Tesla cars

[xelasnave]

I heard Tesla Car Company is valued at a trillion dollars ahead of all other car companies.

How can this be when it pays no dividend?

They may be developing the car of the future but they will not end up with a monopoly..I dont think Ford or Toyota will say .." oh petrol is out lets close the doors its all over" just maybe they decide to produce an electric car as well...mmm competition..and Tesla may have the jump but the F1 participants will catch up in a season.. that is what they do and further they will make a better one...even with a monopoly think of the profit needed to give a decent return on one trillion dollars..I have not worked it out but I will at just a low return...but already I know you need a lot of profit to justify one trillion.

I see Elron on social media all the time and I thought heck if a company does not pay a dividend all it has is confidence in its CEO and hope for the future..Elron certainly presents the hope of the future;).

But have investors got somewhat carried away?:shrug:

So what is it that I am missing.:question:

Where is Gary he will know:thumbsup:.

Alex

A five percent profit would be fifty billion I think .. say a billion a week..how many cars would that be?

[mura_gadi]

careful Alex


You might find the following an interesting read, reporting for the quarterly period ended September 30, 2021.

https://www.sec.gov/Archives/edgar/data/1318605/000095017021002253/tsla-20210930.htm

[xelasnave]

Thanks that is wonderful.
Alex

[gary]

Hi Alex,

I only wish I had that good a crystal ball :lol:

Market cap of a trillion and over valued? As you point out, the numbers
don't appear to add up.

But as you are aware, the stock price reflects not what a company is worth
today but what people perceive the value of the company will be in
the future.

Though I can't read the mind's of investors, my hunch is that they are
betting not on how much profit this company will be making in the
next few years but rather how much they project it might make way out
in 2030 and 2040.

Tesla themselves have given out projections of those sort of timelines.

But perhaps they don't need to. I think the investors are not just looking
inward at Tesla, they are looking outward at climate change.

My hunch is that people are betting on the sweeping changes that will
need to occur surrounding climate change will really kick in over the
next few decades.

Perhaps it is the inverse of what is happening here in Australia or more
accurately, what is not happening here in Australia.

I saw a commentary last week that included a graph that showed
business investment as a function of time here in Australia.
You would hope with near zero interest rates businesses would have
been borrowing like no tomorrow to invest. But the graph
showed business investment here had dropped to essentially
zero. The commentator's own hunch was that the lack of government
energy policy had left businesses with no certainty about investing.

[sn1987a]

I'm all in on Tesla so here's my take.

Tesla is now so far ahead of all competition in building EVs and components, ramping up factories and R&D that they have runaway unstoppable momentum. No net debt and rivers of exponentially growing cash flowing in. The "competition" everywhere is a joke.

Legacy Auto have snookered themselves and will bleed to death as no consumer in their right mind would buy a new ICE vehicle now - they'll hang onto their old one until they can buy a Tesla.

Ford, GM, Toyota et al. are billions in debt, billions to write down in sunk cost on ICE plants that are obsolete and worthless and billions and billions needed right now to invest in EV plants in a desperate futile effort to catch up, software, batteries, R&D, supply chain ect. They're all toast.

If Elon nails Full self driving then it's all over, Tesla will eat the world. If AI with vision can drive a car in any environment then the applications are endless with humanoid manufacturing robots next.

Tesla tech will also take on global utility scale power supply everywhere

It's breathtaking and hilarious, what a ride we're in for. :P

[xelasnave]

Thank you gentlemen for helping me build my knowledge...I do appreciate the both of you taking your time to construct such well thought out posts.

You may like this.

https://youtube.com/shorts/qaQFPNa8ZlM?feature=share

[lazjen]

There are EV competitors starting to come along (not based off legacy auto), but they are a long way behind Tesla. However a lot of them will do well because of the sheer overwhelming demand worldwide. That plus there are market segments that the Tesla doesn't handle well. But, that's good news for the consumer as eventually we'll get a lot of choice.

As for buying ICE, I think you're kinda close with the idea. I think some will transition via PHEV and others may stick with the 2nd hand market for a while. And as I said above, there's just some markets that Tesla doesn't cover right now.

The extra wrinkle to all of this though is the insane supply chain issues for all companies and industries. Wait times for things are getting ridiculous - e.g. Tesla M3s are now 6 to 9 mths wait, up from 5-7 mths from just a month ago, and that was a jump from 3-4 mths a short time before that.

[xelasnave]

There would seem no way a trillion can stand up..i was playing with numbers and get like 20 to 50 million cars needed each week....can be that be right?
Anyways I wont be getting an electric car..while folk in US put six 300 hp motors on their boat I feel no guilt driving 400 klms a month in a petrol car..besides in this weather charging would cost a fortune.
Alex

[taminga16]

Alex, I have a concern over the Elon Musk 'Star-link' project that is polluting our night skies, people are in wonder of the 'now affordability' of the service but fail to realise that when it is up and running Mr Musk will bump the usage costs, after all he has not become a Billionaire by giving stuff away.

[Hans Tucker]

You could get a Hybrid ... best of both worlds. Toyota RAV4 Hybrid is a very popular choice. That or the Subaru Forrester Hybrid would be my next vehicle choice if I decide to replace the Honda.

[lazjen]

I've done the math on the EV we're getting. Even with the crappy weather, there's still enough solar power generated at home to top up the car for our usage, which should be a lot more than 400 kms a month. So ongoing "energy costs" = very close to zero. Unless we do multi-day trips, we expect our usage to be such that we won't need to use any 3rd party chargers.

And even if we had to do non-solar charging, the costs are still way less than petrol - and that was before the recent price hikes.

So, no, certainly not a fortune compared to a similar amount of fuel costs.

[Hans Tucker]

People talk about fuel but what is the through life support of an EV? What are the maintenance costs? I just read an article, whether it is true or not, about the Batteries on a Teslar 3 significantly degrading after 100,000 miles. What are the replacement cost for a new battery bank? Then there is disposal ... environmental impacts. You don't read much on this area.

[Hodur]

Hans, hybrid is about where our tech stands. Imagine the awful range angst driving interstate. Our next car will be a Subaru hybrid. There’s enough issues to contend with I don’t need to add range to those issues.

[Peter Ward]

I have a Tesla Model 3. If I were to run it dead flat and re-charge it overnight
(at off peak rates of 14 cents per K/hr) it would cost me $11.20 to put the 80Kw the car requires to go 500km.

I also have a ICE car. It burns 8 litres of fuel to travel 100km, and to match the Tesla's range will burn 40 litres of fuel.
Fuel watch Prices in Sydney are currently around $2.25 per litre (for 95 octane), so that's $90 to travel the same 500km distance.

$11.25 Tesla vs $90.00 ICE.
and if I use a "free" 35Kw from our PV array
then
$6.30 Tesla vs $90 ICE.

So quite the contrary, it's NOT charging that costs a fortune.

Oh..and the Tesla does not need regular servicing, burn oil, require coolants, transmission oil or chew out brake pads/rotors (courtesy regenerative braking). ;)

[xelasnave]

I am off the grid and have less than 1000 watts from my panels and of late need to run my genny because there is no Sun day in day out.

As I say to people it is not until you are into astronomy or have solar that you notice just how much cloud is around.

Even on days with total Sun I use most of the power for houshold things so there would be little power available to charge a car.

The genny runs the charger which produces 50 amp at 12 volts ( max) ... thats what I mean when I say charging would cost a fortune.

So even with many panels in this weather charging a car really would be so expensive it would be impractical.
When off grid you need a battery bank to store your power. I dont need to cost a system to know it will be probably half the price of the car or more and you still have the problem of bad weather.

Alex

[sn1987a]

Or you could run your house from the 80kwh battery pack in the car for days after you charged it up in town at a supercharger for a few dollars :D

[Rainmaker]

Tesla battery pack is about $20,000 to replace, so basically once Teslas are out of warranty they are a ticking timebomb….

If the battery is damaged (it is under the backseat) by a not warranted event like your kids spill drinks on the back seat and the water gets into the pack…. You pay to replace…. There are no repair facilities for the battery in Australia yet…. Just plug and play…..

An American owner had a stone damage the underside of his Tesla 3 right where the battery is….. cost $16500 USD to repair, not covered by warranty…

Food for thought…

[xelasnave]

That is clever
Alex

[Peter Ward]

Seriously? Are you employed by Chevron or Royal Dutch Shell?
There is no way "kids spilling drinks on the back seat" will cause a Model 3 battery failure. The pack is actually under the floor and is so robust that the NTSB gave the car one of the highest crash safety ratings ever.

As for the US driver that had "stone damage" actually hit a boulder at speed ruptured the pack he got off cheaply IMHO.

Battery prices are also plummeting hence I'd expect pack replacement costs will follow. But let's say it costs $10k in 8 years from now to replace a pack and give the car "as new" range. Last time I sold a seven year old and rather worn out ICE car I had dropped $40k on its original price....entire engine and gearbox rebuilds can also cost thousands.

You do the math.

[xelasnave]

My thoughts are not to if an electric car is a good idea or not but living here in a rural situation and off the grid it does not seem like a good idea.

However if I was living back in Sydney and have only a short drive to the shops it would be different..in fact I would probably go for a golf cart or just use taxis.

My ponderings were around the claim that the company is the most valuable car company in the world firstly when it is paying no dividend and how they value it at one trillion...there are two definitions of a trillion..one is a million million and the other a million million million..lets forget the second and assume whoever made the claim is thinking a "1" followed by twelve "0"...1,000,000,000,000

My thoughts are that this is the value determined by the number of shares and the price they last sold...maybe I am old fashion and things dont work like I now set out ..that is entirely possible add the unrealistic proposition that I could be wrong so I ask for the opinion of others.

A company or business or even a piece of commercial real estate is valued by "capitalisation" ..the value comes from the return on capital. All that occurs to me is a return on a trillion is extrodinarily high and when you do some simple sums you get numbers that suggest a trillion valuation is well off the mark. So what return is reasonable... Lets say only one percent...one percent of a trillion is 10,000,000,000 which can then be seen as the profit paid to shareholders...lets say each car has a profit of $100,000 that means you need to produce 100000 cars a year..doable I expect ..but if you seek a reasonable profit and investors expect say 5% the numbers take the valuation to pie in the sky....just saying is all.

It may be the best thing since sliced bread but that does not mean it becomes in effect priceless...

If you are board and have time you do this sort of thing but I suspect many investors have not done any sums.

AND overvaluation is very dangerous because if you get a run panic sets in and the company disappears.

I dont know what market slice they expect or the profit per car ...anyways I am going off to do something productive.


Alex

[OICURMT]

https://www.ford.com/powertrains/battery-electric-vehicles/



They are already in the market in a B*I*G way...

[Peter Ward]

The market cap of many US companies, not just Tesla, is indeed, insane.

As to whether this house of cards will fall...as the Donald liked to say: We'll see what happens :)

[xelasnave]

I thought share trading was about selecting a stock that had good long term prospects as supported by Warren Buffet and long term that is the game but if I were to get into trading it is as simple as tossing a coin place your bet and sell taking a profit or having a hole to fill next bet...but realistically betting on the horse races is no different ... Each bet needs to make the winnings and losses you are behind...I sometime play roulette like that and jt is hard not to win but you need to seek a very small win to start..even going for a dollar win can see you needing a $500 bet to make the system pay.
But it is boring because I am not gambling..I do not gamble..
Alex

[The_bluester]

I think personally that the "Value" of Tesla is in the range described as absurdly silly.

I don't agree with the assessment elsewhere in this thread either that Telsa stand to become a motoring monolith as all the "Legacy" car makers will fall over under their mountains of debt and reliance on ICE cars. It is pretty obvious that they are all spending hand over fist to get pure EV models out there too, and they have the advantage that have been learning how to make cars for up to 100 years, Tesla has proven over the last decade or so what all the legacy makers already knew well. Making cars is hard and making high quality ones is even harder. The biggest difference is where the mountain of "Other peoples money" has come from, explicit borrowing from the likes of banks or "Investors", both of which tend to want a return eventually.

I think the market desperately needed Tesla or a company just like it a decade ago to prove that the future of motoring did not look like the G-Wiz, around now is when we are going to start finding out if the market still needs Tesla, when all the legacy makers start rolling out new models and Tesla suddenly has real competition for every model they make, built by companies wo do not beta test their self driving software by releasing it to the public. That to me is an example of the same sort of "Blow up as many as we have to" development that SpaceX use, only the lives of the paying public are at stake.

Unless I win a lottery in the very near future, I expect that I have last year bought my last new pure ICE car, though I expect to jump over hybrids and the next new car will be a BEV.

[sn1987a]

:rofl: Every EV that legacy auto produces and sells at the moment is losing them money and cannibalizing their own low margin ICE vehicle sales and thus economies of scale that they need to service their mountains of debt. The more EVs they sell the more they bleed which is why they have been dragging their feet and kicking and screaming for so long. They'll be begging for a bailout soon.

Teslas gross margins are growing to insane levels with every step up in production. Two new giant factories bought and paid for with state of the art productivity about to come online. More factories being planned. Year over year as far as the eye can see Teslas production, margins, cash flow, product diversity climbing the S curve.

Add to that Autonomous driving purchase or subscriptions, Robo taxis, Electric power utility Mega packs, humanoid robots and you're looking at Trillions of dollars of opportunity with no one else even coming close. That's why Tesla is valued around 1T now. By 2030 if they execute on their vision they'll be way over 20T market cap. :P

Don't bet against Elon Musk.

[xelasnave]

Have any sums?

Like how many vehicles sold p.annum to see 20 trillion. Just one trillion would be nice.
I agree their future is wonderful that is not the issue...the issue is how many cars to justfy the current level of confidence...

Some numbers on the back of a used envelope is worth a thousand pies in the sky.

There was a time in Holland where tulips became the focus of investment with some bulbs selling for the price of a house..
. like if you sat down and asked how many tulips will I need to sell to get my money back you would never have reached for your wallet.

https://en.wikipedia.org/wiki/Tulip_mania

Alex

[wavelandscott]

Full disclosure, my company supplies into the automotive space. Materials for interior, exterior, air bag covers, taillights, display panels, touch screens and EV batteries (and tires).

COVID aside, the USA annual car sales are 17 million units…COVID years closer to 13 but the 17 is a solid “normal” expectation.

Tesla gross profit margin per car is just over 30% and climbing (scale and improving know how) for reference GM is less than 15% (last year closer to 11%) and Toyota just under 20% (18% and change). Both GM and Toyota are seeing declining gross margins.

Cheapest model Tesla average sale price is at US$45,000…most expensive model > USD$100,000… fleet average my estimate is USD$ 75,000

You can do some valuation estimates from there depending on what you think their market share will be. China market number of cars is a little larger, I do not know off hand EU or ROW (rest of world). Tesla also sells some batteries for other applications so figure what you will on that.

Batteries for Tesla get cheaper each day and at least in the lab can be just over 90% recycled. Battery chemistry is changing so expect the price of manufacturing to decline rapidly over the next decade…

Hope that helps

[sn1987a]

Year 2030 eight years away.

Tesla 20 000 000 cars per year production and sales at say $50 000 per vehicle = $ 1T revenue

PE ratio 20:1

$20T market cap.

Going to be 2 million cars this year up from 1million last year up from 500k year before.

Waiting list growing even when they lift prices.
Legacy auto paying Tesla for EV credits to avoid fines for not producing enough EVs. Free Money from competitors to build even more factories! You can't make this up!:rofl:

If Tesla solves Autonomy then they can stop selling cars to the public and just make them all into Robo Taxis and make even more money per unit. It will be cheaper to go by Robo Taxi than to own an EV and Tesla will be paid for every km. kms per year 24/7 is more money for Tesla over lifetime of car than selling it.

Tesla insurance now rolling out is cheaper than other insurance because Tesla get all the data from their cars.

They're making and buying as many batteries as they can. Any excess can be put straight into Mega Packs, Cyber trucks, Semi trucks. The demand for Mega Packs is insatiable.

Every way they win.

[raymo]

My Grandmother was born before the first car hit the road, almost all households that could afford it were lit by gas lights, of course no aircraft;
trucks and tractors were steam driven, and 6 months before she died, men
landed on the Moon. How's that for progress in one lifetime?

Even when I was a lad, the milk was delivered by horse and cart, as was coal and bread. The rag and bone man came round on his horse and cart ringing his bell. He would buy and sell anything that had some value. I used to walk 3km each way to primary school in all weathers by myself. I was 11 before I tasted a real egg, and about 7 or 8 before my first real potato. At the age of 8 I used to go about 8km on the bus to the nearest swimming pool, spend hours there having fun, and get home at tea time. My parents would get done for child abuse today.
raymo

[wavelandscott]

A bit off the topic of Tesla specifically but I am sharing for reflection.

A couple of years ago my Wife’s Grandmother passed at just a few months shy of 110 years old. She retained her wits until near the end.

The amount of technological change she saw in her life was remarkable…first cars, first phones (lots of firsts)…but in my view nearly all the changes she saw were recognizable changes…a car for example while updated was not so different from a horse and buggy (4 wheels, a visible power plant, and a steering mechanism) a phone had a place to speak into, a place to listen and a mechanism to connect to your speaking partner…

Up until recently, with a little prior mechanical experience, you could understand the fancy new “machine”

My contention is that the changes we will see over the next 10 years will dwarf what she observed over her life and for all intents and purposes will look like “magic”…borrowing this idea from a great thinker.

Change is constant and accelerating and we need to be ready and willing to climb on board

[sn1987a]

Elon going for Gold! :P

https://www.youtube.com/watch?v=Carg5ympHq4

[Camelopardalis]

Electric cars are substantially simpler, mechanically, and lend themselves more to improvements in process efficiencies.

Profits usually get decimated by competition, so the next few years should be an interesting ride in the market…

[lazjen]

I think we're going to be in for a wild time for a while yet due to the demand far outstripping supply. If/when that sorts itself out, we should see more effective competition.

I wonder if during that process we'll see a lot of traditional dealers close? It will be one way that manufacturers can increase their profits if they follow the online ordering model.

[wavelandscott]

I believe this to be insightful and matches my experience…we have had 3 “service” opportunities for our Tesla since ownership, 1 tire rotation, 1 “computer module update”, and 1 window crack replacement on back window.

2 of the three they came to my house…no hassle or impact to me.

The profit driver of filter changes and “tune-ups” have no meaning with the Tesla. Shockingly simple to own and drive.

[Camelopardalis]

Yeah I won’t be missing the service “reminders”, even though I don’t usually cave in to the guilt until the car itself tells me it wants a service :lol:

Sad that I should trust the electronics more than the honesty of the dealer ;)

[sil]

The EV car thing is irrelvant and profits come in other ways and who would have guessed not too long ago that everyone having a thousand dollar phone in their pocket , when a 20c piece was all you needed it you had to phone someone. Teslas was never about making EV cars and profiting, Its value is in the Electricity storage technology. Lithium Ion is unstable and has a life of only a few years before it is dead, unlike Nickel based rechargables with can be revitalised by switching to Lithium and locking them into unopenable devices and not having spare batteries available. The companies, once they hook you, have a pretty much guarenteed income stream for selling new products. Same with Tesla, their investment in developing batteries means after a few years when you will be forced to replace the car batteries they will be in the black for certain and no doubt the batteries will be lighter and more powerful so you “get” performance upgrades too. But Remember Elon’s goal is to move to mars. He has solar city to develop tech to harness solar energy, with telsa hes developing energy storage tech, hes got spacex to get him there, and he’s got his boring machine tech to create tunneled living space under the surface of mars away from harsh weather and solar radiation, So Elon will need biotech to create food and he’s pretty muchready to take a colony to mars, declare it his own and use his flame throwers to defend it. You might think he’s a nutcase but he has a plan way beyond the horizon you guys can think. With any luck it includes a government-less society.

[gregbradley]

Isn't the barrier to EV the lack of charging stations and working chargers (I read they are often the targets of vandalism).

They sound great for local driving but for long trips with not a lot of infrastructure away from the cities, they don't sound too attractive at this stage to me.

Greg.

[raymo]

Greg, There is no meaningful barrier to EVs. Their range is improving all the time, in fact as I said earlier, a Tesla will go slightly further on a charge than my Mitsubishi ASX Aspire will. Chargers are being installed in large numbers.
An EV with a decent range [say 400kms] can drive right around Australia
including across the Nullabor.
raymo

[Shano592]

I had to laugh at that!

[lazjen]

It is certainly early days, but it's improving. You can see how various EVs fare by using a site like: https://abetterrouteplanner.com/ There are configuration options if you select a Tesla such as using other types of chargers than the supercharger network.