An Evaluation of TSLA; What Value can it Realistically Reach this Decade?

[allgeir]

@theologyandfishing Toyota, world's largest car manufacturer sells less than 10.5M cars worldwide annually. You are projecting 12M Teslas in 2027. Not to mention the nonexistent EV infrastructure worldwide to support 12M Tesla EVs + many more millions of competition EVs. All of this within 5 years? I don't think so.

 

[nic976]

@allgeir Your infrastructure point is key. To get to the 12million vehicles a year you need cities to have electrical street charging readily available. Plus, Tesla looks like they will be behind in Trucks and SUVs. That’s a huge market.

 

[unsure96]

@allgeir Toyota sells pretty much the exact same product as Honda, Hyundai, etc where as Teslas are massively different than even the closest competitor EV. I think this is why Toyota simply can’t grow more than 12m per year (the Camry faces much stiffer competition from the Accord than the Model Y will ever see) whereas Tesla can. Companies are actively avoiding competing in the EV markets that Tesla is dominant in (see Ford GM and Rivian all prioritizing the Pickup market, despite pickups being an absolutely terrible form factor for producing profitable EVs at scale - horrible aerodynamics and huge battery pack sizes will severely limit production).

 

[sonchoy]

@unsure96

Teslas are massively different than even the closest competitor EV.

in what ways?

 

[dojoloach]

@unsure96

Companies are actively avoiding competing in the EV markets that Tesla is dominant in

How the hell did you miss recent entries by BMW, VW, Skoda, Seat, Mercedes, Polestar, Volvo, BYD, and many more in that exact market?

 

[unsure96]

@dojoloach Some companies can’t avoid it. The ones that can do. I think you’ll see the most success amongst companies that don’t compete directly against Tesla. Tesla has a massive cost and scale advantage on the competition. Bad times going to be had for direct competitors when Tesla starts sacrificing some margin for market share.

 

[riverwolf1975]

@unsure96

Tesla has a massive cost and scale advantage on the competition.

They sell marginally more EVs than VW

 

[svandoren]

@unsure96 We're going to see a massive disruption in the auto market over the next 10-15 years. Petrol cars are going away, and they're likely going to stop selling much faster than the average person expects. There's already countries and provinces around the world talking about banning the sale of new petrol cars in the next decade. But also, EVs are just a superior platform in nearly every way.

So looking at the legacy automarket isn't that useful. A lot of the benefits that helped incumbents are also going to go away when all of their legacy ICE engine producing assets/suppliers/infrastructure/etc. quickly become worthless. EV only manufacturers and suppliers are going to be at a big advantage without they're legacy assets (and legacy management) dragging them down. Some companies will probably get bailed out by their government (Toyota might even be counting on it), but none will be successful without going all in on EVs soon.

Tesla has a huge advantage in nearly every area of EV manufacturing, they're:

• The largest EV manufacturer
• The fastest growing large manufacturer in any industry, ever
• With the largest and newest factories for EVs
• Sell the most profitable EVs
• Are the largest buyer of battery cells, with a good relationship/contracts with every major battery producer
• Are the largest manufacturer of battery packs, and own one of the largest battery factories in the world
• Are the world's largest manufacturer of stationary storage, which just means more benefits of scale for cell production and purchasing
• Currently building what could be there two largest battery production plants in the world, for the new 4680 cells, that could be the cheapest cells to produce ever
• One of the largest buyers of raw materials for batteries, and they're getting more and more vertically integrated by partnering with mining companies or just getting in to raw material production directly themselves

Tesla is profitable enough now that they can make huge investments in car and battery production and can afford to invest in vertical integration at a scale we haven't seen in auto manufacturing in generations.

We'll be in a much better place to judge their potential for future growth when we start to see the 4680 cells getting made and sold in volume. If they're able to execute say anything close to their goals, they'll be positioned to be in a dominant place in the EV/automotive industry for at least 5-10 years.

 

[prayersword]

@unsure96 You're absolutely correct, but this sub downvotes uncomfortable truths lol

 

[matilda333]

@theologyandfishing Only 7.2t market cap? Clearly you know nothing of the market. Tesla will easily be worth 100t by 2027 and the first Quadrillion dollar company by 2028. Here's the proof:

• Stocks only go up.
• Elon Musk OMG so funny!!
• Dogecoin?????

So those are why Tesla will be worth 190 Quadrillion by 2029.

 

[resjudicata]

@theologyandfishing EV's are a race to the bottom in price, as they are a simpler machine and the production of batteries will not be limited to the automotive industry. The larger volumes will be in the storage industry, and so battery advantages in cars will be... non-existent 30 years out, likely non-existent 15-20 years out for the auto industry. I.e. Tesla is unlikely to be the leader in low-cost battery tech alone in 15 years. They already are not the leader, they just have the most volume (which is definitely impressive, don't get me wrong).

So for the EV angle, expect lots and lots and lots of competition and a race to the bottom. Drive chain especially.

#2 Self driving: as a software dev, they're in for a rough ride, and may not see large scale adoption for 20 more years. Just so many millions of corner cases. It's already getting hard and they're not even close to better than most 16 year olds.

#3 The only thing going for tesla's valuation is the battery storage angle and becoming a massive scale manufacturer and mining company, etc. While they can definitely get there, it wont be with a 30 forward PE. it would be capped at world energy usage per like week, maximum. So calculate total world energy used annually, reduce it by 30% for efficiency gains from going electric, divide by 50 to get a weeks worth, and calculate how many batteries that will take. Then divide by 50 years to get a steady state amount of demand, and then estimate the per Kwh price, which is likely $10, of which is $1 in profit, and tell me what you come up with.

 

[teresa85]

@resjudicata a race to the bottom in price, - Thats what Nokia Said to Apple

 

[resjudicata]

@teresa85 True, if Tesla monetizes their cars with a really cool app store and 30% margins and get enough penetration, they could be apple. Absolutely true. That gets them *checks notes* a $2.85 T valuation, so max 2.9x from now, and it's ten years from now minimum, so annual compounded return is 11%. Not too shabby, but it's not something I'd bet on.

 

[nnsv]

@resjudicata Their automotive margins are already 30%. They will be creeping up to 40% with all of the new manufacturing innovations which are being introduced in two new factories this year.

 

[resjudicata]

@nnsv So is the automotive industry, at least on a direct labor and direct materials consideration, which is what telsa is quoting when they say 30% margins. They're normal in that aspect. 40% would definitely be impressive though.

Got a business degree in this stuff so if you need more info on what I'm saying we can hash it out here for others to understand