Tesla and Uber Unlikely to Survive (Vol. 2)
Discussion
cossey said:
Burwood said:
RobDickinson said:
Gixer968CS said:
Tesla's p/e ratio is 293 (in other words it is valued at 293 x it's current earnings). VW is 5.5. Does anyone think Tesla is worth 53 times what VW is, or will do anything to justify that valuation? Or do we think VW will continue to launch EVs around the world and steal market share from Tesla. Is Tesla a good investment? Can it survive if it's share price normalises if it turns out it isn't better at selling cars than VW?
Obviousl opportunity to take a short position aye .
The far more likely scenario would be that any drop would take some years as the relative strength Vs VW etc is not going to be clear for at least another 5-10 years.
There is also the irrational side to it where individuals believing that a company is so special that no normal rules apply can keep the price high for a long time. There is always a practical lot to this and it is more sensitive to crashes as smaller investors are more likely to sell if things go bad (like they lose their hob and need to pay the mortgage). It also reduces the appeal to institutional investors long term as if you were not in at the start then there is no return and a lot of risk.
I would buy one of their cars now but I wouldn't buy their shares.
Tuna said:
Silly people like you seemed to think this was a "winner takes all" competition, that someone had to "win" and everyone else would "lose" - you still talk that way, which comes across as rather childish. Pointing out where the various manufacturers are is just about trying to understand the market, not take part in a playground fight.
Yeah, I have never really understood that opinion. Being the first means you do have a 'first movers advantage', but its an advantage, not guaranteed success. Equally, history is littered with businesses that have had the world at their feet, only to snatch defeat from the jaws of victory. Yes, some of those examples are where the market has moved on (Kodak) and didnt innovate - and they can be used as examples of where Tesla will succeed and others will fail. Tesla has made some missteps and are likely to make some more. Other manufacturers will also do the same thing. But as the investment advert have their disclaimers - "investments can go up as well as down and past performance isnt necessarily an indication of future performance".
off_again said:
Yeah, I have never really understood that opinion. Being the first means you do have a 'first movers advantage', but its an advantage, not guaranteed success...
Tesla dominated the ev market, but they failed to meaningfully take market share from ICE. Tesla and Evs were only 1-2% of the market untill the global government's, who had already given manufacturer subsidies, declared ice bans and incentives to consumer and busines buyers.
hyphen said:
off_again said:
Yeah, I have never really understood that opinion. Being the first means you do have a 'first movers advantage', but its an advantage, not guaranteed success...
Tesla dominated the ev market, but they failed to meaningfully take market share from ICE. Tesla and Evs were only 1-2% of the market untill the global government's, who had already given manufacturer subsidies, declared ice bans and incentives to consumer and busines buyers.
GM designed and produced the EV1 in the 1990s and chose not to take it forward. Heck, every vehicle was recalled and destroyed!
The EV market (subsequently 'driven' by Tesla) is in it's infancy and even in that infancy the Model S outsold the S class, Panamera and 6/7 Series combined in the US in 2017. In September of this year and despite not having a manufacturing facility in Germany (yet), more Model 3s were sold in September than BMW 3 Series, Audi A4 and Mercedes C-Class models combined. This isn't bad going is it? This is only the beginning.
Edited by TameBritishMuslim on Wednesday 3rd November 23:35
TameBritishMuslim said:
...The EV market (subsequently 'driven' by Tesla) is in it's infancy and even in that infancy the Model S outsold the S class, Panamera and 6/7 Series combined in the US in 2017. In September of this year and despite not having a manufacturing facility in Germany (yet), more Model 3s were sold in September than BMW 3 Series, Audi A4 and Mercedes C-Class models combined. This isn't bad going is it? This is only the beginning.
Are saloon examples relevant? The German saloon sales dropped off a cliff in Europe and USA because the equivalent SUVs were what the buyers wanted instead. Edited by TameBritishMuslim on Wednesday 3rd November 23:35
x1/x3, q3/q5 and glc all cannibalised their saloon siblings.
hyphen said:
TameBritishMuslim said:
...The EV market (subsequently 'driven' by Tesla) is in it's infancy and even in that infancy the Model S outsold the S class, Panamera and 6/7 Series combined in the US in 2017. In September of this year and despite not having a manufacturing facility in Germany (yet), more Model 3s were sold in September than BMW 3 Series, Audi A4 and Mercedes C-Class models combined. This isn't bad going is it? This is only the beginning.
Are saloon examples relevant? The German saloon sales dropped off a cliff in Europe and USA because the equivalent SUVs were what the buyers wanted instead. Edited by TameBritishMuslim on Wednesday 3rd November 23:35
x1/x3, q3/q5 and glc all cannibalised their saloon siblings.
Tuna said:
You rather missed the point there. The story not so long ago was that Tesla was going to wipe out all of the mainstream manufacturers, and they couldn't possibly produce equivalent models at the prices Tesla was achieving.
Based upon the published gross margin figures, it does perhaps seem that story was at some level correct.It is not so very long ago that Ford were (reasonably) described as "a bank that happens to make cars"; there was no profit in actual car-making. If Tesla can keep growing whilst maintaining their gross margin, perhaps they can dispel that idea too?
TameBritishMuslim said:
Governments incentivised diesel for years through company car tax and what about the US government bail out of the 'big three' in 2008? Oh and don't forget the recent US infrastructure bill which gives massive subsidies to the 'big three', becoming a quasi bail out, for being part of a union and producing a vehicle with a 10 kWh battery - i.e. bolt on a small battery to an ICE engine as a 'get out of jail' card.
Yes, it is true that Tesla has been singled out from discussions with the White House. Its also true that Tesla has a history of injuries in the workplace, resistance to any from of labor force organization and many cases of environmental and operating issues. And thats before we get the racism stuff! The big three arent great and have equally pretty bad reputations over extended periods of time. But Tesla has managed to be a really crappy company in a very short period of time. Oh, and dont forget the massive government grants, support and assistance - all while a limited number of people have got richer and richer. So yeah, they got left out of this one but will likely be included for the sake of fairness anyway. We have to put things into perspective.TameBritishMuslim said:
GM designed and produced the EV1 in the 1990s and chose not to take it forward. Heck, every vehicle was recalled and destroyed!
There is a story there and its quite fascinating. I will admit to not watching the movie on the subject, but its supposed to be pretty amazing. I do know fragments of the story and its not pleasant. That said, the EV1 didnt look great at the time and it wasnt practical. Proof of concept, yes great. A usable car? Not so much.TameBritishMuslim said:
The EV market (subsequently 'driven' by Tesla) is in it's infancy and even in that infancy the Model S outsold the S class, Panamera and 6/7 Series combined in the US in 2017. In September of this year and despite not having a manufacturing facility in Germany (yet), more Model 3s were sold in September than BMW 3 Series, Audi A4 and Mercedes C-Class models combined. This isn't bad going is it? This is only the beginning.
And this is where I have issues. I just checked the numbers (and I could very well be wrong, but I am using public data from Carsalesbase.com). Total number of sales of the S-class, 6/7 series and Panamera in the US in 2017 was 35,250 - total sales of the Model S in the same year? 27,060. These numbers get thrown around and no one checks. So I am going to call BS on that. Also, I would counter that argument too - volume doesnt necessarily mean more money. Given that the BASE price of a 7 series in the US in 2017 was $82k, we can be damn sure that the revenue and profit per car was pretty high. I am pretty confident that no one bought a base 7 series!!! And the S-class started at $97,500 for reference!!!! I am not going to argue on the UK sales, but its been discussed elsewhere - peak sales on certain months are certainly impressive. But its only really relevant on a longer time frame. Tesla is forced to import in bulk and while the cars are in demand, you are going to get peak months of sales. And when you factor in an economy that is somewhat returning to 'normal' and a whole bunch of government incentives - yeah, EV sales are increasing massively, but to pick selective months is a nice sound bite, but they dont necessarily tell the wider story.
Let me cherry pick some numbers too - Tesla sold 223,300 vehicles so far this year (to Q3) in the US. Impressive stuff and a big jump from 2020 (and Tesla switched to reporting quarterly reporting for some reason). Yet Toyota has sold 338,441 Rav4's in the US. Toyota has sold significantly more cars of ONE MODEL than Tesla has sold across their whole range..... And Tesla's total market share of the US is 1.82%. Thats ONE POINT EIGHT TWO percent, just to be clear. We can be sure that this is going to be much much bigger in time, but dont over sell it at the moment. They have a big hill to climb and suggesting that they are somehow killing it, just isnt quite true.
Oh, and if you want to check, the Toyota Rav4 wasnt the most popular vehicle sold in the US in 2021, just the most popular 'car'.
hyphen said:
x1/x3, q3/q5 and glc all cannibalised their saloon siblings.
And as an illustration of how crazy the world is - BMW reports that number of sales is down but profits are up - and revenue per unit is up.... Yep, they arent getting buyers wanting base spec 320i's but are selling every damn X7 they can built, usually with a ton of expensive extras!!! RobDickinson said:
They didnt have first mover advantage.
Gm had the EV1 and even released the Bolt first, the leaf was out years before the model 3.
They were the only car company committed to EVs tho. Which meant they had to make good ones and put in the infrastructure to support them.
Ah, the Chevy Volt.... I still think it was a damn good idea and if you speak to owners, they really like them! They have a great reputation for reliability! But they just didnt sell. I thought the idea was genius at the time and still think there is a use case for something like that. But wow, talk about a swing and a miss....Gm had the EV1 and even released the Bolt first, the leaf was out years before the model 3.
They were the only car company committed to EVs tho. Which meant they had to make good ones and put in the infrastructure to support them.
GM was provided with bail out money and of course it came with strings attached - build a car to compete with Toyota, especially the Prius. So they did. It wasnt bad either! Could have been a disaster like the Pontiac Aztec, but it worked and was advanced! Nice. People kept buying Toyotas though. Damn.
RobDickinson said:
I've not checked Q3 but in Q2 ford lost money on the vehicles it sold and only made money because of paper profit on their Rivian share etc.
Yeah, dont know the details (because I am not a financial specialist), but there are some weird things going on at Ford. And they completely f*cked up a couple of launches too! Heads rolled and things got fixed. So far the launches of the Bronco and Maverick are going well and it looks like they have corrected a few things. But man, they screwed the launch of the updated Explorer - you know, their profit making machine? Yikes!TameBritishMuslim said:
GM designed and produced the EV1 in the 1990s and chose not to take it forward. Heck, every vehicle was recalled and destroyed!
The EV1 ran on 32 lead acid batteries (ie. traditional car batteries). It had a range of 80 miles. I wonder why they didn't take it forward?The mainstream manufacturers have, over the years, tried every possible form of power - gas turbines, hydrogen, LPG, multifuel, steam - the myth that they "don't innovate" is simply not true. That doesn't mean that they're the first to invent anything, but they have never been fixed to the idea of a petrol engine in a car.
The thing that changed was the introduction of mass produced lithium batteries - Tesla's first Roadster had 6831 "laptop batteries". Credit to Martin Eberhard for making the mental leap from laptops to cars. In the 18 years since he made the connection, the batteries used in Teslas have not changed dramatically - they're still 18650 lithium cells ("18650" refers to the dimensions of the cell - 18mm diameter, 65mm length - it looks like a big AA battery). Advancements have come from improved manufacturing processes and better ways of stacking them together and managing heat and failure.
Efficiency has improved since the original Roadster from 110 Wh/km to 165 Wh/km in the Model 3. However, it is not the most efficient EV in 2021 - that goes to the Renault Twizy. The Model 3 is also beaten by cars from VW, Smart and Hyundai.
skwdenyer said:
Based upon the published gross margin figures, it does perhaps seem that story was at some level correct.
It is not so very long ago that Ford were (reasonably) described as "a bank that happens to make cars"; there was no profit in actual car-making. If Tesla can keep growing whilst maintaining their gross margin, perhaps they can dispel that idea too?
There are two things going on there though.It is not so very long ago that Ford were (reasonably) described as "a bank that happens to make cars"; there was no profit in actual car-making. If Tesla can keep growing whilst maintaining their gross margin, perhaps they can dispel that idea too?
Firstly, as a mature manufacturer, Ford has a lot of legacy expenses - older factories, an overly complex logistics setup and a monster ecosystem of suppliers. As a new entrant, Tesla doesn't have those problems - most of it's handful of factories only concern themselves with just two very similar models.
Secondly, Tesla has a line-up that is able to command a premium across the range. That rather distorts the 'lead' they have over other manufacturers. If you look at the F150 - Ford's best selling car, their gross margin is around 29% - pretty much the same as Tesla. Or look at Porsche, which has gross margins of 50% in some cases. Tesla has not invented a "secret sauce" that makes it dramatically cheaper to manufacture a car.
off_again said:
RobDickinson said:
I've not checked Q3 but in Q2 ford lost money on the vehicles it sold and only made money because of paper profit on their Rivian share etc.
Yeah, dont know the details (because I am not a financial specialist), but there are some weird things going on at Ford. And they completely f*cked up a couple of launches too! Heads rolled and things got fixed. So far the launches of the Bronco and Maverick are going well and it looks like they have corrected a few things. But man, they screwed the launch of the updated Explorer - you know, their profit making machine? Yikes!OT Toyota guided 25B USD full year net earnings. Not bad for a s
tty ICE company Tuna said:
skwdenyer said:
Based upon the published gross margin figures, it does perhaps seem that story was at some level correct.
It is not so very long ago that Ford were (reasonably) described as "a bank that happens to make cars"; there was no profit in actual car-making. If Tesla can keep growing whilst maintaining their gross margin, perhaps they can dispel that idea too?
There are two things going on there though.It is not so very long ago that Ford were (reasonably) described as "a bank that happens to make cars"; there was no profit in actual car-making. If Tesla can keep growing whilst maintaining their gross margin, perhaps they can dispel that idea too?
Firstly, as a mature manufacturer, Ford has a lot of legacy expenses - older factories, an overly complex logistics setup and a monster ecosystem of suppliers. As a new entrant, Tesla doesn't have those problems - most of it's handful of factories only concern themselves with just two very similar models.
Secondly, Tesla has a line-up that is able to command a premium across the range. That rather distorts the 'lead' they have over other manufacturers. If you look at the F150 - Ford's best selling car, their gross margin is around 29% - pretty much the same as Tesla. Or look at Porsche, which has gross margins of 50% in some cases. Tesla has not invented a "secret sauce" that makes it dramatically cheaper to manufacture a car.
As for the "secret sauce" question, the discussions over margin for VW ID4 vs Tesla Model 3/Y are interesting here. I'm a mechanical engineer by background. I'm sorry, but I *do* see some "secret sauce" (well, not so secret) in the giant presses and castings Tesla are using.
There are other examples, too. As a small for instance, most companies put a seat controller in an electric seat. Tesla don't; they just run the switches and motors back to the body controller. This reduces their cost. Eventually I'm sure they'll drop the on-seat switches, too.
This reminds of when Lexus arrived. Execs at Mercedes couldn't work out how they could make money on the LS400 at the price-point until they tore it down. Design-for-production is still very much where the game is in turning a profit on cars.
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