Interesting, but market cap isn’t everything - FTA:
"While Tesla’s market capitalization has swelled in size, Ford still overshadows the Palo Alto, California-based company in most other financial metrics. Over the last five years, Ford has posted net income totaling $26 billion, while Tesla has lost $2.3 billion. Last year, Ford had annual revenue of $151.8 billion compared with Tesla’s $7 billion.
And when it comes to car sales, Tesla sold 40,697 vehicles in the U.S. last year, according to researcher IHS Markit. Ford sells that many F-Series trucks in the U.S. about every three weeks."
Former finance professional here: Ford is actually worth 3 times as much as Tesla, once you factor in debt. The total value of the Ford capital structure ("enterprise value") is about 150 billion.
When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a long way to go to catch up to Ford.
> When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a long way to go to catch up to Ford.
That is not necessarily true.
Market cap and enterprise value are two equally valid ways of measuring value or worth. There are even more ways to measure value, such as DCF or value of assets. All of these have their pros and cons.
In this case, my personal opinion is that market cap is a very meaningful way to measure Tesla/Ford and that it's noteworthy that Tesla has passed Ford.
I think it is very meaningful because it (loosely) implies that the present value of Tesla's profits (i.e. net profit after tax) is higher than Ford's. Even on a risk-weighted basis. Or, at least, that's roughly-kinda-sorta what the market believes.
I would argue that enterprise value would be more meaningful that market cap if we were talking about which company was 'bigger'. However, the interesting thing here is that Tesla has become more 'valuable' than Ford, for this definition of value.
I think these comparison's to other car companies really miss the mark. Those who are long on TSLA (myself included) aren't looking at them as a car company. Tesla is cracking open new markets in the following areas:
- Electric Cars (most visible. Also don't undervalue their unique direct sales channel, which is a huge competitive advantage)
- Batteries/Energy Storage (not just cars - utility scale energy storage, with capacity coming online that will double global output of lithium batteries)
- Solar panels and solar roofs (both residential and commercial, a market with a hockey stick growth curve coming)
- Self-driving AI (head to head with Google on one of the most fundamental changes to transportation our society has seen in a century, and they have the hardware driving around us all the time already, rapidly learning and improving)
Ford, GM, et al are irrelevant and poor comparisons. This is SpaceX for Terran energy and transportation.
Yeah I think car companies should focus less on making cars...
- Your first point is cars - there are a ton of evs for sale from many large companies and direct sale doesn't seem to sell more cars than indirect.
- Tesla is partnering with battery companies just as GM does on the bolt and volt. Nothing special here as their battery business is pretty minuscule.
- Again a niche market that compares to GMs after market crate motor program in revenue and size.
- Self driving tech doesn't belong to Tesla and Google, most luxury car companies had automated cruise systems when Tesla was making the roadster. Gm has a large fleet roaming around Detroit, Chrysler is partnering with Google with their Pacificas, and Ford has a fleet of fusions as well after billions in investment.
The larger point is that elon and his 16 companies seem to do no wrong and avoid comparisons to the existing car companies, he should focus on getting market share in the extremely competitive automotive market instead of making a space/AI/brainlink/tunnel/solar/ev company.
Wasn't overvaluing the potential of newer companies over established institutions with significant holdings one of the hallmarks of .com bubble ridiculousness? I'm not particularly knowledgeable about finance and economics– if someone that is knowledgeable has some insight, I'd love to hear it.
Bill Ford gave a talk at SXSW, and I asked him the question "Why hasn't Ford built the gigafactory". He gave IMHO a really weak answer about how they weren't sure the economics of it worked out.
Big car OEMs have so much invested in terms of R&D, brand and emotionally in the combustion engine that I think most are just not going to be able to make the jump to EVs. Nissan and BMW are trying, but they are still making really baby steps.
Nissan "built the gigafactory" a decade ago and it didn't work out for them at all.
In 2007, Nissan and NEC entered into a joint venture just like Tesla/Panasonic's: they created AESC, Automotive Energy Supply Corporation, and built a $1.1 billion lithium ion battery factory near one of Nissan's manufacturing plants. Nissan committed to buying the plant's output for some years. These became the batteries and battery packs for the Nissan Leaf, of which they've sold more than 200,000 to date.
However, AESC eventually lagged at least a generation behind Panasonic (and now several others) in chemistry, process and price, which significantly worsened Nissan's position in the market. It took them some years to get out of that arrangement (relatively recently) so that they can buy batteries for the next-generation Leaf and other Nissan-Renault vehicles at less than 1/2 the price from other suppliers.
There's no guarantee that 10 years from now, we'll look back and say the Gigafactory was a wise investment for Tesla. They feared insufficient supply or being locked out of adequate supply for batteries, but now that everyone's seen the writing on the wall that EVs could become a big chunk of the new car market in the 2020s, it seems far less likely that battery supply will be a short-term issue.
Boston Power, BYD, Foxconn, SK Innovation, Samsung SDI, LG Chem, etc have built, broken ground or committed funds for over 150 GWh of annual vehicle battery production over the next 3-5 years. Tesla will not be the only major player in that market, and Panasonic is free to supply batteries to other car makers than Tesla from their other factories.
He's right, the economics don't work out for a Ford. They only work out for a smaller, separately owned disruptor. Inevitable truth and pattern seen across all mature industries
For instance: The government of Sweden just announced suggested legislation for june 2018 that will severely punish any new registrations of non-electric vehicles (the tax penalty is linear to the co2-emissions/driven km above a certain treshold.) I think it goes sort of halfway towards Norway's current policy. (Which is rather extreme, and something they as a nation can afford, being a major oil exporter.)
Can anyone long the stock who is bullish about the future growth of production, cars, batteries etc write down some quick napkin math on future expectations that would justify your investment at this valuation? I have yet to hear a bull case with any actual math behind it, but am willing to hear you out.
Something like:
cars sold by yr, Margins.
battery wall, solar sold by year. Margins.
multiples assumed on revenue and earnings by yr, and at mature phase.
dilution of equity assumed to scale production.
Can someone address those things without hand waiving them away for me? Again, I'm not long or short the stock, but havent heard a coherent argument with math for going long.
In the late 90' during the tech bubble, companies that had negative cash flow operation were bid to the stratosphere. Tesla and Amazon however have positive cashflow for operations and huge growth.
People said the same thing about Facebook in 2012-2013 and Google in 2004-2005: how will they (Google and Facebook) justify their valuations? Well, they did. Wall St. sometimes get it terribly wrong (Infospace in 2000) and other time very right.
Sometimes it doesn't make sense...but there is a method to the market's madness.
If everything in investment is about Math (and Math only) we'll have a perfect market. I'm long on Tesla and I totally believe the current valuation is out of proportion. However, I know Tesla can do a lot more and better than they do currently. I do think they have a lot of potential and can overtake other car makers. I won't buy more shares but I'll hold on to them for the foreseeable future.
Thinking about product category sales is the wrong way to do it, because Tesla is trying to restructure existing product categories. Not car purchasing, but mobility services. Not solar panels but sustainable electricity generation and storage.
U.S. residential electricity use is 1.4 trillion kilowatt hours (kWh) per year. [1] At $0.10 each that $140 billion dollars.
Americans travelled about 3 trillion car miles in cars per year. [2] At $0.50 per mile (what the IRS lets you claim for mobility) that's $1.5 trillion dollars.
That's just the U.S. These markets are enormous. There are all kinds of ways for them to carve out $7 billion a year in net income to justify their market cap.
The assumption is that Tesla is going to knock the market out of its steady state. You aren't going to predict any of those numbers because the space of possibilities is wildly broad for a roiling market. You may as well try to predict the weather a year from now. People instinctively know not to waste time on that.
Put differently, the long argument is a qualitative one, not a quantitative one. This doesn't make it any less intelligent, just harder for people to put into words. See an earlier comment I made[1] about the kind of thing that's meaningful but which is difficult to attach a number to.
And conversely, if you can predict something with numbers, that's a sign that it's stable and less risky, but then the price/ROI will reflect that safety.
I would agree with the market that Tesla has the potential to be far far larger than Ford should things go well. If they manage to get to 500000 cars and full automation within the next year, they'll be worth even more than their current market cap.
Remember that Tesla have by far the best dataset for building self driving cars and this is going to give them a huge time to market and/or safety advantage over their competition. If they launch an Uber clone as well (which they have implied they might) I think they could be able to replace a lot of car journeys with their service instead of paying drivers, something Uber's lofty valuation is entirely based upon.
This! Tesla's proposition is very risky but from their track record of what they've done with reusable rockets, I guess you can say execution is their strong point. Yes Elon will have crazy deadlines, but if you put a good buffer then eventually he'll deliver it.
One possible future is that Tesla execute perfectly but their stock still underperforms the market.
In 20 years Tesla may produce more cars than Toyota. They may have self-driving AI that is safer than any other. They may provide more taxi rides than Uber. But the total market for new cars may be half what it is today because no-one will own cars in future.
Ford is sitting on almost $16 billion cash. Tesla, like Amazon, burns through cash as fast as they can turn it into scalable future stuff. Whether you consider this good or bad depends on your future outlook:
Being long Ford is making a bet that the future will look pretty much the same.
Being long Tesla is making a bet that the future will look different. (Plus the risks of believing that they can do what they say they can, and that their vision is more correct than not)
If you are a Ford investor and want Ford to be investing in the future, you should be ashamed of them for being either too scared or too stupid to know what to do with their piles of money. Then again, the largest carmakers in the US (incl. Ford) were making a loss just a few years ago, and unlike Tesla, they were making that loss while doing ZERO to invest for the future.
So maybe Ford should be scared.
Or maybe they should be pivoting faster so they don't return to not-making-a-profit, because unlike Tesla, they still aren't spending very much on the future, are they?
We can argue about whether or not Tesla has a good plan or a bad plan, but Ford has shown before that they more or less have "No plan." Their reliance of SUV profits almost killed them in the mid 2000's (and did mortally wound GM, only to be resurrected). Will Ford's reliance on the F-150 (or on ICE expertise while outsourcing most other things) do the same thing in the future?
~~~
I've been holding Tesla for a long time. Currently I'm more optimistic about the company than when I bought it, which seemed fairly risky.
I think the room for growth and market expansion (Important Electric Things and energy future) is very large. I think trying to compute how the math will get there is a mistake, short of making sure that they are not going to run out of money.
Being long technology stocks is a strange game. If you're long IBM or AAPL right now, you're more or less betting that the future is going to look pretty much the same, just like with Ford. It's almost a misnomer to call them technology stocks.
There are only a handful of public companies you can bet on (Tesla and Amazon are probably the most obvious) that are really betting big on the future. The dividends of these will be unknown.
"Being long Tesla is making a bet that the future will look different."
No. Being long Tesla is making a bet that the future will look like Tesla, that Tesla will be producing a very significant chunk of the vehicles on the road sometime in the reasonably near future. Tesla currently has plans to expand to produce 0.5 million vehicles per year in the 2018-2020 time frame; Ford currently produces 2.5 million vehicles in the US for ~15% of the market.
Disclaimer: I'm on my second F-150 and third Ford vehicle.
I don't own either Ford or Tesla stock directly and I'm not sure how accurate this assessment is, but Ford is probably investing the same amount or more as Waymo or Tesla in self driving car technology. It appears all of the large auto manufacturers are technically a little behind Waymo but are starting to catch up and are ahead in other areas of the total problem of getting self driving cars in production - it looks like none of the big US/euro brands is going to be satisfied with integrating something from Waymo.
I've been expecting this ever since I test drove a Tesla last year and got the same feeling I got back in 2008 when I saw an iPhone 3G. The market isn't betting on just another car company but on. car + energy (electricity instead of gas) + TaaS (Transportation as a Service). Tesla has a tremendous headstart on this and in 5-10 years I expect a bloodbath like the smart phone wars, with a only 2-3 main players left e.g. Tesla:Apple::Waymo:Android.
Ford has dozens of production facilities across every continent on earth producing millions of vehicles a year. How can Tesla possibly be more valuable?
I think people are betting more on Elon then they are on TSLA.
As an aside, he strikes me as someone who's been told he has some short measure of time left to live and is trying to make the most of it. By all measures, he's swinging for the fences.
My prediction has always been that all traditional car manufacturers will jump into the market with gusto at the next inflection point in battery technology.
The current state of the art battery technology for vehicles is heavy and has less than desirable energy density.
The minute a new technology can deliver twice the energy density at the same or lower weight and lower cost most established car manufacturers will jump in.
Electric cars are very easy to build when compared to IC cars. The simplest fact being that you are eliminating thousands of mechanical components and replacing them with an electric motor and hundreds (or thousands?) of electronic components (for motor control). Electronics design and manufacturing is easier, cheaper and faster than mechanical manufacturing.
I believe Tesla is positioned to take a big hit when that inflection point happens. They are inexorably married to a battery technology. The Gigafactory, as awesome as it might be, is now a large ship with huge mass that is very difficult to turn around.
The next battery technology might very well turn the Gigafactory into a huge anchor for a few years, during which all other car manufacturers, lacking that commitment, are likely to leave Tesla in the dust.
When that change comes the other players will have the problem that they too will need to build some sort of Gigafactory. There is no way they can do a rushed attack against Tesla on this. These guys are slow movers not willing to take big risks. When this battery technology switch happens I am pretty sure Tesla will actually be the first to move. They will have more experience with large scale battery production than the competition.
It isn't just about cells but putting them together and designing a whole battery, with cooling and everything. Tesla knows very well how to do this. The competition doesn't.
New battery tech takes a long time to being to market. Once an innovation is shown to be viable in a lab, there's a long gauntlet of stress tests to run--different operating loads under different environmental conditions. There's no market surprise to be had that's going to catch your competitors off-guard.
> Electric cars are very easy to build when compared to IC cars.
As I commented above, I recommend reading about the development of the Volt and Bolt at GM. They had a huge learning curve:
> Nearly everything changes when you opt for a fundamentally different power train, so GM’s greatest advantage—more than a century of experience building cars—was all but moot.
I don't really know about the gigafactory, but it seems logic that a % of it is dedicated to R&D and growth. Plus, this battery tech doesn't create itself, if I remember reading correctly Tesla is making some advancements in here as well.
Some other car manufacturers could do this intantly. Nissan has the best selling electric car (Leaf) on the market and Toyota has some kick ass hybrid engines (that's an electric engine AND a combustion engine) available for most of their cars. If they decided that battery only cars is the way to go they could switch from one day to the other. But they don't.
I can't find a number through Google but the number of Ford Hourly/Salaried employees has to be over 125,000. As a guess.
Tesla has 30,000 hourly/salary employees.
Despite being valued 'less' Ford has a huge economic impact for many peoples lives. This may decline, over time, but don't be surprised if Ford/GM/Chrysler combine forces for a huge battery factory of their own. Their ability to tap capital markets with lower interest rates than Tesla is a competitive advantage. They also move many more vehicles than Tesla and get better prices from suppliers, which is a competitive advantage.
Tesla's gambit with batteries is either going to work or will offer a fantastic opportunity to pickup a battery factory at a good price.
At the of the day, when all major automotive companies have EV vehicles, what's going to differentiate them? The accuracy of the self driving software? Entertainment options within the vehicle? Serious question.
Of the major automakers, Toyota probably has the furthest behind ICE platforms. The 5.7L V8 and the 4.6L v6 are 10 years old, and very fuel inefficient compared to the the engines from ford or GM. I think that Toyota really has the most to fear in this case, since they haven't had any success bringing out more efficient ICE/Drivetrains to match the competition, and haven't really managed to scale the hybrid efficiency past the sedan market.
In the truck/SUV/CUV segment, the engines are dated- sure. But that segment barely exists in other markets, at least compared to small cars. Particularly in Europe and Asia.
Regardless, I don't think it's a tech issue, but rather an image issue. Trying to sell hybrid trucks to Americans is like trying to feed boiled spinach to kids.
Comparing Tesla with Ford is like comparing Ford with (GM + Shell + Hertz). Tesla is an energy company not an automobile company. It plans to sell you new ways to capture (solar panels), store (power wall), and consume (cars) energy. It also plans to make cars fully autonomous and ownership free. Ford will obviously compete with Tesla in some segments is not a primary competition for Tesla.
I think this is mostly undervaluation of Ford. 45B$ marketcap is quite low for that kind of revenue, profits and assets. I mean 12B$ in free cash flow! How do analyst even evaluate car companies?
Why doesn't this have a huge benefit to Tesla. They always seem to be short on cash, but if you are worth that much shouldn't cash be super simple to raise for Tesla?
Why push for high stock prices if it gives little benefits.
Seems like a nutty evaluation even if Tesla knocks over the established players in the future. I do in fact think that there will be an iPhone moment where established players who have not taken electric self driving cars seriousness will be eradicated like Black Berry and Nokia.
[+] [-] dan1234|9 years ago|reply
"While Tesla’s market capitalization has swelled in size, Ford still overshadows the Palo Alto, California-based company in most other financial metrics. Over the last five years, Ford has posted net income totaling $26 billion, while Tesla has lost $2.3 billion. Last year, Ford had annual revenue of $151.8 billion compared with Tesla’s $7 billion.
And when it comes to car sales, Tesla sold 40,697 vehicles in the U.S. last year, according to researcher IHS Markit. Ford sells that many F-Series trucks in the U.S. about every three weeks."
[+] [-] peterbonney|9 years ago|reply
When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a long way to go to catch up to Ford.
[+] [-] robzyb|9 years ago|reply
> When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a long way to go to catch up to Ford.
That is not necessarily true.
Market cap and enterprise value are two equally valid ways of measuring value or worth. There are even more ways to measure value, such as DCF or value of assets. All of these have their pros and cons.
In this case, my personal opinion is that market cap is a very meaningful way to measure Tesla/Ford and that it's noteworthy that Tesla has passed Ford.
I think it is very meaningful because it (loosely) implies that the present value of Tesla's profits (i.e. net profit after tax) is higher than Ford's. Even on a risk-weighted basis. Or, at least, that's roughly-kinda-sorta what the market believes.
I would argue that enterprise value would be more meaningful that market cap if we were talking about which company was 'bigger'. However, the interesting thing here is that Tesla has become more 'valuable' than Ford, for this definition of value.
[+] [-] imjk|9 years ago|reply
[+] [-] postmeta|9 years ago|reply
GM and Ford have 200k+ employees each and so much legacy baggage where-as Tesla, even with Scty, only has around 40k employees.
And they mostly tend to be fanatically hard workers.
[+] [-] sxates|9 years ago|reply
- Electric Cars (most visible. Also don't undervalue their unique direct sales channel, which is a huge competitive advantage)
- Batteries/Energy Storage (not just cars - utility scale energy storage, with capacity coming online that will double global output of lithium batteries)
- Solar panels and solar roofs (both residential and commercial, a market with a hockey stick growth curve coming)
- Self-driving AI (head to head with Google on one of the most fundamental changes to transportation our society has seen in a century, and they have the hardware driving around us all the time already, rapidly learning and improving)
Ford, GM, et al are irrelevant and poor comparisons. This is SpaceX for Terran energy and transportation.
[+] [-] strombofulous|9 years ago|reply
[+] [-] sceew|9 years ago|reply
They acquired Cruise Automation: https://www.getcruise.com/ or https://fortunedotcom.files.wordpress.com/2016/09/cru10_c.jp... .
[+] [-] bischofs|9 years ago|reply
- Your first point is cars - there are a ton of evs for sale from many large companies and direct sale doesn't seem to sell more cars than indirect.
- Tesla is partnering with battery companies just as GM does on the bolt and volt. Nothing special here as their battery business is pretty minuscule.
- Again a niche market that compares to GMs after market crate motor program in revenue and size.
- Self driving tech doesn't belong to Tesla and Google, most luxury car companies had automated cruise systems when Tesla was making the roadster. Gm has a large fleet roaming around Detroit, Chrysler is partnering with Google with their Pacificas, and Ford has a fleet of fusions as well after billions in investment.
The larger point is that elon and his 16 companies seem to do no wrong and avoid comparisons to the existing car companies, he should focus on getting market share in the extremely competitive automotive market instead of making a space/AI/brainlink/tunnel/solar/ev company.
[+] [-] skdotdan|9 years ago|reply
[+] [-] chefandy|9 years ago|reply
[+] [-] dabeeeenster|9 years ago|reply
Big car OEMs have so much invested in terms of R&D, brand and emotionally in the combustion engine that I think most are just not going to be able to make the jump to EVs. Nissan and BMW are trying, but they are still making really baby steps.
[+] [-] dangrossman|9 years ago|reply
Nissan "built the gigafactory" a decade ago and it didn't work out for them at all.
In 2007, Nissan and NEC entered into a joint venture just like Tesla/Panasonic's: they created AESC, Automotive Energy Supply Corporation, and built a $1.1 billion lithium ion battery factory near one of Nissan's manufacturing plants. Nissan committed to buying the plant's output for some years. These became the batteries and battery packs for the Nissan Leaf, of which they've sold more than 200,000 to date.
However, AESC eventually lagged at least a generation behind Panasonic (and now several others) in chemistry, process and price, which significantly worsened Nissan's position in the market. It took them some years to get out of that arrangement (relatively recently) so that they can buy batteries for the next-generation Leaf and other Nissan-Renault vehicles at less than 1/2 the price from other suppliers.
There's no guarantee that 10 years from now, we'll look back and say the Gigafactory was a wise investment for Tesla. They feared insufficient supply or being locked out of adequate supply for batteries, but now that everyone's seen the writing on the wall that EVs could become a big chunk of the new car market in the 2020s, it seems far less likely that battery supply will be a short-term issue.
Boston Power, BYD, Foxconn, SK Innovation, Samsung SDI, LG Chem, etc have built, broken ground or committed funds for over 150 GWh of annual vehicle battery production over the next 3-5 years. Tesla will not be the only major player in that market, and Panasonic is free to supply batteries to other car makers than Tesla from their other factories.
[+] [-] hammock|9 years ago|reply
[+] [-] metricodus|9 years ago|reply
For instance: The government of Sweden just announced suggested legislation for june 2018 that will severely punish any new registrations of non-electric vehicles (the tax penalty is linear to the co2-emissions/driven km above a certain treshold.) I think it goes sort of halfway towards Norway's current policy. (Which is rather extreme, and something they as a nation can afford, being a major oil exporter.)
[+] [-] nickpeterson|9 years ago|reply
[+] [-] ff10|9 years ago|reply
[+] [-] hodder|9 years ago|reply
Something like:
cars sold by yr, Margins.
battery wall, solar sold by year. Margins.
multiples assumed on revenue and earnings by yr, and at mature phase.
dilution of equity assumed to scale production.
Can someone address those things without hand waiving them away for me? Again, I'm not long or short the stock, but havent heard a coherent argument with math for going long.
[+] [-] paulpauper|9 years ago|reply
Tesla's car business is quite profitable and has huge growth...that's what matters http://greyenlightenment.com/another-correct-prediction-tesl...
In the late 90' during the tech bubble, companies that had negative cash flow operation were bid to the stratosphere. Tesla and Amazon however have positive cashflow for operations and huge growth.
People said the same thing about Facebook in 2012-2013 and Google in 2004-2005: how will they (Google and Facebook) justify their valuations? Well, they did. Wall St. sometimes get it terribly wrong (Infospace in 2000) and other time very right.
Sometimes it doesn't make sense...but there is a method to the market's madness.
[+] [-] 8ytecoder|9 years ago|reply
[+] [-] erikpukinskis|9 years ago|reply
U.S. residential electricity use is 1.4 trillion kilowatt hours (kWh) per year. [1] At $0.10 each that $140 billion dollars.
Americans travelled about 3 trillion car miles in cars per year. [2] At $0.50 per mile (what the IRS lets you claim for mobility) that's $1.5 trillion dollars.
That's just the U.S. These markets are enormous. There are all kinds of ways for them to carve out $7 billion a year in net income to justify their market cap.
[1] https://www.eia.gov/tools/faqs/faq.php?id=96&t=3
[2] https://www.advisorperspectives.com/dshort/updates/2017/03/1...
[+] [-] tokipin|9 years ago|reply
Put differently, the long argument is a qualitative one, not a quantitative one. This doesn't make it any less intelligent, just harder for people to put into words. See an earlier comment I made[1] about the kind of thing that's meaningful but which is difficult to attach a number to.
And conversely, if you can predict something with numbers, that's a sign that it's stable and less risky, but then the price/ROI will reflect that safety.
[1] https://news.ycombinator.com/item?id=13711871
[+] [-] brohoolio|9 years ago|reply
[+] [-] andy_ppp|9 years ago|reply
Remember that Tesla have by far the best dataset for building self driving cars and this is going to give them a huge time to market and/or safety advantage over their competition. If they launch an Uber clone as well (which they have implied they might) I think they could be able to replace a lot of car journeys with their service instead of paying drivers, something Uber's lofty valuation is entirely based upon.
[+] [-] LordHumungous|9 years ago|reply
Lol. Yes, the second most unprofitable tech company in the world should clone the first most unprofitable tech company. Why not.
[+] [-] nojvek|9 years ago|reply
[+] [-] MarkMc|9 years ago|reply
In 20 years Tesla may produce more cars than Toyota. They may have self-driving AI that is safer than any other. They may provide more taxi rides than Uber. But the total market for new cars may be half what it is today because no-one will own cars in future.
[+] [-] mcguire|9 years ago|reply
[+] [-] simonsarris|9 years ago|reply
Being long Ford is making a bet that the future will look pretty much the same.
Being long Tesla is making a bet that the future will look different. (Plus the risks of believing that they can do what they say they can, and that their vision is more correct than not)
If you are a Ford investor and want Ford to be investing in the future, you should be ashamed of them for being either too scared or too stupid to know what to do with their piles of money. Then again, the largest carmakers in the US (incl. Ford) were making a loss just a few years ago, and unlike Tesla, they were making that loss while doing ZERO to invest for the future.
So maybe Ford should be scared.
Or maybe they should be pivoting faster so they don't return to not-making-a-profit, because unlike Tesla, they still aren't spending very much on the future, are they?
We can argue about whether or not Tesla has a good plan or a bad plan, but Ford has shown before that they more or less have "No plan." Their reliance of SUV profits almost killed them in the mid 2000's (and did mortally wound GM, only to be resurrected). Will Ford's reliance on the F-150 (or on ICE expertise while outsourcing most other things) do the same thing in the future?
~~~
I've been holding Tesla for a long time. Currently I'm more optimistic about the company than when I bought it, which seemed fairly risky.
I think the room for growth and market expansion (Important Electric Things and energy future) is very large. I think trying to compute how the math will get there is a mistake, short of making sure that they are not going to run out of money.
Being long technology stocks is a strange game. If you're long IBM or AAPL right now, you're more or less betting that the future is going to look pretty much the same, just like with Ford. It's almost a misnomer to call them technology stocks.
There are only a handful of public companies you can bet on (Tesla and Amazon are probably the most obvious) that are really betting big on the future. The dividends of these will be unknown.
(This was part of a previous small discussion about the price of TSLA last night: https://news.ycombinator.com/item?id=14018954)
[+] [-] mcguire|9 years ago|reply
No. Being long Tesla is making a bet that the future will look like Tesla, that Tesla will be producing a very significant chunk of the vehicles on the road sometime in the reasonably near future. Tesla currently has plans to expand to produce 0.5 million vehicles per year in the 2018-2020 time frame; Ford currently produces 2.5 million vehicles in the US for ~15% of the market.
Disclaimer: I'm on my second F-150 and third Ford vehicle.
[+] [-] unknown|9 years ago|reply
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[+] [-] stevenwoo|9 years ago|reply
http://www.navigantresearch.com/research/navigant-research-l...
[+] [-] RodericDay|9 years ago|reply
This is funny to me. I think Tesla is selling more of the same: various big cars to car drivers who can't imagine a society without cars.
It feels like "trickle-down environmentalism", and I don't have a very high opinion about the economic variant.
A real radical vision of the future would be betting on train and bus companies or something wild like that.
[+] [-] marvin|9 years ago|reply
[+] [-] tahoeskibum|9 years ago|reply
[+] [-] aphextron|9 years ago|reply
[+] [-] rottyguy|9 years ago|reply
As an aside, he strikes me as someone who's been told he has some short measure of time left to live and is trying to make the most of it. By all measures, he's swinging for the fences.
[+] [-] rebootthesystem|9 years ago|reply
The current state of the art battery technology for vehicles is heavy and has less than desirable energy density.
The minute a new technology can deliver twice the energy density at the same or lower weight and lower cost most established car manufacturers will jump in.
Electric cars are very easy to build when compared to IC cars. The simplest fact being that you are eliminating thousands of mechanical components and replacing them with an electric motor and hundreds (or thousands?) of electronic components (for motor control). Electronics design and manufacturing is easier, cheaper and faster than mechanical manufacturing.
I believe Tesla is positioned to take a big hit when that inflection point happens. They are inexorably married to a battery technology. The Gigafactory, as awesome as it might be, is now a large ship with huge mass that is very difficult to turn around.
The next battery technology might very well turn the Gigafactory into a huge anchor for a few years, during which all other car manufacturers, lacking that commitment, are likely to leave Tesla in the dust.
[+] [-] jernfrost|9 years ago|reply
It isn't just about cells but putting them together and designing a whole battery, with cooling and everything. Tesla knows very well how to do this. The competition doesn't.
[+] [-] thinkling|9 years ago|reply
> Electric cars are very easy to build when compared to IC cars.
As I commented above, I recommend reading about the development of the Volt and Bolt at GM. They had a huge learning curve:
> Nearly everything changes when you opt for a fundamentally different power train, so GM’s greatest advantage—more than a century of experience building cars—was all but moot.
https://www.wired.com/2016/01/gm-electric-car-chevy-bolt-mar...
[+] [-] franciscop|9 years ago|reply
[+] [-] jansan|9 years ago|reply
[+] [-] karpodiem|9 years ago|reply
I can't find a number through Google but the number of Ford Hourly/Salaried employees has to be over 125,000. As a guess.
Tesla has 30,000 hourly/salary employees.
Despite being valued 'less' Ford has a huge economic impact for many peoples lives. This may decline, over time, but don't be surprised if Ford/GM/Chrysler combine forces for a huge battery factory of their own. Their ability to tap capital markets with lower interest rates than Tesla is a competitive advantage. They also move many more vehicles than Tesla and get better prices from suppliers, which is a competitive advantage.
Tesla's gambit with batteries is either going to work or will offer a fantastic opportunity to pickup a battery factory at a good price.
At the of the day, when all major automotive companies have EV vehicles, what's going to differentiate them? The accuracy of the self driving software? Entertainment options within the vehicle? Serious question.
[+] [-] abakker|9 years ago|reply
[+] [-] skoocda|9 years ago|reply
Regardless, I don't think it's a tech issue, but rather an image issue. Trying to sell hybrid trucks to Americans is like trying to feed boiled spinach to kids.
[+] [-] Thaxll|9 years ago|reply
[+] [-] mvpu|9 years ago|reply
[+] [-] vonkale|9 years ago|reply
[+] [-] jernfrost|9 years ago|reply
Why push for high stock prices if it gives little benefits.
Seems like a nutty evaluation even if Tesla knocks over the established players in the future. I do in fact think that there will be an iPhone moment where established players who have not taken electric self driving cars seriousness will be eradicated like Black Berry and Nokia.
[+] [-] hueving|9 years ago|reply