Investors conclude that Tesla is a carmaker, not a tech firm
economist.com
economist.com
The idea that Autopilot has some magic sauce that nobody else can replicate is laughable.
* when in full-auto on a single lane road, when there's an exit on the right the Tesla 3 almost always slightly swerve towards the exit before coming back in its lane. None of the Megane, the EQE or the BMW i4 do that.
* To overtake a slower vehicle, the Megane and i4 are better : simply push the left blinker, then the car switch lanes and accelerates BEFORE having entirely switched lane, like a human driver would do.
* The mapping and charge planning on the BMW and particularly the EQE/EQS are arguably slightly superior now to Tesla (though Tesla is still a bit easier). Renault is very close, and Kia/Hyundai isn't far behind either.
Really? One of the main selling points for me is that the center screen in Teslas are actually usable, non-laggy POS like most cars these days.
But here's how the current Mercedes navigation looks https://www.youtube.com/watch?v=DCgy3askMcM The AR stuff works really well and is arguably way ahead of anything Tesla offers.
VW is the only one still shipping a piece of crock.
A minor nuisance. Unless you happen to be at the ready attentively double-checking whatever the assistance is doing - then it must be infuriatingly annoying! Guess what you're supposed to be doing, all the time...
For example, motorcyclists depend on inferring behaviour more than the average driver. Someone swerving towards an exit is far more reliable an indicator of them taking it than a signal - many drivers don't bother using them.
Many bikers I know avoid Teslas like the plague, as they're deeply difficult to read at best, and lethal at worst.
It is critical to be aware of the surrounding traffic, and recognizing the driving style — the wheel angle and the current balance/attitude of the cars — is critical to understanding what they'll do next.
Just one example a while ago in traffic on a highway, I slowed a bit and moved to the other side of my lane, barely thinking about it. Seconds later the car on my left suddenly drifted into my lane, right where we would have been and only feet off my front bumper. My wife exclaimed "How did you know that was going to happen?!?", and I said I'd just noticed in the corner of my vision an odd wiggle in their front wheel, like the driver's attention or direction was off.
Sussing out what a driver is doing with any intersection, regardless of their signals, is key. Are they actually setting up to turn or stop, or just going along ignorantly?
So far, I haven't yet noticed anything big from Teslas, but although I've done a lot less driving since COVID, I still have noticed that their road positions and attitudes are, ummm unique. But really good to know about this fake-move towards the exit lane — very helpful — Thanks!
Any traffic participant (of any type) behaving sufficiently differently than the fat part of the bell curve for the situation (traffic, weather, location, vehicle type, time of day, etc) they are in is dangerous because they violate the expectations of all other road participants have for them. Other road participants need to be able to make reliable enough and accurate enough predictions of future state for things to work properly. This holds regardless of human or computer.
And honestly it's less inference and more "I assume this person is going to try to kill me. How would they do so and how do I avoid that?"
I haven't ridden in years, but even in my car I'm allergic to being in someone's blind spot.
It wasn't a great first user experience to have the car immediately drift right towards the guardrail crusher.
It's entirely possible that is an unsafe-at-any-speed configuration.
Teslas do this in FSD mode.
No need to buy a $x FSD Tesla to get some extra.
None of that is why Tesla was ahead of everyone for so long.
It's because their cars have better range, and Tesla is still the range leader. They held four of the top six spots in 2022, and the number one is the Lucid Air (only 3k of them have actually been sold):
https://www.caranddriver.com/shopping-advice/g32634624/ev-lo...
Also, I just want to say I am categorically not an Elon or Tesla fanboi and I am rooting for other brands to meet and exceed their range performance.
https://www.cnbc.com/2023/01/03/south-korea-fines-tesla-for-...
As a Tesla owner: range and ambient air temperature are significantly correlated (i.e., your 300 miles of range plummets to ~120 when below freezing).
But, on a good, sunny, warm day, their range claims are correct.
I say this as someone who owns an electric car by a different manufacturer.
This isn't a defensible position though for Tesla. New charging networks are coming online at a furious rate. I'm not sure maintaining their own network makes sense unless everything becomes compatible and they use it as an additional revenue stream. But for them to compete when every other auto manufacturer is subsidizing shared networks is risky.
In the US.
And the US drives these crazy valuations.
I wish the EPA would clamp down on manufacturer's range estimates, as those ranges are theoretical (perfect driving with no real acceleration, no climate control, etc). We need practical city/highway range like we get for ICE cars. My EV6 is rated at 310, but driving as conservatively as possible in Houston I get more like 285. On a road trip where it was mostly exposed freeway and cruise control, my range was closer to 220.
Should also probably disclose range in freezing temps as well (I'm in Houston so I don't consider that as much as others). The first manufacturer to solve that problem well would possibly be a better car than one with a larger theoretical range.
"Every Tesla we've tested has failed to hit its EPA range estimate"
https://www.edmunds.com/car-news/electric-car-range-and-cons...
I don't think Tesla is as far ahead on range as everyone thinks. Highway miles are what matters and Tesla tends to be optimistic on their numbers.
The only cars that get the 'A' rating on that spreadsheet are the two Model 3 cars (316 mile version, and 200ish mile one), the 62kWh Nissan Leaf (216mi), and a bunch of super low range cars where efficiency is easy, since weight is way lower.
Competitors are catching up, yes, but they're still pretty far behind in the efficiency game... which means that Tesla can produce quite a few more cars for the same amount of raw battery pack. Which drives better margins and more production capacity.
The competitors also charge much less quickly, so there's some optimization there that they lack. Like, on paper they can do 250 kW but you never get more than 100 when actually charging it etc
The ,,false advertising'' that others say come from the fact that when you drive fast it doesn't matter how energy efficient you are, so it works out only with low speeds.
I don’t know if people have heard, but China is one of the bigger market. Heh.
Is this something you see as a benefit? For me Tesla's overall aesthetic, including both their exterior looks and interior design, along with the absence of physical controls that go long with that represent their biggest downsides (outside of build quality).
I wonder how long Tesla can get away with not offering CarPlay/Android Auto functionality. The lack of that basic, cheap, and frequently used feature disqualifies any car from consideration in my view.
What's REALLY bad though is that other manufacturers rushed after Tesla and turned their brains off. Now we have a bunch of electric cars with crappy plastic interiors (light weight for range) and shitty tablets as user interface. Some are recognizing these horrifying mistakes that will cost lives but it will take years to recover because a lot of projects are too far ahead already to be changed or canceled.
I mainly speak from extensive experience with Volkswagen - the crappy capacitative touch buttons on the steering wheel will finally go. The new CEO Blume is not as blind as Herbert Diess - he doesn't view Tesla as the second coming of the iPhone, especially since Teslas continue to stagnate in quality and other manufacturers are quickly catching up.
Good luck outproducing Hyundai, Kia, Volkswagen, BMW, Audi... time was Teslas ally especially because Toyota kept insisting on Hydrogen cars for so long and VW fucked up software development so bad with CARIAD that Konrad Zuse is spinning in his grave ready to produce energy for all EVs sold.
I credit Tesla with 2 things:
- Opening the EV market and pushing other manufacturers to invest
- Great engineering regarding battery and range (in the past)
The list of issues is longer nowadays and I am not willing to forgive quite as much as in 2014 with great alternatives on the market.
> Is this something you see as a benefit?
Yes. It's a distraction free operating environment. Tesla's aesthetic choices are semi-scandinavian/Ikea. Minimal doesn't have to be that style specifically. The early New Beetle did a passable job. The typical car is like MS Word with every ribbon open at once. A minimalist interior is focus mode.
I cannot activate most controls on a Tesla without taking my eyes off the road.
They also seemingly refuse to keep the GUI stable for more than three or four months at a time.
The interiors though are pure trash. They look unfinished and designed by Rule of Cool, instead of practicality.
Which are all gimmicks.
The vast majority of people don't want that from a car. I've been in Telsas plenty of time and absolutely hate it. Yeah it looks cool for a moment, but I would never want that.
It really doesn't help when the leadership of said car company is erratic and eroding the goodwill of the brand while people generally feel comfortable with more established carmakers. I feel pretty confident that major automakers are going to be around in 10 years. Buying a Tesla already feels like a bit of a gamble to me just because of its newness.
With an economy that's already slowing it could really hurt them when it's likely fewer people are buying cars and will be more cautious about it when they do. "Maybe I'll hold off another year and see how the new crop of cars compares with the Tesla."
https://twitter.com/TroyTeslike/status/1609346097733828609?s... (This is the most recent data made public, the Patreon data goes through Dec 31 with the numbers quoted)
[0] https://www.torquenews.com/14335/tesla-sweetens-deal-discoun...
I still don't get the 'look good' part, why do non-ICE cars always need to have a different look that what is already popular/proven in the market. The traditional automakers are still doing this today with their first big pushes in EV. If they don't sell they'll blame 'the market' for not wanting EV, but in reality it could be folks just aren't interested in the design / don't what to make the fashion statement.
"We have tens of billions and tens of decades invested in 'perfecting' ICE. This is a huge upheaval" is an attitude I'd expect any of them to take (while still recognizing they need to see where the market is heading and planning for that).
It's also starting to creep into the mainstream consciousness that EVs aren't a good long-term solution to our poor transportation system.
They want everything in the same darn place that 99% of cars have it, with physical switches to be able to change things so you can just feel what you are doing without taking your eyes off the road.
Most people see the interior of a Tesla as a complete gimmick.
This is pretty much the definition of a great tech product: it's ahead of anything else by N years. What makes a great technology company is that they manage to consistently maintain that lead with product after product.
We'll see if Tesla can maintain its lead. It's not looking good and it probably depends mostly on whether or not Elon Musk can regain his grip on reality.
They do have one major advantage, which is why I still drive a Model S, and that's the Supercharger network. It's a big deal for anyone who regularly drives a few hundred miles in their EV.
Tesla are 5-10 years ahead on profit, due to adopting cost savings such as no buttons, more miles per kwh, thus smaller batteries, casting most of the body in 2 or 3 pieces.
And then there's in house software creation, vs everyone else. Software makes their use of their motors more efficient.
That's before you have the problem with how to get rid of your non EV business.
Then you have battery tech, opening lithium refining facilities, owning more of the supply chain. Everyone else will be paying extra for batteries for decades.
You think automakers don't know about software? You do realize that what the ECU has to do to keep internal combustion engines running as efficiently as they do today is at least an order of magnitude more complex that electric motor management
> That's before you have the problem with how to get rid of your non EV business.
That's an asset, not a liability. Some places in the world are unlikely to have the infrastructure to support a conversion to EVs in the next decade or two. It doesn't mean we stop trying but having mature technology that you don't need to invest a lot in to support a niche use case is a good thing, not a bad thing.
> Then you have battery tech, opening lithium refining facilities, owning more of the supply chain. Everyone else will be paying extra for batteries for decades.
There's no reason to believe that Tesla's suppliers will remain exclusively theirs unless they've signed massive longterm deals that the public is unaware of.
https://www.teslarati.com/volkswagen-herbert-diess-third-par...
Tesla will be Tesla's supplier https://www.bloomberg.com/news/articles/2022-10-19/tesla-con...
Judging from my experience with cars' integrated sat-nav, speech recognition and bluetooth hands-free I would say most automakers do not consider good software to be a priority.
Many Chinese companies are multifaceted or have co-ownership with suppliers. For example, look at a company like BYD, which appears to be out producing Tesla and has yet to fully enter many markets. They also build their own batteries. The Chinese motor industry is a formidable competitor.
This shouldn't have to be a position that requires any kind of defense or explanation. There's nothing contradictory about believing that:
1) A company makes a great product 2) The quality of that product and its total addressable market justifies the company's value at $X 3) The market cap of that company is far, far higher than $X
Apparently GM's Supercruise is better, and cheaper.
I got enhanced autopilot in my first Tesla. Except for changing lanes, things like summon and autopark are just toys. The auto lane chance is so glitchy I decided I was better off saving seven grand on my second Tesla.
But if Enhanced Autopilot was 1-2 grand, I'd have bought it without regrets.
Seven grand for a software update sounds like a ripoff. Especially just for lane change.
https://www.autoweek.com/news/technology/a42268159/general-m...
If that's the case and any manufacturer could just license Waymo's tech I'd think that relying on Telsa to win at autopilot is suspect.
But, in general, Supercruise is hands-free and doesn't require jiggling the steering wheel every 30 seconds.
From what I understand, Supercruise is a lot more limited in where it'll work, compared to Autopilot.
But, EV market options are so limited that the differences really don't matter, unless that kind of functionality is top on your list. In my case, I bought a second Tesla because of the charging network, and because I needed a 3rd row.
https://www.cnbc.com/2022/12/21/test-driving-gm-ford-and-tes...
Look at all their other efforts to enter areas with a dominant player. People were saying Spotify was doomed when Apple Music launched, yet it has barely has an impact (even though Apple had a massive amount of expertise and industry connections in music). Their social network (Ping) was an instant failure. Hopepod couldn't compete with Echo and Sonos. They tried multiple times to get into video gaming and went nowhere (Pippin, Arcade). iAd was dead in the water when it tried to compete with Google and Facebook. Same with Maps, MobileMe. Heck they are even having trouble with a wireless charging pad, and have basically conceded the market to Qi.
Dominance in one sector rarely extends to an unrelated one regardless of how many billions you throw at the problem.
Do you own any Magsafe devices? Their Magsafe implementation is like magic and its extremely practical. It (among many other things) has essentially locked me into iPhone ecosystem for good.
https://www.tesla.com/ownersmanual/model3/en_cn/GUID-F907200...
Edit: yes meant FSD
To dorks who believed the hype, yeah.
I'm not sure outsourcing manufacturing and focusing on design works in auto industry - but could be wrong.
1) manage supply chain (hardest part) 2) spec parts (establish quality metrics, change small aspects of design) 3) come up with car concepts 4) assemble parts certain components (e.g. weld the frame, install all the premade parts)
They are not building or designing every component in a car - not even close.
https://www.foxconn.com/en-us/products-and-services/event-hi...
We'll see if it works out. Seeing as how they're Apple's biggest partner I'd be surprised if Apple one day doesn't design a car. EV's are simpler, eventually they'll all be fast and have 500 mile ranges. The platform won't matter, so what sells the car? Design.
They outsource their manufacturing to Magna Steyr.
I'm still young, but hearing about this kind of feature makes me feel like a luddite. I just don't get it. Is it so passengers can play while you're driving, or just to play while the car is charging/you're waiting somewhere?
Openpilot by comma is very equivalent to autopilot (not FSD) and can be added on to a boring cheap car (depending on that car's compatibility) like a prius, corolla, or sonata, all for just about $2,000 dollars. Granted, it's a "dev-kit", requires a bit of research to install, but if you can pass the barrier it's really equivalent to autopilot and available to consumers at a price point that Tesla is not.
And if you don't want the latest and greatest (comma 3) you can get a used comma 2 or a comma knock-off "Mr One" for a few hundred dollars and still have an excellent experience for basic level 2 functionality (automated highway navigation, essentially)
OK but we don't even officially know if Apple is trying to make a car?
>The idea that Autopilot has some magic sauce that nobody else can replicate is laughable.
The idea that a very difficult, innovative software problem can't be just replicated by legacy auto manufacturers who lack software engineering expertise is not laughable at all. The legacy auto manufacturers will really have to prove themselves here and so far they have not.
Paying a premium for Apple smartphones hardware and software is a thing, paying same percentage premium for a car is a lot different, it's a lot more money.
Whether Apple can make a car better than Tesla is a moot point - Tesla isn't able to make cars as well as the other global automakers. Their whole schtick was the EV drivetrain. That's what set them apart from everybody else. It was never build quality. Now that governments around the world are essentially mandating EV's the global automakers are now entering the market. They have the know-how and experience in all the other areas of automotive manufacture that Tesla does not.
Bottom line: Tesla has had to come up-to-speed with the entirety of automotive manufacture and still aren't there. The global automotive manufacturers only have to come up to speed with an EV drivetrain, a drivetrain they've been experimenting with for years. Want to bet money on who's most likely to win the market?
Apple would be fools to enter this market and their investors should howl if they were foolish enough to do so.
The real question is whether the high-end car market is large enough for Apple to bother with.
Still... that doesn't mean the stock is infinitely valuable. Presumably the market will shake out and TSLA will end up with a valuation kinda high for a car company, but not in tech-company range.
I believe Tesla holds - or, held - a similar position. They had a head start in many areas, but they could not keep it up.
One big difference is quality; Apple phones have great build quality, always have - although they had issues with bending and holding the phone a certain way iirc. Nothing like that in recent years though. But Teslas are known for poor build quality, mainly in the bodywork - expensive construction methods, poor and inconsistent spacings, etc.
Tesla hasn't innovated in recent years. Their last 'big' one was announcing the semi, cybertruck and a new Roadster, but it went radio silent for all of those for years after the announcement until recently when they finally started delivering the first semis.
Apple on the other hand has consistently released a new phone every year since the iphone 1, and more models and innovation to boot.
Tesla had so much money but they don't seem to have invested it efficiently. They also failed to advance their self-driving much further, which seemed to be the USP they were pushing for for a while.
Its owner messing around with the stock price by announcing a privatization, then buying Twitter on what seemed like a whim was another big issue of course. He lost a lot of credibility over the years.
I think Tesla will pivot from a car manufacturer to a battery manufacturer, and that its long-term strategy is its Turbocharger network. Electric cars are here to stay, and whoever owns the charger network now will benefit for a long, long time - like the oil industry has for a hundred years on fuel.
Pocket PC was a thing and it was great.
We have come so far in human progress that nobody invents something that is ‘miles ahead’ of everyone else.
What people do is they manufacture a narrative which purports such claims and shove it down people’s throats.
That is even more true in a sector which is almost 200 years old such as automotive.
Tesla buys their batteries, though. They could/should sell the motors perhaps?
I think this counts for more than people realize. Similar with Facebook/Zuckerberg and Amazon/Bezos. The most effective founder CEO, in my opinion, for a large company is one that stays generally unknown to the public.
Tesla went from cool (I personally thought a Tesla was much more desirable than a traditional luxury car like a lambo) to kinda cringe, in large part because Elon Musk is broadcasting cringe on the daily to anybody who will listen.
It continues to amaze me how investors seem bamboozled by the appearance of "tech company-ness", by businesses which are obviously in markets that don't support the high price to earnings of "tech companies"--valuations which are premised on strong network effects (present, to a degree, with Telsa, in the form of the charging network--but they will open that up to other carmakers, I guess?) and low unit costs (um, not for cars), and which fundamentally make no sense for things like retail (high unit costs, no network effects) or scooter rentals (high capital costs, high unit costs, limited network effects).
But investors--showing the wisdom of crowds, I guess--seem frequently unable to look past the shiny CSS and the fact that the founder/CEO wears a turtleneck and the headquarters office has a beer tap.
These people don't actually care if PLTR hits 500B in revenue in 2035, they just want their stock price to go up 10x this year.
I don't do a lot of individual stock picking, because I can't be assed to look too closely at fundamentals and I don't think I have a good enough pulse on the public opinion that I can predict who Redditors will think is a sexy CEO next.
They’re not like the other companies listed.
Why do investors price so highly these gambles over things that are already generating demonstrable value for real human beings?
Like, why do these cultural signifiers make them salivate to be parted from their funds given the track record of tech (20% fail in year 1, 1% become unicorns, 18% of first-time founders generate a company that can even tread water)?
By that measure, Apple and Google aren’t tech companies. (Apple sells devices to consumers. Google sells ads to companies.) They are. They just aren’t software companies.
I think there's an inherent distrust (which I share) of giving technology the power to end our lives with one bug. Trust in technology, in general, is pretty low right now, so that reflects back on perceived future technology where one bad steer or missed brake ruins your life. Although I happen to share this pessimism with the human aspect of driving as well, I've almost died before because I wasn't focused while driving (IRL nerd sniping basically), and I know it could happen again in the future no matter how much I want to be a safe driver.
The truth is, if full self driving cars actually happened, with safety statistics better than humans and with a low barrier to entry, you can bet that people would change their opinion real fast. Much like Americans who have a revelation after experiencing European or Asian public transit, the realization that they could have an extra hour per day that was previously spent staring at a road, would be a big motivator to change opinions on technology. Add in that three of your friends already use it daily and they're not dead yet, and you rode with them and it seemed like a safe driver.
The problem is that will not be the expectation. It will need to be perfect or near perfect.
full self driving cars can drive a million of miles with no accident, but if on 1,000,001 miles there is a accident with a death it is all over the news, and people proclaiming the technology is terrible, unsafe and not ready. In that same 1,000,001 miles humans have caused far more damange and death but that is just "normal" so....
I think this is the wrong counter-argument against self-driving cars being viable.
If the median answer is $0 and there were a lot of negative answers then that means there's a lot of positive answers. Just sell the cars to those people!
Not everybody wants a self-driving car just like not everybody wants a big mac. Hell you probably need to pay some people to eat a big mac. But theres enough people that want a big mac that despite that fact it's a huge business.
A lot of danger of motor vehicles is when motorist choose to be dangerous though. If self-driving cars force motorists to follow speed limits and other traffic control devices, that will limit their uptake by quite a bit I think
If it's true that self-driving is likely to be developed in the next 10 years than Tesla and Uber are good investments, because there's a reasonable chance of a world-changing, market-monopolising product making your investment incredibly profitable.
If self-driving is unlikely in the near-term then Tesla and Uber are not so attractive - you're looking at investing in an overvalued electric car manufacturer with limited production and a money-pit taxi operator, respectively. If a moon-shot innovation like self-driving is still likely in the next 25 years then on the other hand there's not a whole lot of reason to believe that these companies are the one's that will get to capitalise on it, rather than the established (cheaper) manufacturers or some new upstart. There are far safer investments out there.
All that's happened here is that people have lost faith that these companies are likely enough to develop a world-changing technology to justify their recent high stock prices.
Yeah but this is colloquial speech, the probabilities are there just implicit because it would be exhausting to make this explicit in everyday speech.
Did investors really believe that? I don't know a single person who believed that years ago when the pre-IPO valuations were going through the roof. I maybe knew a few people who believed it was possible one day but not anytime soon. It's wild to me that so called sophisticated investors really believed that in the not too distant future uber would have a fleet of driverless vehicles shuttling people around.
FWIW, I don't believe we'll see anything like that in my lifetime (I'm 37). The last few years of development in this space, for me, have proven that it's a much harder problem than people thought and that the early big improvements in the tech gave people false hope.
There was a weird period a while back where basically everyone except people who actually worked in the area seemed to believe the self-driving car was nigh.
They didn't. I don't know what OP is talking about. Uber's self-driving initiatives were always a moonshot.
Perhaps some people did give a negative answer, but that isn't really why the median is zero. If you asked 100 people, and 51 said $0, and the other 49 said anything else at all (including all saying $1m) then the median would be $0. No negative answers needed.
Source? I struggle to even find it mentioned in Uber’s S-1 [1]. (To say nothing of Lyft.)
[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9a...
A robot driving your car? Where's the fun in that?
The promise was, that it will be here today. And this is clearly not happening and this is (one reason) why people feel bullshitted and so the trust and the stock go down.
So I also would not bet, that in 10 years FSD is ready, but I certainly see it as a possibility.
So when I see these driverless cars in my neighborhood with no one in the driver's seat, is that just my imagination?
Huh? What? No. That's not where the valuation came from. To be fair to Uber, they created a new type of market for which there was an immense demand for. Their self-driving initiatives were a moonshot and maybe got some people excited and therefore invested in Uber (see Tesla/Musk), but not quite the same as saying it drove their valuation.
>Tesla, ... were priced as if self driving cars are almost here.
Tesla was/is a hype stock based on the personality cult of Elon Musk that stemmed from being first-to-market with EVs. The valuation wasn't really driven by whether or not Tesla cars are self-driving.
Yes, Tesla customers and investors believed it because of the personality cult of Musk, but there was an actual (albeit wrong and likely deceptive) business proposition that gave investors a reason to value it as being worth more than all the other auto makers put together. That proposition depended entirely on FSD being only X years away and that Tesla would produce the best FSD product.
https://electrek.co/2019/07/16/tesla-cars-worth-100k-200k-fu...
The promise was "buy this car and soon it will self-drive" (and for Uber it was "Never mind we don't have a sustainable business model now, we will soon with self-driving").
The shares were around $20-25 (today's worth, taking in account the splits). I do not see any reason why it would be worth more than that.
- Roadster and Cybertruck are not only late, they were even removed from their landing page. DOA. Ford, Rivian and even GM brought solid product (pickups) to the market and the fat cake is being eaten. - Semi was very late and doesn't look too promising. - FSD turned from an advantage to a huge liability. I believe it has now a negative value (current and potential future lawsuits). - competitors started producing comparable or better cars at better prices (VW ID3, Mercedes EQE, any EVs from Hyundai/Kia) - there's a strong perception of Elon being bored with Tesla. We've got a billion dollar ship with no captain.
I do not believe in Elon's political involvement having such a great impact, other than taking his attention away.
No, Tesla is still very overpriced for a car company based on hype.
Tesla: mcap $388B, debt $9B, op income $12B, free cash flow $9B
GM: mcap $49B, debt $110B, op income $10B, free cash flow $1B
Ford: mcap $48B, debt $139B, op income $11B, free cash flow $3B
Tesla makes more money than Ford or GM, while having much less debt. The fact that they sell fewer cars means their margins are higher, and they have more room to grow. Maybe they shouldn't be worth eight times more than Ford or GM, but they should definitely be worth more.
And if you believe that the industry is going electric, then Tesla is already there, while legacy auto has a lot of work to do, and Tesla's low debt load makes them better positioned to do lots of R&D.
It is totally valid to criticize musk for not delivering a full self driving car on when he said he would, but that hasn't put the profitability of the company at risk. If GM cannot deliver a volume Car at a profit in a world where ICE is illegal what is going to happen?
Edit. I'm not implying that Tesla is fairly priced, underpriced or overpriced. But this whole situation reminds me a time when I invested in Tesla IPO after reading lots of "Don't DO IT!" articles in media.
Tesla: $31.0 bn
GM: $65.3 bn
Ford: $42.1 bn
Tesla doesn't have this overhang and is also growing very fast.
It's a brutal business, which is why I think it's fascinating.
It's not going to completely correct in a day. As you note, its value may be inflated by two orders of magnitude. Musk's hijinks with Twitter have cost him dearly in investor confidence -- both indirectly, as his behavior there is erratic, and directly, as his loans for that deal are backed with Tesla stock. And then there's the non-delivery of FSD, which is the real "dream" that he's been selling so hard.
My guess is nothing. Investors just piled on looking to make a quick buck on a rising stock, and it fed an enormous bubble. Money was looking for somewhere to go. The market is only rational over a very long timeline.
The companies with the most debt were the ones to gain the most. Those promises did not age well however and valuations are still correcting from that.
Electrification of cars, while critically important for the climate, does not open an entirely new modality of life in the way that cars initially did. It's not transformative as a business model.
Therefore, unless they cause a major behavioral switch that is monetizable, EVs will just eventually replace the current car market. Tesla's potential growth as an EV maker is directly proportional to traditional automakers' car market loss, to the extent that happens. Does that justify a 10 or 20x valuation? Only if you think they will reach dominant global market share of all cars. To do so they would have to have an non-replicable comparative advantage, which they have failed to demonstrate.
And the 2022 re-reveal (in which humans have to push it onto the stage): https://twitter.com/BriannaWu/status/1576021072239300608
So to call it a leading robotics company is just so strange since they are just entering the space.
You can see that Asimo has very capable hands, which even boston dynamics robots don't. Just like in art, the hands are the hardest to replicate.
My suspicion is that in the next 5 years or so, Rivian, Lucid, and similar startups will be defunct. I expect Tesla to persist long term, as their financials are decent now. Though I think their product strategy is very non-conventional and if consumers aren't convinced by it then it could be a stumbling block to their future success.
I think the bigger question we should ask ourselves is, "What is a tech company?"
Are you saying the Gigafactories are not making batteries at all?
https://www.cnbc.com/2022/09/20/tesla-megapack-battery-caugh...
Grid storage might eventually be a major business for Tesla but I doubt that it will drive huge profits. They don't have any unique sustainable competitive advantage and the customers are extremely price sensitive, so I expect long term profit margins to be low.
"tech" as it's called benefits from a non-linear scale factor: serving one more person does not directly correlate to a static increase in cost, it's more derivative in nature (cost increases onefold with each order of magnitude). Add to that globalisation for free. That's how you can expect more growth and revenue from a "tech" company than from traditional industries. Service has an almost 1:1 relationship, manufacturing is kind of in the middle, where you benefit from scale but still need to purchase matter, and time from people to build stuff.
In that way tesla is not a tech company. To build an additional tesla you need more people and more robots. You need to purchase steel, lithium, leather, etc. You need to ship that Tesla. Growth doesn't come to them at a derivative cost.
As an investor you might judge that they might have better software, or better cars, and ride a wave of electrification that other manufacturers don't, which justified a higher price because their potential for growth is higher. That's not entirely true anymore, everyone else is producing electric cars now, at prices that are often cheaper, so their advantage is not that big anymore.
But actually no, in the age of 24/7 viral digital titilation, manias have been upgraded to hysterias.
Once the dust of this cycle settles the tangible "tech" advances booked will actually quite meager and people will not believe how many got so excited about so little.
Entire theses and books will be written about how general STEM illiteracy and FOMO coupled with unprecedented liquidity create fertile soil for all sorts of bizarre collective phenomena.
Car manufacturing will be a more valuable industry as EVs become the standard, but definitely not fast enough to quadruple the value of the industry in a handful of years. Not unless we start overvaluing every company like Tesla.
Her valuation makes sense if you think Tesla's going to dominate the car industry and robotaxi and displace truckers with FSD and have Tesla robots replace all factory workers and nurse, rent out the supreme dojo chips to the whole world, etc.
* This is an oversimplification and financial firms do provide very valuable services and products to customers and clients around the world.
Tesla had its decade head start, and it did amazingly. In my opinion, however, there is no way it can compete with the entire ecosystem of high-tech plus the manufacturing knowledge of the major car companies.
It's still WAY too overpriced to conclude that investor consensus is that it's just a carmaker. Market cap has a long way to fall before that conclusion holds.
It's currently 7x the value of Ford with a fraction of the production.
Saying that Tesla is a 'fraction of production' is just an incredibly ignorant analysis of a company.
Real estate companies, same thing.
Cab companies, you know the drill.
So being one of those, but with computers & the web, does not permanently lift you out of your lane. Tesla is a car company, WeWork is a real estate company, and Uber/Lyft are cab companies.
Any other company that would miss release dates as much as Tesla does would have crashed by 90% by now
Elon's "genius" is that he pushes companies to take bigger than normal risks. But then he gets lost in survivorship bias. Not an uncommon trajectory in business.
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The Good:
I remain excited by their large die castings, aka gigipresses. It seems to me this will lead to better fit and finish (eg. the unforgivable panel gaps).
I support their cradle to grave supply chain integration.
I like that they make their own tech such as chips and batteries.
IIRC, Tesla leads in reducing part count and labor hours.
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The Bad:
Terrible labor relations.
Psychotic spokesmodel.
Declining brand value.
Reportedly poor quality software.
Bad FSD strategy. No LIDAR, wtf?
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The Unknown:
Future cost of capital? Tesla previously had some clever sources of revenue. Govt investment, incentives for EVs, selling emissions credits to other OEMs, customer provided capital thru pre-sales. What's Tesla future play?
Tesla could offer auto insurance, capturing some of that idle capital, a la Buffet & Geico.
Employee morale. Compensation thru stock options is fantastic for growth companies. With the recent devaluation, I'd be super pissed and looking for a new gig.
Their rollout of the 4680 battery with new chemistry seems to troubled. This seems important.
Can their reboot of FSD R&D catch up? New team, finally accepting need for LIDAR, etc.
Rollout of Cybertruck seems contingent on 4680 transition. What's plan 'B'?
Will executive board (investors) boot Elon Musk? He really seems like Tesla's ongoing biggest risk, biggest liability. ("Thank you your service, here's your award plaque, now please go away.")
The valuation of the most valuable car company in the world has fallen 70% in the past year. Tesla has shed more in market cap in the past year than the GDP of most countries. How is that not remarkable?
It's emblematic of the collective insanity of tech investors in the past couple of years - that's the interesting story, and that's where the criticism lies. Tech investors have made comically bad, bad bets industry-wide in recent years, and Tesla has been one of the biggest.
It's not overly critical to think Tesla's valuation has been insane and unjustifiable, or that it's "just a car company". At least saying it's "just a car company" is admitting that there's some fundamentally valuable business behind it, unlike some other money-pit companies out there.
The whole FSD debacle feels like people just arguing semantics and gotchas. I recently watched some videos of FSD operating in tight, hilly and unusual roads in CA. I was very impressed, its obv not perfect, but its fucking cool. People here made it sound like a scam.
The whole 2010s was a debt driven economic cycle. Very cheap money for those who can dream up a use for it. And some people are great at selling dreams.
He bought into a car company that made no cars. The people trying to imply he bought his way into the auto industry are trolling just as much as Elon does all while complaining about Elon trolling. Sure he wasn't a Founder of Tesla in the technical sense, but everything important that happened, happened after he bought it.
We (US) really need more competition in this space.
You of course can think whatever you want, but it seems to me that many people, myself included, once felt like you do about Tesla and Musk. But for many of us, his actions over the past several years have caused me to adjust our perspective. I no longer believe he has good intentions, or will deliver on most of what he promises. I wouldn’t buy a Tesla at this point, and I definitely would have a few years ago.
I’m just curious if you’ve thought about what might make you adjust your view of him.
Things that turned me off:
- Many times under warranty getting stupid things repaired that were clearly manufacturing problems or just boneheaded mistakes when putting the car together. Crazy for a $102k automobile. - Once warranty wore off ran into an issue where the car warned me it might not start again and it needed service immediately. Tesla scheduled my service 2 weeks out and charged me $1000, for something that when I googled it was a common problem and that the service center told me wasn't something I had done. At this point I was pretty frustrated. - Elon's antics: when he called one of the heroes who rescued those kids from the cave a pedo to sate his own ego I was flabbergasted. I've paid more attention to his actions since then and they've only made me think less of the man. I truly think he has done too many recreational drugs and has destroyed his mind.
This article is referring to the term used in more of a financial context - referring to how the company will grow and scale. In this context, "tech company" refers to a company with very low marginal CoGS that exponentially decays with scale.
The distinction is highly relevant if you're deciding how to value a stock. For whatever reason the public markets had been valuing Tesla (and every other EV startup) as though it was going to benefit from tech-like high margins and free distribution.
"And the natural Tesla-owners among the wealthy progressive set are less prepared to overlook Mr Musk’s libertarian antics at Twitter"
banning journalists and parodies he doesnt like == libertarian, got it!
Data isn’t what makes a tech company successful. It’s the application of that data into a product. They have Autopilot as their seminal data product, but it is buggy.
The one who reigns the era of automation and AI will be the one who possesses all our data.
--I want to target my new car advertising campaign at any Tesla owner with FSD that recently had a wreck or near-wreck.
--I want to target my bloated overpriced techy product that will collect all sorts of personal data specifically at Tesla owners as they are clearly okay with this behavior.