Ibime:



Ok, let's get back to numbers. Let's assume Tesla has a $25k car and sells more than VW, BMW and Mercedes combined are selling now.

Tell me why they should be currently valued more than Mercedes, Toyota, VW, BMW, Ford, Honda, GM, Chrysler, Peugeot, Nissan, Hyundai who already control almost all of the market and already sell most of the $25k cars.

The market has a finite number of car users so valuation must be tied to that. As for battery storage, I want to see how much of Teslas revenue comes from that which is less than 6% of their revenue. I'm not swayed by the salesmanship on Elon on Twitter who will make out like storing 10KW of electricity in batteries in Australia is the best thing since sliced bread. Energy companies who really do this will be laughing.

the future is battery, we are slowly moving away from petro carbons, if he achieves battery energy density of at least 50% that of gasoline, do you know how much that technology is worth, let's not even talk about royalties that it will fetch tesla

The company isn't just making cars, they have cytertruck and tesla semi

If what they are planning to do with batteries is successful, tesla will be the industry leader in anything battery, be it trains, planes, helicopter or ships

When amazon started, people thought he was crazy and never believed that he will dominate that sector globally

Abi it's blockbuster and Netflix

Tesla is doing to car manufacturers what iphone did to nokia

iamJ:
35% is alot and you aren't even considering the fact that they own most of the patents for the technology, each tesla on the road is feeding tesla valuable information

Self driving technology alone is worth billions, tesla is ahead by decades

Battery production is another cash cow waiting to be milked

tesla's capacity utilization is 72 per cent 72% is a big deal for car manufacturing company

They wouldn't own 50% of the market, they will own like 35% same thing they said about apple when android began to blow up, isn't apple still standing, make good products and people will place you above local brands

Tesla is not ahead of any self-driving technology. Waymo owned by Google parent company is a couple of years ahead of any competitors. Self-driving relies on sensors and maps, there is no kryptonite technology that Tesla has over anyone else.

Battery storage technology can easily be caught up, even the Chinese will do it and are already doing it, and have more EVs on the road than Tesla including buses.

Electricity storage revenue for Tesla is only 6% of their revenue, and is for storage of small quantities of electricity. Electricity companies have been storing electricity in grids in the Megawatts using batteries, compressed air etc for decades. Where Tesla is leading right now is in compact battery storage which can be caught up.

All these are just the same arguments we hear in the cult of Elon Musk echo chamber to justify some overvalued prices and keep such overvaluation going. Google through its investment companies also have thousands of technology patents and are at the cutting edge of many technologies but you don't hear them being hyped like Tesla because they don't have a personality cult following.

Ibime:


Tesla is not ahead of any self-driving technology. Waymo owned by Google parent company is a couple of years ahead of any competitors. Self-driving relies on sensors and maps, there is no kryptonite technology that Tesla has over anyone else.

Battery storage technology can easily be caught up, even the Chinese will do it and are already doing it, and have more EVs on the road than Tesla including buses.

Electricity storage revenue for Tesla is only 6% of their revenue, and is for storage of small quantities of electricity. Electricity companies have been storing electricity in grids in the Megawatts using batteries, compressed air etc for decades. Where Tesla is leading right now is in compact battery storage which can be caught up.

All these are just the same arguments we hear in the cult of Elon Musk echo chamber to justify some overvalued prices and keep such overvaluation going. Google through its investment companies also have thousands of technology patents and are at the cutting edge of many technologies but you don't hear them being hyped like Tesla because they don't have a personality cult following.

telsa have been very private about their self driving technology, msm will put waymo ahead of tesla cause theirs uses maths

Nothing in this life teaches faster than experience and that is what tesla is getting with all those cars on the road using autopilot

They are training the AI and making it much better


People in the know, know that tesla is far ahead even if they don't release information about their AI like waymo and co


Waymo is building a child, tesla is training a child

Happy new year people.


How we dey?

iamJ:
35% is alot and you aren't even considering the fact that they own most of the patents for the technology, each tesla on the road is feeding tesla valuable information

Self driving technology alone is worth billions, tesla is ahead by decades

Battery production is another cash cow waiting to be milked

tesla's capacity utilization is 72 per cent 72% is a big deal for a car manufacturing company

They wouldn't own 50% of the market, they will own like 35% same thing they said about apple when android began to blow up, isn't apple still standing, make good products and people will place you above local brands

Tesla is not getting 35% of any market. They will be lucky to get 10%. China, Africa and a good chunk of Latin America already rule them out of that market due to Chinese restrictions and availability of electricity in the third world.

Let's get to some numbers to see Teslas potential slice of the pie. Total yearly revenue of all auto companies last year was $1.03trn. Net margin is 4-5% so let's assume $50bln net margin. To get to valuation, let's multiply by S&P500 current PE Ratio of 38 which is $1.9trln. Tesla valuation is already 44% of that.

When we start talking of $25k cars, Tesla Net margin will drop to Industry standards. Ford makes $2.2k Gross profit per car for example.

Take another approach - About 65 million new cars are sold per year. Going by Ford's average Gross profit per car of $2k, that is $130bln per year. Again we can assume after overheads, $50bln of that is net profit. So once again, Tesla would have to control around 44% of the total car market in the future with a payback period of 38 years to justify it's current valuation ignoring inflation.

The current behemoth of the auto industry, Toyota has a market share of 10% and we still have other players to come such as Google, Amazon, NIO, other Chinese and many Euro consolidations and buy outs of smaller EV companies with good EV technology in Europe. So putting Tesla at 44% market share is nuts.

Swissh:
Cc Skimpledawg

Drop your account details in an empty thread and tag me.

Allaluya...

Done already man.

Ibime:


Tesla is not getting 35% of any market. They will be lucky to get 10%.

Let's get to some numbers to see Teslas potential slice of the pie. Total yearly revenue of all auto companies last year was $1.03trn. Net margin is 4-5% so let's assume $50bln net margin. To get to valuation, let's multiply by S&P500 current PE Ratio of 38 which is $1.9trln. Tesla valuation is already 44% of that.

When we start talking of $25k cars, Tesla Net margin will drop to Industry standards. Ford makes $2.2k Gross profit per car for example.

Take another approach - About 65 million new cars are sold per year. Going by Ford's average Gross profit per car of $2k, that is $130bln per year. Again we can assume after overheads, $50bln of that is net profit. So once again, Tesla would have to control around 44% of the total car market in the future with a payback period of 38 years to justify it's current valuation ignoring inflation.

The current behemoth of the auto industry, Toyota has a market share of 10% and we still have other players to come such as Google, Amazon, NIO, other Chinese and many Euro consolidations and buy outs of smaller EV companies with good EV technology in Europe. So putting Tesla at 44% market share is nuts.

Tesla is not just an auto industry player, business model is quite unique. Maybe you should consider including potentials of other aspects of the business in your analysis/valuation.

Of course, current value is not justified, but focusing only on one segment of the business for your analysis won’t work.

nitrogen:


Tesla is not just an auto industry player, business model is quite unique.

This is their revenue breakdown so as far as I can see, they are an automotive company with a 6% side hustle in low KW electricity storage, unless you are talking of something that hasn't materialised yet.

Ibime:


This is their revenue breakdown so as far as I can see, they are an automotive company with a 6% side hustle in low KW electricity storage, unless you are talking of something that hasn't materialised yet.

Well, valuation is the present value of future cash flows. If you have big dreams and the world believes you can achieve them, they will factor that into your market capitalization.

Comparable, precedent transactions and net asset valuation methodologies are out through the window. The world is doing a DCF for Tesla, and I believe they will continue to update their analysis with Elon’s big plans until he messes up.

Regards2U:


Gigafactory in Berlin, China and US is going to position Tesla to be miles ahead of any car companies and it takes a lot of effort and time to switch the production system of ICE to Ev's.

Zoox, Rivian( both owned by Amazon) and Waymo are the Ev's that are more likely to compete with Tesla in the future.

Data and Ethical issues are the only problem Tesla might face more outside US.

You're joking right?

You know how many non-Tesla EVs dey Europe?

Skimpledawgg:

Allaluya...

Done already man.

Hold up
Swissh
Look like an imposter



Sorry he's the one
Legit

nitrogen:


Well, valuation is the present value of future cash flows. If you have big dreams and the world believes you can achieve them, they will factor that into your market capitalization.

Belief must translate into numbers in the long run. SpaceX and Boring company ventures will not bring any numbers to Tesla. I think people are conflagrating both. Teslas primary business is storage of electricity in small quantities and sale of cars and car technology which is a finite market that can be quantified and valued.

When a stock price starts behaving like Bitcoin, you know you have gone past rational analysis into the territory of wild speculation driven by cult of personality. Who knows, e fit be newly minted Bitcoin millionaires pumping up Tesla price with their new found cash.

nitrogen:
Comparable, precedent transactions and net asset valuation methodologies are out through the window. The world is doing a DCF for Tesla, and I believe they will continue to update their analysis with Elon’s big plans until he messes up.

I just did something comparable to a DCF methodology up there without the discounting to show that Tesla needs 44% of future market share to justify current prices. This has gone past DCF into madness and greed.

Ibime:


Belief must translate into numbers in the long run. SpaceX and Boring company ventures will not bring any numbers to Tesla. I think people are conflagrating both. Teslas primary business is storage of electricity in small quantities and sale of cars and car technology which is a finite market that can be quantified and valued.

When a stock price starts behaving like Bitcoin, you know you have gone past rational analysis into the territory of wild speculation driven by cult of personality. Who knows, e fit be newly minted Bitcoin millionaires pumping up Tesla price with their new found cash.

Agree with you sha, current valuation is speculation driven. What I know is, most analysts don’t care, they will continue to look out for business plans that justify new high stock price.

Low interest rate is also a major issue, when rates are low, assets are generally overpriced.

I see that stock at 1k by year end.

Economics Pro max

Ibime:


I just did something comparable to a DCF methodology up there without the discounting to show that Tesla needs 44% of future market share to justify current prices. This has gone past DCF into madness and greed.

Well, cost of capital assumption is very key. Also, there are other factors. E.g. Emission levels expected from other manufacturers can result in lower cash flows (in form of fines and/or ESG capex) or slightly higher cost of capital, since they may not be able to borrow at competitive rates.

nitrogen:




Well, cost of capital assumption is very key. Also, there are other factors. E.g. Emission levels expected from other manufacturers can result in lower cash flows (in form of fines and/or ESG capex) or slightly higher cost of capital, since they may not be able to borrow at competitive rates.

That's a red herring. CoC is cheap across the board right now and applies to all the automakers, and they will all be producing exclusively EVs in 2040 so those environmental costs won't be a factor. You can just predict future cash flows by applying a market share percentage. Forget the time-value discounting and just assume they increase gross with inflation to arrive at the same CF each year in Present Value. If we use 38 years which is the current S&P PE ratio and is a consensus number that allows you to forget discounting, like I said Tesla needs to hit 40+% market share to justify current price.

The kind discussion going on here, if you no sabi anything na to just mute dey read. Advantage be say na only people wen sabi go reply. No stat padding and amala turning. At least for once here, let's separate the boys from the men here

Una Don see Joe Biden son pedophile pictures lol

Ibime:


That's a red herring. CoC is cheap across the board right now and applies to all the automakers, and they will all be producing exclusively EVs in 2040 so those environmental costs won't be a factor. You can just predict future cash flows by applying a market share percentage. Forget the time-value discounting and just assume they increase gross with inflation to arrive at the same CF each year in Present Value. If we use 38 years which is the current S&P PE ratio and is a consensus number that allows you to forget discounting, like I said Tesla needs to hit 40+% market share to justify current price.

True, however, have you considered the fact that many of Tesla’s competitors will do a lot in terms of capex to get to where Tesla is today, for example, they need to convert most of their manufacturing and assembly sites to ones suitable for EV manufacturing, they need to do lots of inventory disposal, what about capex for innovation and technology?

Tesla’s platform is top notch and well integrated, the company just needs to build on existing platform for growth, while others would need to transition slowly before they even talk about growth. Designs and feel of Tesla’s products are special, which can lead to customer loyalty (highly valuable, even though it’s intangible), a very good example is Apple and their products.

Agree that by 2040/2050, most players will probably be at the same level, but, what happens between now and then? Maybe that’s what investors are considering.

In addition, I believe that investors are looking at some level of operational and manufacturing efficiency in the nearest future for Tesla, which means improved margins and free cash flows.

nitrogen:


True, however, have you considered the fact that many of Tesla’s competitors will do a lot in terms of capex to get to where Tesla is today, for example, they need to convert most of their manufacturing and assembly sites to ones suitable for EV manufacturing, they need to do lots of inventory disposal, what about capex for innovation and technology?

Tesla’s platform is top notch and well integrated, the company just needs to build on existing platform for growth, while others would need to transition slowly before they even talk about growth. Designs and feel of Tesla’s products are special, which can lead to customer loyalty (highly valuable, even though it’s intangible), a very good example is Apple and their products.

Agree that by 2040/2050, most players will probably be at the same level, but, what happens between now and then? Maybe that’s what investors are considering.

In addition, I believe that investors are looking at some level of operational and manufacturing efficiency in the nearest future for Tesla, which means improved margins and free cash flows.

Good point but Tesla PPE at cost is $22 bln which can be surmounted. Infact some of these are probably overinflated on Tesla balance sheet, for example he bought solar gigafactory from his cousins at $3bln which was seen as a massive overpayment. Other automotive companies are buying smaller EV companies with technology, same way Elon bought Tesla so they don't need to waste much time in the early stage. With many of them switching production to China, they will tap into much cheaper means of production there and PPE assets will have also become more efficient and cheaper in terms of utility derived per investment. The game is also open for highly capitalised players like Amazon and Google which is more competition beyond the current automakers, plus Chinese cars are reaching the level of quality to pass regulatory barriers to Western market entry so more competition.

Finally French and German Governments aren't sleeping. They take great pride in their automakers performance and French Government own 10-15% of all their car makers. You will see these governments deploy all sorts of subsidies and research from EU research centres to give their companies competitive advantage.

On top of that you have Hydrogen technology which will make EVs obsolete as Hydrogen is carbon neutral. EVs would get tariffed or even banned should hydrogen become viable, and you have companies like Toyota pursuing Hydrogen strategy heavily.

Ibime:



Good point but Tesla PPE at cost is $22 bln which can be surmounted. Infact some of these are probably overinflated on Tesla balance sheet, for example he bought solar gigafactory from his cousins at $3bln which was seen as a massive overpayment. Other automotive companies are buying smaller EV companies with technology, same way Elon bought Tesla so they don't need to waste much time in the early stage. With many of them switching production to China, they will tap into much cheaper means of production there and PPE assets will have also become more efficient and cheaper in terms of utility derived per investment. The game is also open for highly capitalised players like Amazon and Google which is more competition beyond the current automakers, plus Chinese cars are reaching the level of quality to pass regulatory barriers to Western market entry so more competition.

Hmmmm, when you say cheaper means of production in China, is it cheap labor or technology or both? My understanding is that cheap labor is no more an advantage, there are more middle-class families than before in China. If it is technology, China imitates, they don't have the tech and innovation yet. A major reason why Tesla has got a factory in China is access to that middle class. China is the world's biggest car market, there won't be the need for Tesla to export cars at high tariffs from the US to China. So, basically, the cheaper production story is difficult to sell these days.

Also, I do understand that traditional players like GM, Ford etc, and tech companies like Amazon, Google have corporate venture capital arms for the acquisition of EV technologies, but then, a major problem is the scalability of those technologies. Commercializing acquired EV technologies (in large quantity) is really tough, that's why they continue to do internal R& D even though they buy a lot of start-ups every year.

Finally French and German Governments aren't sleeping. They take great pride in their automakers performance and French Government own 10-15% of all their car makers. You will see these governments deploy all sorts of subsidies and research from EU research centres to give their companies competitive advantage.

On top of that you have Hydrogen technology which will make EVs obsolete as Hydrogen is carbon neutral. EVs would get tariffed or even banned should hydrogen become viable, and you have companies like Toyota pursuing Hydrogen strategy heavily.

Trust me, those governments cannot match the efforts of the private auto industry in North America.

Hydrogen technology? It is still nascent, and even if huge success will be seen in the next 20-30 years, the issue is, hydrogen fuel cells cannot beat battery tech (VW already confirmed this, Toyota is just wasting its resources). Hydrogen in cars won't be efficient. The reason the world is talking about hydrogen is that it can replace natural gas in industrial and domestic heating, as well as the prospects of using it in trucks, ships, and maybe for electricity storage. Finally, hydrogen is not viable without pipelines for transportation purposes. Existing gas pipelines are not suitable for transporting hydrogen, therefore, huge capex will be required for new or modified pipelines. Also, moving it in small quantities using trucks is very expensive. Implication: Tough to boost the availability of hydrogen (domestically), while it is very easy to have EV charging stations everywhere within a very short time.

EV is the way to go, other auto players will play catch up for years, but they will eventually get there. However, don't forget that Tesla is not just about cars, other segments of the business will pick up big time in the next few years. Investors believe that the platform is ready for growth and efficiency, and they also think that the other segments of the business will make up for grounds lost by 2040.

gift01:
The kind discussion going on here, if you no sabi anything na to just mute dey read. Advantage be say na only people wen sabi go reply. No stat padding and amala turning. At least for once here, let's separate the boys from the men here

Lol It's their field of specialization...That others aren't involved doesn't mean they're of no good in their own areas of specialization...Na so small thing dey excite some of una no wonder any politician with small packaging dey easily hoodwink una...

patrickmuf:
Lol It's their field of specialization...That others aren't involved doesn't mean they're of no good in their own areas of specialization...Na so small thing dey excite some of una no wonder any politician with small packaging dey easily hoodwink una...

Chief why now?

patrickmuf:
Lol It's their field of specialization...That others aren't involved doesn't mean they're of no good in their own areas of specialization...Na so small thing dey excite some of una no wonder any politician with small packaging dey easily hoodwink una...

Oga Patrick why now? Why?

Nitrogen, I do not totally agree when you say China are copycats and do not have the tech and innovation yet. This one no be true o.


Unless you're talking about hydrogen fuel cells exclusively.

Look at the story of Nio.

Ibime:


Tesla is the poster boy for the current market bubble, more than octupling in price in 1 year and with a Price-Earnings ratio 50 times the S&P average. A lot of people will cry when Tesla burst.

Hmmmmm. This will be very interesting to see. Everything points to it's value being artificial but the price keeps going up. It's crazy

patrickmuf:
Lol It's their field of specialization...That others aren't involved doesn't mean they're of no good in their own areas of specialization...Na so small thing dey excite some of una no wonder any politician with small packaging dey easily hoodwink una...

Maka why na?

A40:
Hmmmmm. This will be very interesting to see. Everything points to it's value being artificial but the price keeps going up. It's crazy

If Tesla was run by a dull paper pusher type person instead of a charismatic genius/guru like Elon Musk its valuation would be high but definitely not this high. No one said it should not have high value but if you look at the fundamentals of the company itself it is obvious that people are being emotive to a fault rather than being analytical.

They are banking partially on Tesla the company but more on Elon Musk the man, and that is a very risky tactic.

afrodoc2:


If Tesla was run by a dull paper pusher type person instead of a charismatic genius/guru like Elon Musk its valuation would be high but definitely not this high. No one said it should not have high value but if you look at the fundamentals of the company itself it is obvious that people are being emotive to a fault rather than being analytical.

They are banking partially on Tesla the company but more on Elon Musk the man, and that is a very risky tactic.

Lool Elon is more or less viewed as the modern day Tony Stark. I do believe that it is going to take some significant period of time for the bubble to burst.

afrodoc2:


Maka why na?

Lol Doc, his comment was a little disrespectful so I say make I give am small Pepper...

Unlimited22:

Oga Patrick why now? Why?

Nitrogen, I do not totally agree when you say China are copycats and do not have the tech and innovation yet. This one no be true o.


Unless you're talking about hydrogen fuel cells exclusively.

Look at the story of Nio.

Na just small Pepper...Him talk been no make sense...Some folks are actually learning a thing or two from the exchange here...Everyone here get their area of specialization, even traders Sabi wetin we no sabi...