering, therefore comparing Tesla's valuation to Ford's is incomplete. People are betting Tesla is gonna get there first, and whoever gets there first, gets all the monies.

Paper Chaser

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Re: Please teach me about TSLA
« Reply #39 on: August 28, 2020, 07:09:08 PM »
I think your arguments are good reasons those manufacturers are going to struggle in the next 5 years. Just buying battery cells from LG, CATL, or Panasonic as a commodity isn't the only factor for performance. There's power management software, power draw of components, motor efficiency and pack design. They've got big investment $ to use, but not the kind of battery science infrastructure Tesla has been cultivating for a decade. Tesla and SpaceX are the top 2 destinations for engineering talent in the US.

I agree EPA isn't perfect, but the Taycan Turbo is 2x the price of the Model S and the Model S runs on an older battery standard. It's expected to get a refresh next month. Maybe on their new in house cell design/chemistry. Maybe on the same cells the Y uses. I don't know. There will definitely be a new motor though. That's already been announced.

Tesla does a lot of impressive stuff. But for all of their tech and EV experience, a lowly Hyundai Ioniq EV gets more miles per kWh than any Tesla currently:
https://cleantechnica.com/2018/06/30/what-are-the-most-efficient-electric-cars/

And as the Taycan/Model S comparisons show, all of the efficiency claims in the world may not materialize or make a tangible difference in the real world. Another example might be the Taycan's ability to do consistent, hard acceleration runs as long as the battery lasts, while the Tesla quickly degrades and ultimately goes into limp mode after just a handful. If the Tesla's battery tech is truly superior, then shouldn't it outperform the competition in a scenario like that? Especially considering it has a larger battery?

The Taycan is more expensive than the Model S at least in part because it has better fit/finish and nicer materials. There's also a pretty good chance that it's been tested more thoroughly by the manufacturer than Tesla did (to allow for extended track driving). That costs money. Like several hundred dollars per hour typically, and we're talking about thousands of hours most likely. Tesla's own employees were impressed by the quality of the Taycan:
https://www.caranddriver.com/reviews/comparison-test/a30799498/2020-porsche-taycan-turbo-s-vs-2020-tesla-model-s-performance/

Just as the Taycan makes a Model S look like a good deal, the Model Y is priced well above the Mach E or ID4 beforeincluding their $7500 tax credits. These are vehicles that will have real interiors, and that have been designed, engineered and assembled by companies with a hundred years of experience screwing cars together to last hundreds of thousands of miles (Not to say that they haven't screwed up before, or can't screw up again, but basic things like control arms aren't likely to be a problem for them). I think they'll be very competitive with the Model Y in the real world. It will be interesting to see how it all shakes out though!
« Last Edit: August 28, 2020, 07:25:05 PM by Paper Chaser »

PDXTabs

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Re: Please teach me about TSLA
« Reply #40 on: August 28, 2020, 07:13:35 PM »
When Tesla pulls off the impossible and makes self driving a reality people will pay for a subscription or just rent a car by the mile from Tesla.

You spelled Waymo wrong.

nick663

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Re: Please teach me about TSLA
« Reply #41 on: August 28, 2020, 10:42:38 PM »
P/E is a bad metric for a company growing like TSLA but their market cap doesn't make sense.  It didn't make sense 50% ago though so I'm not a good source.  Certain stocks just develop a cult and move without logic... I only invest in things I understand and a market cap so far out of the ordinary for a car company is beyond my realm of understanding.  People try to justify it as a "tech company" or some other thing but over 90% of their revenue comes from automobiles... they're a car company.

Many people hit on other points I feel about them but one thing I didn't see mentioned above is what will happen when the market reaches saturation.  325k EVs were sold in the US in 2019.  What happens when the supply increases to 500k?  1 million?  It's not far off and I have a tough time believing that we'll see major adoption of 50k+ EVs when gas is $2/gallon.

4) Realized the cars are beyond amazing and no one will EVER buy a gas car EVER AGAIN if they have ridden in a Tesla, because gas cars are just plain inferior in every single measurable way.  If you are a gear-head reading this saying I'm full of crap and gas cars are awesome and blah blah blah, feel free to test my theory and go test drive one. 
You don't understand car people if you are saying this.  There are more people driving cars from the 60s than Tesla owners and it's not because they're the best thing ever made.

That's not to say anything negative about Teslas or BEVs.  I would love one as a daily driver.  My track and fun cars will continue to be gas powered for the foreseeable future though.

KungfuRabbit

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Re: Please teach me about TSLA
« Reply #42 on: August 29, 2020, 05:29:51 AM »
When Tesla pulls off the impossible and makes self driving a reality people will pay for a subscription or just rent a car by the mile from Tesla.

You spelled Waymo wrong.

Waymo isn't actually doing full self driving.  The way they are setting up that autopilot is ahead of time they map an area to extreme detail, so the car has a built in map down to the inch of where the road goes, where stopsigns are, etc, and the car is programmed to not be allowed out of that area.  They will also need to continuously update it and watch the area because it will not be set up to handle special circumstances of construction zones or other changes.  In fact, if there were no cars or people on the road a Waymo car could drive just fine without using any cameras or lidar or sensors at all, just using the GPS to follow whatever route within the mapped area.  So the only thing the car needs to do is watch out for other cars and people, which makes the task significantly easier.

Because of that, my guess is that yes Waymo will indeed have full self driving (not even a driver sitting in the seat prepared to take over) first, set up within a very specific city or even route (such as from an airport to a convention center or downtown or hotel area, that is very commonly traveled by taxi).  And I hope they do, itll be a regulatory mess for whoever goes first, and the publicity of the first crash will be very intense. 

The flip side of that is never underestimate the power of obscene amounts of data, no one comes even close to the amount of data Tesla has given the size of their fleet.  They are also building a new supercomputer, "Dojo", specifically to do machine learning for full self driving even better.   

lemonlyman

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Re: Please teach me about TSLA
« Reply #43 on: August 29, 2020, 10:11:40 AM »
I think your arguments are good reasons those manufacturers are going to struggle in the next 5 years. Just buying battery cells from LG, CATL, or Panasonic as a commodity isn't the only factor for performance. There's power management software, power draw of components, motor efficiency and pack design. They've got big investment $ to use, but not the kind of battery science infrastructure Tesla has been cultivating for a decade. Tesla and SpaceX are the top 2 destinations for engineering talent in the US.

I agree EPA isn't perfect, but the Taycan Turbo is 2x the price of the Model S and the Model S runs on an older battery standard. It's expected to get a refresh next month. Maybe on their new in house cell design/chemistry. Maybe on the same cells the Y uses. I don't know. There will definitely be a new motor though. That's already been announced.

Tesla does a lot of impressive stuff. But for all of their tech and EV experience, a lowly Hyundai Ioniq EV gets more miles per kWh than any Tesla currently:
https://cleantechnica.com/2018/06/30/what-are-the-most-efficient-electric-cars/

And as the Taycan/Model S comparisons show, all of the efficiency claims in the world may not materialize or make a tangible difference in the real world. Another example might be the Taycan's ability to do consistent, hard acceleration runs as long as the battery lasts, while the Tesla quickly degrades and ultimately goes into limp mode after just a handful. If the Tesla's battery tech is truly superior, then shouldn't it outperform the competition in a scenario like that? Especially considering it has a larger battery?

The Taycan is more expensive than the Model S at least in part because it has better fit/finish and nicer materials. There's also a pretty good chance that it's been tested more thoroughly by the manufacturer than Tesla did (to allow for extended track driving). That costs money. Like several hundred dollars per hour typically, and we're talking about thousands of hours most likely. Tesla's own employees were impressed by the quality of the Taycan:
https://www.caranddriver.com/reviews/comparison-test/a30799498/2020-porsche-taycan-turbo-s-vs-2020-tesla-model-s-performance/

Just as the Taycan makes a Model S look like a good deal, the Model Y is priced well above the Mach E or ID4 beforeincluding their $7500 tax credits. These are vehicles that will have real interiors, and that have been designed, engineered and assembled by companies with a hundred years of experience screwing cars together to last hundreds of thousands of miles (Not to say that they haven't screwed up before, or can't screw up again, but basic things like control arms aren't likely to be a problem for them). I think they'll be very competitive with the Model Y in the real world. It will be interesting to see how it all shakes out though!

Please look at the efficiency table I posted above. That Hyundai Ionic is a short range lightweight car. Tesla never intended to make a less than 200 mile range vehicle because few buy them.

The Taycan is a great car. It's been out for almost a year. It takes the Turbo trim at 2x the price to out perform a Model S on an old battery standard. I don't think meager performance increases on a track justifies the price difference. For all their testing and decades of experience, don't you think it should blow it out of the water especially at that price? Based on Taycan sales volume, the market agrees with me. We'll see the new Model S next month likely at Battery Day.

It's not really relevant to talk about other vehicles as if they're Tesla killers. The EV market is expanding. All manufacturers will have a slice of the pie. My opinion is Tesla will sell all they produce.

PDXTabs

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Re: Please teach me about TSLA
« Reply #44 on: August 29, 2020, 10:56:00 AM »
Waymo isn't actually doing full self driving.

Do you have a source for that? Because they have a hell of a lot of sensors:
https://www.theverge.com/2020/3/4/21165014/waymo-fifth-generation-self-driving-radar-camera-lidar-jaguar-ipace

Cache_Stash

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Re: Please teach me about TSLA
« Reply #45 on: August 29, 2020, 01:41:52 PM »

So TSLA today has a P/E ratio of $917.2.  My understanding of this is that this means you need to pay $917.2 to get one dollar of earnings. 

Maybe this is why I am a real estate lawyer and not a finance or tech genius, but I'd want some sort of reasonable expectation of return on my investment.  I could see see investing in a high growth company with a P/E of like 40 or 50, but $917.2? 

Does this mean the market expectation is basically that TSLA is going to quickly become the largest car company in the world?

For those that currently own TSLA, what is the cap on how high you think it can go?

I am solidly team VTSAX so I have no specific dog in this race but I don't really understand what's going on and am wondering if I just have no vision or if this is a "bubble indicator" so to speak.

It's valued at earnings projected for 2040.  That means once it's growth is over so is the share price.  It will revert to the mean.  The market is only so large.  You could be putting your money into it now and it could be dead money for 20 years.

Paper Chaser

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Re: Please teach me about TSLA
« Reply #46 on: August 29, 2020, 07:23:55 PM »
I think your arguments are good reasons those manufacturers are going to struggle in the next 5 years. Just buying battery cells from LG, CATL, or Panasonic as a commodity isn't the only factor for performance. There's power management software, power draw of components, motor efficiency and pack design. They've got big investment $ to use, but not the kind of battery science infrastructure Tesla has been cultivating for a decade. Tesla and SpaceX are the top 2 destinations for engineering talent in the US.

I agree EPA isn't perfect, but the Taycan Turbo is 2x the price of the Model S and the Model S runs on an older battery standard. It's expected to get a refresh next month. Maybe on their new in house cell design/chemistry. Maybe on the same cells the Y uses. I don't know. There will definitely be a new motor though. That's already been announced.

Tesla does a lot of impressive stuff. But for all of their tech and EV experience, a lowly Hyundai Ioniq EV gets more miles per kWh than any Tesla currently:
https://cleantechnica.com/2018/06/30/what-are-the-most-efficient-electric-cars/

And as the Taycan/Model S comparisons show, all of the efficiency claims in the world may not materialize or make a tangible difference in the real world. Another example might be the Taycan's ability to do consistent, hard acceleration runs as long as the battery lasts, while the Tesla quickly degrades and ultimately goes into limp mode after just a handful. If the Tesla's battery tech is truly superior, then shouldn't it outperform the competition in a scenario like that? Especially considering it has a larger battery?

The Taycan is more expensive than the Model S at least in part because it has better fit/finish and nicer materials. There's also a pretty good chance that it's been tested more thoroughly by the manufacturer than Tesla did (to allow for extended track driving). That costs money. Like several hundred dollars per hour typically, and we're talking about thousands of hours most likely. Tesla's own employees were impressed by the quality of the Taycan:
https://www.caranddriver.com/reviews/comparison-test/a30799498/2020-porsche-taycan-turbo-s-vs-2020-tesla-model-s-performance/

Just as the Taycan makes a Model S look like a good deal, the Model Y is priced well above the Mach E or ID4 beforeincluding their $7500 tax credits. These are vehicles that will have real interiors, and that have been designed, engineered and assembled by companies with a hundred years of experience screwing cars together to last hundreds of thousands of miles (Not to say that they haven't screwed up before, or can't screw up again, but basic things like control arms aren't likely to be a problem for them). I think they'll be very competitive with the Model Y in the real world. It will be interesting to see how it all shakes out though!

Please look at the efficiency table I posted above. That Hyundai Ionic is a short range lightweight car. Tesla never intended to make a less than 200 mile range vehicle because few buy them.

The Taycan is a great car. It's been out for almost a year. It takes the Turbo trim at 2x the price to out perform a Model S on an old battery standard. I don't think meager performance increases on a track justifies the price difference. For all their testing and decades of experience, don't you think it should blow it out of the water especially at that price? Based on Taycan sales volume, the market agrees with me. We'll see the new Model S next month likely at Battery Day.

It's not really relevant to talk about other vehicles as if they're Tesla killers. The EV market is expanding. All manufacturers will have a slice of the pie. My opinion is Tesla will sell all they produce.

I looked at the table above. The chart you posted seems to me like somebody set out looking for ways to make Tesla look good, and had to come up with qualifiers that nobody else would really use to measure efficiency. It's based on EPA range which we've seen Tesla might be a bit optimistic about, and other makes might be a bit conservative with. Moreover, I'm not sure why vehicle weight is factored in? In an ICE, we measure vehicle efficiency by distance traveled and fuel consumed (mpg or km/l). It's generally understood that larger, heavier vehicles are less efficient, so weight is not factored into the efficiency calculation seperately. MPG per lb of weight isn't a thing anywhere else in the car world. Why should battery vehicles be any different? Measure the energy needed for the vehicle to travel a certain distance. That's the efficiency. Weight, powertrain efficiency and aerodynamics are all factored into that single, well understood number already. Nobody says "It's the most efficient engine in it's class" if the entire vehicle itself isn't actually the most efficient. Nobody cares how efficient the powertrain is if it doesn't translate into getting them further down the road per gallon of fuel/kwh of charge.

Again, if the Taycan and Model S are driven in identical situations, they're coming in nearly identical range (within 10 miles of each other). The Taycan is both heavier and has a smaller battery. If the Tesla is so much more efficient (by weight or not), and Tesla's tech is truly that much better, then how does that happen? Perhaps the efficiency claims are a bit of a paper tiger, at least in some situations? Perhaps efficiency by weight isn't actually a thing that matters?

As for sales, as you've noted, the Taycan can be twice as expensive as the Model S. Why would the sales be expected to be similar? Sales of a $50k vehicle aren't often compared to sales of a $100k vehicle right? Nobody expects Model S sales to be the same as Model 3 sales do they? Of course the cheaper one sells more units. That's not the market choosing a superior product necessarily. It's pretty likely that it's just a reflection of the number of people in a given income range. I'm not here to argue that Porsche is going to move as many units as Tesla will with their Model S. I'm just saying that for the first time, there are very competitive vehicles coming to market in the next couple of years. They're competitive in ways that I think mainstream buyers are likely to appreciate (nicer interiors, better developed, similar real world range, cost competitive, familiar brands with strong supply chains for replacement parts, etc).
« Last Edit: August 29, 2020, 07:31:42 PM by Paper Chaser »

Car Jack

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Re: Please teach me about TSLA
« Reply #47 on: August 30, 2020, 07:08:53 AM »

-My first car was an Oldsmobile that I got relatively new when my Grandfather passed away.  It was a fine car, treated me well-ish, but the crash test ratings on that car were HORRIBLE, it was something like an average of 1.3 stars.  I'm not going to say I'm risk adverse or unnecessary scare of death / getting injured, but Teslas are the safest cars ever made, by a fairly substantial margin, and I like that.  Personally I'm a good driver with 20 years of driving and zero accidents, but you never know.  Thats the kind of thing that 99+% of the time has no real value, but on that 1% of the time when it matters it is priceless. 
 

The bolded part is a lie.  Here's what CR and the NHTSA said about Tesla's claims:

ďThe rules are there so consumers can make informed decisions,Ē he says. ďTesla doesnít get to pick which ones apply to them.Ē

Consumer Reports factors the results of government crash tests into evaluations of vehicles and vehicle safety. CR weighs NHTSAís crash ratings as well as those from the Insurance Institute for Highway Safety. Teslaís vehicles have scored well in all of NHTSAís crash tests, but so have a number of other vehicles. (See our list of 5-Star Rated vehicles, below.) Not all of Teslaís vehicles have earned the highest possible scores on IIHS tests.

In an October letter, newly released to the public, NHTSA tells Tesla that itís misleading to compare overall safety scores of vehicles with different weights because of the physics of car crashesóitís possible that occupants of a larger, heavier SUV would fare better in a crash than an occupant of a Model 3, contradicting the claims Tesla made in its blog.

 
I understand that Tesla fans latch onto every positive thing about the company, even when it's made up.  Sort of like Trump saying he aced the cognitive test and that the doctors were amazed how well he did, while it was made in a way that any average 8 year old would also ace it.  But Tesla goes beyond and says that not only did Trump ace the test, but Pompeo, because he's in the same administration must also be able to ace the test and  nobody else ever was able to ace the test.  He ignored that everyone not put into the hospital aced the test.  Tesla ignored the fact that equal ratings were earned by the Civic, Corolla, Impreza, Accord, TLX, RLX, Insight, E class and Camry.  It's almost like we'd have to search to find any car that didn't meet the ratings that Tesla achieved.

https://www.consumerreports.org/car-safety/feds-say-tesla-exaggerating-model-3-crash-test-results/#list


I keep seeing claims that anyone who test drives a Tesla will be overwhelmed and converted, including a couple times in this thread.  I test drove one.  I was impressed with the looks of the model S I drove and the materials were better than expected.  It drove fine.  There were a few annoying things like the cars "seen" in the instrument cluster going by, but I expect that feature could be shut off.  After my test drive, I asked price and was told that Model S starts at $85k.  Sorry, but although the car drove fine, it was no $85k car.  It would be nice at $40k.  Maybe $42k.  I was underwhelmed and left wondering why people thought it was so amazing.  I suppose if you're coming out of a 20 year old beige Camry (typical Boglehead car), then sure.  But even a new Corolla would be amazing by comparison.
« Last Edit: August 30, 2020, 07:14:37 AM by Car Jack »

lemonlyman

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Re: Please teach me about TSLA
« Reply #48 on: August 30, 2020, 08:20:47 AM »
The $105k variant of the Taycan (in the same price range as the Performance S/cheaper with tax credits) doesn't sell either. Because it's not competitive. They use the 2x price model to compete on specs/performance.

A weight example: The Performance S is less efficient than the Long Range S. Because they tweak the motor and use different software. It's the same battery as the long range and same weight. Tesla Long Range S 402 EPA/Tesla Performance S 348 EPA. That's why weight is important. It can be used to measure the efficiency of the whole drivetrain.  The Taycan Turbo and Performance S test you linked did not drive the range. They extrapolated it after 100 miles. Maybe the Taycan has longer range, but they are trusting the software estimates over running the test. VW doesn't have the best history in being honest with its software (diesel gate). They should have driven the maxes.

I agree there will be other compelling cars. The Lucid Air being revealed on 9/9/20 looks amazing. Do I think it will sell? If it goes 515 on 113kwh like they claim? Hell yeah it will. Do I think Teslas suddenly won't sell because it exists? No. The whole EV market is expanding very rapidly. Based on the total battery supply, manufacturers won't be able to keep up with demand.
« Last Edit: August 30, 2020, 08:30:48 AM by lemonlyman »

TomTX

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Re: Please teach me about TSLA
« Reply #49 on: August 30, 2020, 09:15:12 AM »

I understand that Tesla fans latch onto every positive thing about the company, even when it's made up.  Sort of like Trump saying he aced the cognitive test

Pretty bizarre twisting about there. What's your game?