IdleRich

IdleRich
ain't it also people betting on tesla becoming the monopolist of the automobile industry? like amazon in its respective industry.
I suppose that people are thinking that... but how would that work? Why can't GM or BMW make an electric car (I don't pay attention to these things but I assume they already are)? What's to stop it being better than Telsa's? The car market isn't (or at least hasn't been) a monopoly, do you really see a world where every car on the road is a Tesla?
 

IdleRich

IdleRich
yeah it's not that it was ever perfectly aligned with actual performance - as you say the price of a share is what people are willing to pay for it - but that it's become almost totally divorced from performance. both in a more general macro sense and in terms of individual companies. and tho I don't pay close enough attention to the market to know the details, I have to think that some companies have grasped and adjusted to that truth - that performance has significantly less impact on share value than it did, say, 20 years ago - better than others, with Tesla in the highest percentile of that kind of reality/perception arbitrage.
Ah I see what you mean, not just the stock market as a whole divorced from the economy as a whole, but the individual performance of companies becoming less related to their share price too.
 

yyaldrin

in je ogen waait de wind
I suppose that people are thinking that... but how would that work? Why can't GM or BMW make an electric car (I don't pay attention to these things but I assume they already are)? What's to stop it being better than Telsa's? The car market isn't (or at least hasn't been) a monopoly, do you really see a world where every car on the road is a Tesla?

if investors want tesla to become the monopolist then that's what's going to happen i think yes. it's also weird how every country is rolling out the red carpet for elon musk, subsidizing his company in all sorts of way.
 

IdleRich

IdleRich
I don't see that personally... market leading maybe, but monopoly, I just don't see how it could be possible. Maybe it's a "black swan" type thing though, I dunno.
 

padraig (u.s.)

a monkey that will go ape
ain't it also people betting on tesla becoming the monopolist of the automobile industry? like amazon in its respective industry
yeah like Rich I don't think that's the case. certainly people are betting on Tesla selling more cars.

or idk maybe Musk fanbois on Robinhood think that but idk much that demographic alone drives share value

and it's - no offense - a pretty absurd belief. Tesla currently has about 1/5 of the global electric vehicle market, which in turn is only about 3% of the global car market. it does tbf have a near-monopoly on electric cars sold in the U.S.

what ppl are really betting on is the electric cars becoming a greater share of the global car market, which seems like a good bet
 

padraig (u.s.)

a monkey that will go ape
the issue isn't that people shouldn't be optimistic about Tesla's future, it's that that optimism isn't remotely enough to justify a market cap twice that of GM, which will sell something like 5x as many cars as Tesla this year
 

padraig (u.s.)

a monkey that will go ape
There was a theory a while back that companies like Tesla would give rise to further US interventions abroad as they try to extract the lithium reserves from places like Bolivia for their car batteries.
this, OTOH, would not surprise me at all. Monroe Doctrine, bro.
 

Leo

Well-known member
its cuz all the 1% want to fly Tesla rockets to mars and live there once global warming turns earth into a toaster oven. wake up, sheeple.
 

beiser

Well-known member
ok i'll try to defend tesla, you're welcome @Linebaugh

not many teslas where you are because they're mostly being sold into markets with high subsidies for electric cars, like california. plenty of them around here.

the theory is, in part due to subsidies, electric cars have gone from being far more expensive to a bit more expensive than gas cars, and as volume goes up, the price should continue to fall. when you include gas and maintenance costs, they're arguably getting close or cheaper already. at some point not too far in the future, they'll be unambiguously cheaper, and at that point, people will probably stop buying gas cars.

there's a theory of "BMW or Volkswagen or whoever could make an electric car just as good as soon as they really try," and this sounds plausible except for that these companies are already selling electric cars, and they're… usually a lot more expensive than the comparable tesla, or just not as good. This is evidenced by them not selling many of them, even when the manufacturers are producing them at a loss, usually to meet average emissions targets. It turns that there's actually a fairly steep industrial learning curve to making electric cars—on paper they're "simpler," but that in reality just means more specialization can be deployed to improve the final product.

so—Tesla has 28% of the global electric car market (several times more than the next-closest competitor) and the electric car market is about 2% of the total car market today. Toyota, in comparison, has the highest share of the total car market, with 10% market share. The theory is that by having a substantial head-start in underlying technologies, a disciplined approach to their platforms, and a scale advantage, Tesla will manage to retain or increase their share in the electric car market as it undergoes a ~40x increase in size. If that's a sustained advantage, you could see them increasing their margins as well as their market share over time, resulting in them having a greater profit share than their market share.

Keep in mind that Tesla has an incredibly disciplined approach to capex—for example, there are no Tesla dealerships, they're only sold direct. And then, even more incredibly, Tesla has never bought ads. Car ads are basically an entire industry, and Elon posting on twitter is probably doing better for awareness than all of them. They also have lower employee costs, because young engineers are tripping over themselves to work for Tesla, and then everyone working there has been getting paid in Tesla stock and is now worth an enormous bundle if they can hold on until it vests. They also have a much better cost structure than other American automakers, because they're non-union and they don't have retired employee pensions to pay. Further, they're disciplined at pulling design and production in house, rather than contracting it out, which gives them an advantage at building new types of features. Finally—Tesla is just clearly better than anyone else at executing, and that adds up over time.

I agree that $500Bn reflects some optimistic assumptions—continued flawless execution by Tesla and no competitors really taking them on earnestly. On the other hand, Toyota is worth $225Bn, and has a low multiple (which reflects an assumption of a shrinking market share). With other American automakers culturally worthless, European automakers painfully incremental and saddled with a collaborative approach to worker management, and Japanese automakers with their heads in their asses talking about hydrogen, it increasingly looks like the strongest competitors will be Chinese automakers like BYD and Geely—strong contenders, but more likely to carve out a scale advantage than an experience-based advantage, which will likely bring them more market-share than profit-share.
 
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