Hacker News Reader

Comment by toomuchtodo | Hacker News Reader

You're going to compare it to Jeep Liberty sales volume when its consuming the entire top end of the luxury market?

http://cleantechnica.com/2016/01/15/1-large-luxury-car-in-us...

"As we all know, Tesla doesn’t report sales/deliveries by country. However, various outlets estimate Tesla sales using a variety of methods. EV Obsession estimated 26,566 Tesla Model S sales in the US in 2015. Rob notes that the lowest estimate was 24,200. In either case, the Model S outsold the Mercedes S-Class, the BMW 7-Series, the BMW 6-Series, the Audi A7, the Audi A8, the Porsche Panamera, and every other car in this class."

View on HN

The point is that Tesla doesn't move anywhere near enough volume or generate anywhere near enough sales to justify its market cap. Its previous valuation was almost entirely a prediction of future revenues rather than a reflection of current ones.

And it's hard to say what class the Model S fits in. I don't think 7 or S is right, despite the price point. Those are both full-size luxury sedans, and while the Model S may be a full-size sedan, it's hardly luxury. Its interior is closer to a 3-series or E-class than the top-of-the range luxobarges. That's not a knock on build quality, just the reality of battery power currently being much more expensive than ICE. You've got to shave cost somewhere, and Tesla shaved it off luxury.

>The point is that Tesla doesn't move anywhere near enough volume or generate anywhere near enough sales to justify its market cap.

Buying TSLA right now is making a big bet on the Model 3. If Tesla comes out with a popular car (likely) and can make enough of them to turn a profit (little more skeptical on that one), it may end up justifying valuations. I wouldn't put my money on it, but I'm not surprised other people do.

I think that's a fair point. I suspect Tesla will end up being very much like Amazon: a company that ships physical goods but acts like a tech company. That is, they'll operate on razor-thin margins and dump every penny of profit into R&D in perpetuity. That will probably give them a leg up on companies that pay dividends, at least in the short-medium term. Ultimately, though, they run the "risk" of being Apple: a company that has to spend inordinate sums on R&D in order to gain a 1- or 2-year window of exclusivity before the competition commoditizes their product.

Reply on news.ycombinator.com