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Comment by arcticbull | Hacker News Reader

Apple owns 75% of the entire profit share of the global smartphone business while making 13% of the phones. Tesla isn't even close to that kind of performance.

[edited, I mistyped 75% as 85% initially]

[1] https://www.counterpointresearch.com/global-handset-market-o...

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Not yet. But Tesla's P/E is 147 now at this quarters' rate of profit.

That's nothing for a company growing revenues at over 50% while still increasing its margins.

Also, Tesla is still production limited (i.e they would steal their competitors' market share if they have a few plants available). The only market where Tesla is not growing its share steeply is where they decided not to prioritize sales. Just look at the Model Y sales in Europe where they finally to make deliveries.

Tesla don't even have a pickup to sell yet, which is USA's #1 model.

Totally, and at some point in the future, if they're super lucky, they might be worth something around half of what they're worth today lol. I don't think they're going to grow the car market, which means they're worth at most what the car market is today. Further, I sincerely doubt theres a world in which they own 100% of the car market, so that means it's overvalued both now and into the future.

Toyota's worth 300B and they have excellent industry-leading margins. Tesla is priced at 900B while shipping a tiny fraction of the cars.

[edit] Tesla shipped 241,000 cars this quarter. Toyota shipped 2.2M. Tesla's car deliveries are literally a rounding error against Toyota's. It would take 6 years of 50% YoY growth to match Toyota's shipments alone this year.

[edit2] Toyota's PE is 9.6, so once mature, Tesla should also trade right around a 9.6 p/e, if they're really lucky.

[1] https://www.statista.com/statistics/267272/worldwide-vehicle...

I would gladly bet on a company making 241,000 computers vs 2.2M typewriters. I get your logic and math but this isn't apples to apples.

Market valuation depends on expected future profit margin per car. Not on how many million low margin cars you have already shipped. Walmart has the highest revenue, while Apple has the highest profit. Shipping a bunch of low margin stuff is of little value.

The market expects tesla to beat Toyota by an order if magnitude on profit margin per car. As simple as that.

But they won't, and I don't know why anyone thinks that they will.

TBH, that's a prediction of the future that you haven't substantiated.

The fact that the have insane YOY growth with 14B quarterly revenue, are supply constrained - not demand constrained, have very high profit margin per car if you exclude new giga factory investments is sufficient to justify the stock price.

Again, that doesn’t make sense. Apple being the obvious example. You don’t necessarily revert to a market cap maximum. EVs can have high margins and scale. Tesla is positioned as the Apple of its market.

And its business is more than vehicles - a lot more. Stationary batteries also have fat margins.

At scale at current margins, Tesla will be substantially more profitable than traditional car makers.

How will Tesla keep current margins once every other car company is releasing high quality electric cars?

> Once every other company is releasing high quality electric cars?

Like who exactly? Only the American automakers are taking this seriously. Most have them have a target of maybe 50% of their offerings to be electric by 2030. Some European brands are now starting to play serious VW at the forefront of it. And the ones resisting the most are the Japanese. Mazda doesn’t even commit to a hybrid and realizing more efficient ICs coming soon in 2024. Toyota and Honda are actively seeking to block incentives to EV makers.

And even if startups like Rivian or big players like Ford,GM and VW eventually start making cars at a much better quality, they still have to match the level of vertical integration that Tesla has. The lead they have is no joke.

Audi doesn't even have an R&D team for engines at this point. They're all in on electric, Mercedes is on a similar track. I'm not saying other companies will catch up soon, but Tesla needs to sustain their advantage for literally decades for this valuation to make sense. 10 years isn't enough.

I've heard very good things about Fords EVs. Battery tech way behind Tesla, but they're already starting to take some of Tesla's market.

Audi is a VW subsidiary. And VW's CEO (Herbert Diess) has said they don't expect to overtake Tesla, they just hope not to die trying to survive the transition.

Diess also invited Elon to speak at an internal meeting, specifically to help them understand how to make the transition faster. VW wants to survive.

> Like who exactly? Only the American automakers are taking this seriously.

Sorry, what now? In Europe, Tesla's market share is below 20%, because they're being outcompeted by Volkswagen and Renault. But European car makers aren't taking EVs seriously?

Couple of things. 1. I acknowledged VW as the only group seriously invested in EV 2. The statistics you mention only Europe, but if you look at US market, two thirds of the first half sales this year was Tesla, the next two Chevy (GM) and ford. Total accounting for 80% of the sales. 3. In your statistics, Tesla + VW account for 40% of the market share in EU, but your statistics is based on including PHEVs which lets be honest, isn’t exactly the same product as a BEV. If you remove the PHEVs, then Tesla suddenly starts looking a lot better. 4. And even if PHEVs were part of it, the top selling cars include ford, Kia and Hyundai. Yeah, European car makers are definitely playing catch up (with the exception of VW like I said)

We've been hearing this since 2012. And yet...

Competing electric cars didn't really start being any good until this year. They will continue to catch up over the next decade.

Why now? Tesla are also improving and, from what we know, they're making bigger better (megacasting, cell to pack, FSD computers, etc). What's the competition's plan exactly? They'll be hard at work to try not to cannibalize their ICE sales in the meantime, too, since their resources to invest in BEV comes from ICE sales.

By 2026 the F-150 Lightning will be the #1 selling EV in America. That is a bet I am absolutely willing to make.

Battery costs. It has a substantial lead and should continue to as it is far ahead in terms of scaling and reducing cost.

You think Tesla will have cheaper batteries than literally everyone else forever? Incredibly hard for me to believe that at least one company won't be able to create a competing battery. Differentiating on hardware has never been a way to create a trillion dollar company. It requires lock in via incredibly brand loyalty and Tesla doesn't have a big enough customer base atm.

Not forever but long enough to become the leader. Apple continues to innovate despite plenty of opportunity for everyone else to catch up.

What current margins? At what scale? Toyota has a best-in-class 6% profit margin, substantially better than its competitors sitting at 3%, and earns 20 billion dollars. Even at the most optimistic margins Tesla is vastly overvalued.

Gross margins. Tesla is scaling right now and continuing to innovate on the tech side.

Ok, so what margin do you see justifying their valuation? 10%? 15%? The margins of a company like Microsoft who makes their money on software (30%)? Even if you used that last figure, they'd more than 80x over valuation on current earnings. This is a car company. There are fundamental limits on how much money you can make.

Didn't they say their operating margin is 14.7% and automotive is indeed close to 30?

Those include massive subsidies by the government.

Wasn’t the non-subsidy margin only like 5% less?

Current earnings aren’t really relevant when they’re poised to continue growing fast.

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