People said this 3 years ago too, arguing Tesla was too big. guess what: it got way bigger. Tesla is forcing other brands to have to adapt or die. They are way behind Tesla in technology, infrastructure, and marketshare for electric vehicle and battery tech.
I think you have to ask whether Tesla would have the same or similar valuation in any of the following circumstances:
- If literally anyone else were CEO.
- If Musk hadn’t used twitter to gather a cult-like following of people who idolize him, think the tech is cool, and can’t afford a Tesla but can afford a few shares of the stock.
- If Musk hadn’t repeatedly inserted himself into the WSB “meme stock” & crypto counter-culture to cultivate fans within that group of risk-taking investors who are known for ignoring fundamentals and buying stock on their intuition (or even the internet’s intuition!) alone.
I’m not saying Tesla is worthless and I even have to give Musk credit for creating an internet persona where he’s helping middle class millennials “stick it to the man” while _being_ the billionaire man. But IMO its very obvious that at least some substantial portion of Tesla’s valuation comes from Musk and his internet antics/persona and is completely detached from the underlying value of Tesla itself.
You’re not entirely wrong, but Tesla (and a small SpaceX investment via funds) is the closest most people can come to investing in Musk personally. Wouldn’t you invest in someone who is obsessed and will strive at all costs to succeed? And how is this any different than accelerators like YC investing in founders vs business ideas? The “eccentricity” for lack of a better word is the symptom of his underlying drive, so if you want the returns you take the good with the crazy.
I wouldn’t work for Musk (to protect quality of life and mental health), but absolutely would sink all of my high risk allocated capital directly into him as a person. Obsessed people get shit done.
> And how is this any different than accelerators like YC investing in founders vs business ideas?
VC funds are (1) diversified, so it’s less risky — their success or failure isn’t tied to any one persona or even any one company, (2) fund investors have a lot of money so they can afford it if their entire investment goes to zero, and (3) the investors are well-versed in assessing the likelihood of that risk when they make the investment. The same cannot be said for the average Joe who’s a fan of Musk and has $2,500 in their Robinhood account.
Fair points. I'm unsure how to protect retail more without handicapping those who know what they're doing. Taking away exposure opportunity from retail isn't going to help, but neither does encouraging gambling (although that's what investments are, educated gambles). Musk is exploiting an edge case, but I'm unsure if I can blame him for it based on how it's turned out.
Don't invest (or gamble) what you can't afford to lose on high risk investments. Index funds are your friend.
Although I'm no fan of Musk he's a pretty smart guy and he's done a pretty good job so far of toeing the line. (Though I don't envy his lawyers because I suspect he toes the line a touch more than they'd prefer.) And, as the saying goes, winning fixes everything, so I think the fact that Tesla is "profitable" and has a promising technology at the core of the business helps, too. It's clear the stock price isn't entirely derived from the company's value but the company clearly isn't worthless, either.
All that is to say, I don't think there needs to be any additional restrictions or regulations on investors to deal with meme stocks because I think the problem will eventually be addressed via the existing system. Whether it's Musk or (more likely) some other enterprising social media personality I think we'll eventually see a meme stock that's so egregiously ridiculous and loses a lot of people a lot of money that the SEC, and perhaps the DOJ, will be forced take action. Maybe even multiple egregious meme stocks will be used in quick succession in order signal where the SEC's "hard line" will be.
And I eagerly await Matt Levin's "Memes are Securities Fraud" column when it happens!
> Don't invest (or gamble) what you can't afford to lose on high risk investments. Index funds are your friend.
100% truth, but many people don't listen to that. Too boring. I'd rather have Joe Robinhood Investor sink $2,500 into Musk and his mission with Tesla instead of sinking $2,500 into GME or casinos.
This obsession hasn't always been good, and often caused Elon Musk to make dishonest statements about the overall state of the business and its future. This should scare anyone who is attempting to value Elon Musk at a realistic level.
As a recent owner of a model 3, I've been blown away by the charging infrastructure advantage.
The non-Tesla chargers near me in Colorado are just plain garbage. Sometimes, they work great, but other days I go back and the terminal won't function. And currently, these chargers are all the owners of non-Tesla EVs have.
I'm actually surprised there isn't a legal push by Congress to force Tesla to open up their charging infrastructure to others.
> I'm actually surprised there isn't a legal push by Congress to force Tesla to open up their charging infrastructure to others.
There is in some other countries. IMO the supercharger network is a short-term competitive advantage but probably not a sustainable one as other companies move in.
> I'm actually surprised there isn't a legal push by Congress to force Tesla to open up their charging infrastructure to others.
I honestly don't understand this sentiment.
Tesla invested many many years creating a charging network in a competitive environment that actively resisted it. So now that Tesla is super successful in part because of this long-term investment, how is it fair that Tesla _must_ open it up to the _same_ people that resisted them earlier?
That's like Apple being forced to give up their Lightning specs to third-parties because they invested years of R&D into creating a fast plug-and-play standard before USB-C gained a foothold.
Because sometimes the government can use its powers for the good of the general public, even if it negatively effects business. How negatively Tesla would be impacted is debatable - I don't think anyone would expect them to be forced to let people use their chargers for free.
I dont think people would put up with a gas station that only fueled Toyotas, or a parking lot that only allowed Fords. This doesnt strike me as being terribly different.
I own both a Audi e-Tron and Tesla Model Y (well, it’s the wife’s but you get the idea.) Taking a road trip in the Audi is all but out of the question because of how awful the charging infrastructure is. That is not say nothing in regards to the litany of design flaws, poor consumption, and miserable dealer support with the Audi.
Tesla is easily 10-15 years ahead of all other manufacturers.
> Tesla is easily 10-15 years ahead of all other manufacturers.
Well the majority view is that the Porsche Tycan is a better car, but at a different price point - considering the (im)maturity of the market 10-15 years seems a stretch, particularly considering there are some great cars coming out like the mini electric.
Depends on how ‘better’ is being judged.
Premium fit/finish, interior quality, handling, etc. - i.e. the things that the legacy Porsche business was already good at, Taycan is better.
Battery tech, motor tech, vertical integration, and (arguably most importantly) overall efficiency, Tesla is ahead, and probably by many years.
Tesla also far ahead in effort/time out into developing self-driving, though the jury is obviously still out on how meaningful their approach finally turns out to be.
I considered the Taycan as a replacement for the e-tron but it has all the same problems as the e-tron. The interior finish and handling dynamics are nicer than Tesla for sure but literally everything else they get wrong. Like I said, they are at least 10 years behind.
Here is an example: recently the Audi app which you use to control the car from your phone was down for two weeks for server upgrades. I have worked in IT and software for almost 20 years now and a 2 week outage is unimaginable.
I'll agree a 2 week outage is insane, but that's hardly an example of the tech being behind. Shitty process sure and lazy software development too.
How about the charge range or stability control? Any idea about the battery's expected life span? What technology do you think Audi is behind on?
My impression has been that Tesla nailed the charging network, charge range and raw straight line performance. Everything else they half-assed, i.e. the stuff I care about on a daily basis feels cheap.
* Rear hatch will occasionally just open by itself. There was a TSB from the dealer to resolve this where they reprogram your keys and adjust the sensitivity of the kick sensor but I'm still skeptical. The audi app should alert me if the hatch has been left open for more than X minutes with the car off.
* Audi App in general is very slow and unresponsive. Sometimes I'll try to precondition the car and the app just spins for minutes and then silently fails.
* The onboard charger can run with either 50% of 100% of a circuit, nothing else. If you are at a shared 240 or 120v system where there is a lot of load (RV camp ground for example) your car simply won't charge.
* Electrify America is a mess. You can google this and see thousands of examples.
* There is no regen or one pedal driving. You can manually activate regen by pulling the levers on the steering wheel but the behavior isn't consistent and the regen isn't strong.
* There is no way to enable "creep" mode like how a traditional automatic ICE car behaves.
* There is a feature to schedule charging for those who have off-peak rates. You have to set this every single time you use the car.
* The virtual cockpit and 360 camera occasionally fail to initialize so you just have blank screens.
* Consumption is extremely high. For reference for Tesla people a good day in an etron is 400wh/mi.
* Vehicle nav map shows me gas stations, no way to search for charge stations.
* Vehicle still has ICE based service reminders built in.
---
Now for things that are going to get someone killed:
* The vehicle rolls backwards on hills. This + lack of creep means that you have to feather the gas. There is a "hill hold assist" which will randomly kick on but it's not reliable. Stop and go traffic in a hilly area is very annoying.
* When parking the vehicle will roll backwards or forwards for about a foot until the brake catches. This could easily entrap someone in an enclosed space.
* If the vehicle is "on" or "off" isn't completely clear as a user. If you put it into accessory mode it looks exactly the same as the vehicle being on sans one small green line. I've accidentally put the vehicle into neutral with the vehicle in accessory mode while parked on an incline and it began rapidly rolling away (the thing weighs almost 7000lbs) while I tried to pump the non operational brakes.
* Vehicle automatically shuts off climate control after 30 minutes of idle. I'm glad I learned about this while waiting for someone instead of when I had left my dog in the car.
* Getting out of the driver seat shuts off the car completely when in park. See prior points about climate control and rollback.
I could go on. This is just what came to me off the top of my head.
With the exception of the efficiency numbers, none of these seem like problems that would take 10 years to resolve, even at the glacial pace of most automakers. Many of them even seem like software issues that would be resolvable via firmware updates.
400wh/mi though, oof. That would be about as expensive to operate as my current gas-powered vehicle (both around 10c/mi).
Yes but it’s the mindset of the VAG software engineering staff that created these problems. I didn’t go into the extremely confusing MMI, lack of OTA updates, etc. There is no way to escalate issues to VAG corporate. Even if they pressed reset on their software engineering team tomorrow it’d take a few years to ramp up to catch Tesla.
That's INSANE. No wonder why they need chunky batteries!
Our Model 3 cruises at around 200 Wh/mi.
Also, the Model 3's climate control times out after four hours. But you'll get a notification when that happens and can re-enable climate immediately thereafter.
Well the statement “nobody makes a better car at that specific price point” is a bit less bold than the original claim that every other car company is “easily 10-15 years behind”.
I mean it’s obviously an absurd claim anyway, Tesla is less than 15 years old and clearly the other car companies aren’t starting from scratch.
Besides, the Taycan now starts at $79k, not $120k. You are comparing the cheapest Tesla against a higher range Porsche. It’s pretty much cost competitive with the Tesla Model S. Not everything is about performance anyway, I doubt I need more power than either car - a comfortable driving experience and build quality would be more important to me if I was in the market for one of these cars (which are all more than I would want to pay for a car).
All I can find are articles such as this one https://www.tu.no/artikler/apner-tesla-offentlige-ladestasjo... that talk about Tesla bidding for contracts to install charging stations and that the conditions of the contracts require the stations to be open to other brands of car.
The article points out that Tesla can do this by dedicating part of the station to third party chargers.
So it isn't because they are being forced to do it nor is it necessarily the case that Tesla's own network would be involved.
There is something between 'fundamentals' and 'irrationality' here. This kind of market cap results from a bet by buyers that, if given access to capital (by inflating the value of Tesla or Elon's holdings of Tesla shares, or its ability to issue more) Tesla will realize the value that the market cap is bid up to. But of course, it's circular - if Tesla's stock wasn't bid up that high, it wouldn't have the capital to realize that value. That doesn't mean it's irrational, but it's not the same as a cold evaluation that a business is already clearly going to be worth than much.
Their product is so popular production of their Model Y is essentially sold out for the 3rd quarter with 2 weeks to go in the second quarter. They are in a business that has massive efficiency advantages as it scales. There is a good chance Tesla will be the largest company in the world in 10 years. It isn’t a coincidence that you hear all these rumors about Apple trying to get into the automotive business.
"The market can remain irrational longer than you can remain solvent."
And it will continue to go up until it doesn't. Maybe Tesla has a vault of unicorn blood and is just waiting for the perfect time to unveil it, but as a car company, their stock valuation makes absolutely no sense. It would take a miracle for Tesla to overtake more than all 3 top automakers combined. There is zero indication this has any possibility of becoming a reality.
Tesla's stock performance is in pure FOMO land now.
- Tesla owns a large global infrastructure for charging that they produce themselves. And produce a lot of home and destination charges as well.
- Tesla has a very large expanding internal battery production and will be one of the bigger battery manufacturers in the world themselves.
- Other car companies down own their distribution channels and thus make lower margin per car
- Tesla is market leading in grid storage a gigantic market that is about to grow for the next 20 years straight
- Tesla is leading in home solar/storage market that will also be growing for then ext 20 years
- Tesla has the potential leading in self-driving (yes make your jokes now HN)
- Legacy car makers actually make a huge amount of their money from out of warranty part sales, a channel that Tesla has yet to take advantage of because most of the time they have far more new cars and service is still losing money for them. Steady state the huge service network they are building will be very profitable.
Tesla has the clear potential to continue growing 50%+ with improving margin (localization of production, vertical integration) just with production capacity that's already in production. While the other car makers are at series risk of having a huge amount of legacy infrastructure that is losing value while their still large ICE production could very well turn negative margin as volume decrease economics of scale.
You can still call it to high, but saying its made up nonsense is equally incorrect.
Go look at the Wallstreet models, the stock price is defensible even with not all that aggressive assumptions for the next 10 years. Far less aggressive then Tesla internal targets.
It all depends if you believe Tesla can continue to execute. And what position they will be in by 2030 and then what you believe the next 10 years will look like.
It's a great question. Future potential, leadership, tech stack, manufacturing capacity, etc. There is a lot of "soft" aspects of running a company and valuation is one of the most difficult/error-prone things to do.
> it can continue to moon indefinitely if the market dictates it
Not really. The higher the price gets, the more new money it takes to move the price higher. TSLA has done significantly worse than the overall US stock market this year.
I don't disagree with you, but the common retort I hear to this sentiment is that "they aren't a car company, they are a battery/energy storage company that currently sells cars".
What are your thoughts on that sentiment? Just curious to hear from rational investors on that specific item.
That doesn't prove much; it's been 3 years of a very bubbly market. The NASDAQ has gone up 2x over that period. As Warren Buffett said, "Only when the tide goes out do you discover who's been swimming naked."
I remember a lot of people in 1999 and 2000 pooh-poohing talk of a bubble with the exact same arguments. The technology is amazing! People predicted it was a bubble before and it's only gone up!
There's no denying Musk is a true master of hype. That has given him a ton of free advertising and a very low cost of capital. And he's gotten away with fantasies and lies for years, like promising 1 million robo-taxis on the road by the end of 2020. [1] But all bubbles pop eventually, and truth always wins over hype in the long run. It's only then we'll see whether Tesla's become truly a sustainable business, or whether Musk is still swimming naked.
Just look at Norway and the Netherlands which seem to have a 2-3 year lead on EV adoption. Volkswagen brands have already surpassed Tesla sales there. Tesla makes a terrific product and they single handedly provoked that change we are seeing now. However, the German and Korean brands make great cars too. Given the choice I would trade good build quality, some more physical buttons and a quiet cabin at highway speeds for Teslas ride and futuristic infotainment on most days.
They are catching up, but currently the VW and other EVs, with the exception of Porsche, are pretty inferior. (A notable exception is Hyundai's Ioniq5, which is very impressive).
My biggest concern with other auto manufacturers EV projects is how absolutely abysmal these companies are at building software. It's just not even close. And software makes a HUGE difference with EVs. My wife's Audi has absolute shit software.
It's not that it's some tall order to write good software, it's just that these massive corporations have no idea how to build good software teams, period.
> My biggest concern with other auto manufacturers EV projects is how absolutely abysmal these companies are at building software. It's just not even close. And software makes a HUGE difference with EVs. My wife's Audi has absolute shit software.
A few years ago I read some forum posts from someone who claimed to be an ex-Tesla engineer that basically said Tesla was pretty bad at building software too. They're probably just better at making the UI seem shiny.
I'll note that "inferior" to somebody on HN may not be very much like "inferior" in the judgment of a mainstream consumer. I agree with you that traditional car company software is terrible. But if there's one lesson I've had to learn over and over, it's that terrible software is not much of a barrier to market success.
Most companies struggle to build well understood products like apps and web sites. The leadership of most organizations is unable to organize the relevant work because they don't know anything about such products. If a company struggles to build an app, a product like an EV is a major undertaking.
BMWs next electric cars will have batteries with zero (!) rare minerals, they are on the way to produce cars with renewable energy and they can recycle 96% of their batteries, just not the thermoplastic. There is much more they are doing. Where they forced to adapt? Yes, they weren't at the forefront. But they are taking huge leaps forward.
All that while providing, well, the quality of a german car. I drove a model 3 and a BMW and there is a massive difference in quality.
If there is a German car maker lagging behind I think it would be Daimler/Mercedes Benz. VW is somewhere in the middle I guess.
I would say VW AG is leading the charge among the germans, especially considering the volume of cars the group sells as a whole. The ID.4, the Buzz, the Audi E-tron lineup and the Porsche Taycan, just to start. VW group also has a long history of racing hybrid vehicles, and I'm looking forward to seeing more and more racing classes move to hybrids. But i digress.
Agreed that MB is the laggard and that Tesla quality is poor.
I think this point is key. Musk was fast out of the gate and did well out of it. Existing car companies are slower to adopt innovation, but they've been doing it for 100 years at this point. Musk is a darling of the early-adopter market, but that's a small percentage of the total market. The more established car companies have huge advantages there, and Tesla's going to have to work very hard to overcome them.
Maybe market share, but I can't see how the argument goes for technology or infrastructure.
As of now, none of the auto-driving tech is acceptable to go hands free, people have tried it and paid with their lives. The only difference between Tesla and traditional companies is that Tesla didn't seem to mind people testing unproven techs with their lives while the other manufacturers are more restrictive.
Your comment reminds of me of this. If in the future medicines/technologies are invented to get rid of people's impulses to hurt one another (as in Stanislaw Lem's Return from the Stars), but in doing so, people also lost the impulse to take risks, would you be for or against such technology? Neither side is wrong.
Anyhow, I think it's a well-known fact that Tesla's rise is due to their innovation in both hardware and software (Technology). Their Supercharger network (Infrastructure) surely is also ahead of their competitors by a wide margin.
I mean, just 3-4 years back I'd agree with you. Nowadays at least here in UK you're getting 100-150kW chargers being built literally everywhere. I'd have no problem owning and driving cross-country in a non-Tesla EV nowadays. That equation will only be getting worse and worse for Tesla - they are adding more Superchargers but nowhere near the rate of non-Superchargers. Yes, Superchargers are better technically(especially if you have the latest Model 3 and can tap into the 250kW charge), but it's no longer the argument to buy a Tesla - charging a normal EV is less and less of a problem, even on long journeys, even without having access to the Supercharger network.
Kyle Connor, from the Out of Spec Motoring YouTube Channel, took a Porsche Taycan across the country on December 31 and set a new electric Cannonball record with a time of 44:26. This beats the previous record set by Connor and his team in a Tesla Model 3 by almost an hour.
Tesla MARKET VALUATION has grown like crazy, but their sales and profits are lagging behind. And you're wrong: Tesla might have an advantage in infrastructure (Supercharges) but their technology is not far ahead of others, and their market share is falling down (at least in Europe).
Also: Tesla is planning to open up their chargers network to other cars [1]. So either they have a plan to ditch car manufacturing and focus on chargers network (and battery production), or they are digging their own grave.
That article you linked to isn't saying what you think it is.
I specifically would like to see the superchargers opened up to all vehicles as well, but the details of the article state that they are only doing this in very select locations/markets, and primarily focused on those which were built with government subsidies.
We are not likely to see the vast majority of the Tesla charger locations opened up to other brands for a while, and that may come via regulation.
This market cap is assuming that Tesla captures the entire auto market at higher margins than any car company to exist ever. To which, I ask, have you seen the auto market? Do you think the Germans are just going to let BMW and Volkswagen die? These companies used to make tanks, and still could if you pressure them enough. Hyundai is 6% of the entire South Korean economy; do you think they are just going to let another company consume that? And as for China, the world's largest auto market, you are at the entire whims of the CCP, which could decide to kick you out in favor of their favorite local competitor at any time.
The share is overvalued.
Tesla is the leader in CPU, but only average in the rest of the manufacturing.
And the main selling point for the CPU, autonomous driving, has been announced for years.
In the meantime, there is only talk of the full potential for autonomous driving.
In my opinion, it will still not be ready in 5 years.
I want Tesla to succeed but I know of several horror stories with quality and getting any kind of support or repairs post-purchase. They have some work to do.
It just isn't true that other brands are lagging way behind Tesla in tech / infra / market share for electric vehicles.
The difference in the past 3-4 years has been huge and traditional car companies have really closed the gap. We're no longer in the days of only the Leaf and the Bolt being electric cars with reasonable range.
Most electric cars these days have enough range to be a daily driver. Most cars these days have driver assist and rear cameras, etc. Tesla's "fully autonomous" car is not here (despite being "2 years away" 6 years ago). Teslas have shockingly lower reliability than people expected when they first started being sold, and traditional cars have a leg up on them in this regard.
I'm not a Tesla downer, honestly I think they've done so much good for the world and the risks taken to make that company a success has accelerated progress in so many ways. All of that can be true, and it can also be true that other brands are catching up and already have attractive alternatives to Teslas out in the market now.
