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Tesla shares tank after U.S. discounts doubled on key models

reuters.com

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Re: Tesla shares tank after U.S. discounts doubled on key models

#141

Post by WeylandYutani »

samwillis wrote: post #59

I just fined the Tesla share price incredible hard to justify, I know they are a growing company with big ambitions but the numbers just don't work. Tesla: - Market cap: $392.78 billion - Q3 units sold: 343,000 VW Group: - Market cap: $70.98 billion - Q3 units sold: 2,181,300 Obviously they are slightly different companies, Tesla sell solar and battery storage products. And VW Group have brands that sell to a part of…

Tesla no longer has a moat in China- a more important market for EV than America.

As for Volkswagen the translation is "car of the people" which Tesla is assuredly not.

Re: Tesla shares tank after U.S. discounts doubled on key models

#142

Post by snovv_crash »

jacquesm wrote: post #132
snovv_crash wrote: post #127

Earlier quoted context omitted.

So why doesn't VW just sell premium cars if it would make them more money?

Because there is a lot of money to be made selling lots of a cheaper product if you can produce it profitably. Besides that dealers are typically willing to sell such smaller vehicles at or near their own purchase price counting on the recurring income for service and fleet sales of such vehicles tend to be quite profitable because there is only one signature but a very large amount of money involved. Mercedes is a n…

> VW (or rather, the VAG group) is simply a different kind of company.

Exactly. Which is why comparing unit sales and expecting that to correlate to stock price is not logical.

Re: Tesla shares tank after U.S. discounts doubled on key models

#143

Post by jacquesm »

mutatio wrote: post #133
jacquesm wrote: post #111

Earlier quoted context omitted.

Usually profit margins shrink as volume goes up. You can't sell that many cars into the premium segment simply because the segment doesn't support the volume. VW sells a ton of cheap and small vehicles.

Isn't net profit absolute though, i.e. directly comparable between the two organisations. Long tail of cheap vehicles probably does help VW stay resilient long term (perhaps in the current economic climate / recessions). It seems targetting volume could be detrimental to net profits under current/recent market conditions. Selling fewer, supposedly more upmarket vehicles has allowed Tesla to out perform VW.

They're simply different companies. VW is fairly broad spectrum when it comes to cars, even a Mercedes 'A' class (or a Smart for that matter) is fairly expensive compared to an entry level VW (say, an 'Up').

Tesla outperforms VW because they are riding a wave and have been very successful in maintaining their lead in BEVs. That won't last and then the likes of VW and possibly Toyota if they ever get with the times are going to eat Tesla's lunch, especially if the chief twat is going to be distracted by his new toys.

Re: Tesla shares tank after U.S. discounts doubled on key models

#144

Post by jacquesm »

snovv_crash wrote: post #138
jacquesm wrote: post #129

Earlier quoted context omitted.

> Which inflates their unit numbers No, they are real sales. > exposes them to downturn risk On the contrary, those models are the most successful ones during an economic downturn. > and doesn't really do much for their bottom line On the contrary, those models are the mainstay of their business. Really, three out of three, why bother?

Real sales, yes, but this is why comparing sales by units doesn't mean very much relative to stock price. Tesla has ~25% margins, VW has 3% margins. A recall, unsold stock or component shortages can quickly put VW in the red. This is what I mean by downturn risk, economic downturn is not the only potential problem manufacturing companies run into. > Really, three out of three, why bother? This level of communication…

Tesla has 25% margins because they are in a different segment. If Tesla sold a large number of very cheap cars they would not be able to command 25% margins. If you lop off the top portion of VW's sales and look at their margins they will be much higher than the margins on the smaller stuff. But in absolute numbers those figures certainly help and they also help to protect VWs income stream during slow years.

Their premium brands tend to be hit very hard during those years (Porsche, for instance).

Re: Tesla shares tank after U.S. discounts doubled on key models

#145

Post by snovv_crash »

t0mas88 wrote: post #140
snovv_crash wrote: post #127

Earlier quoted context omitted.

So why doesn't VW just sell premium cars if it would make them more money?

Because it would make them more money per car but not overall. And they aren't competitive in that segment with the assets they have. They would have to design different models, scale down production etc, a pivot of the company. A better comparison is Mercedes or BMW, they're in a similar market segment and not selling 10x more cars at 1/5th the price live VW is. Still their market caps are lower than Tesla and their…

BMW and Mercedes aren't showing any real YoY growth. They have some token electric offerings, but don't seem particularly committed.

This is HN, the difference in value between a growth company and an incumbent should be at the front of our minds at all time.

Re: Tesla shares tank after U.S. discounts doubled on key models

#146

Post by snovv_crash »

Ekaros wrote: post #130
snovv_crash wrote: post #128

Earlier quoted context omitted.

How many of those are building charger networks?

As many as have build their own petrol station network.

Someone needed to bootstrap the charging infrastructure. At some point it will be a commodity and at that point Tesla is 'just' sitting on a big asset.

Re: Tesla shares tank after U.S. discounts doubled on key models

#147

Post by WeylandYutani »

snovv_crash wrote: post #128
oblio wrote: post #117

Earlier quoted context omitted.

I love how you're listing Rivian, Lucid, NIO, but you're completely discounting the company that has invested tens of billions of euros into an EV platform, and will invest tens of billions of euros more over the next few years. VW. FYI, Mercedes, BMW, Hyundai/Kia are also building huge EV platforms. I don't have sales numbers for them, but I imagine all of them are already selling tens of thousands if not hundreds o…

How many of those are building charger networks?

Irrelevant the EU in their benevolent wisdom has mandated that charging networks have to be interoperable. You can use Tesla superchargers for your 20k Kia economy box.

Re: Tesla shares tank after U.S. discounts doubled on key models

#148

Post by KptMarchewa »

jacquesm wrote: post #143
mutatio wrote: post #133

Earlier quoted context omitted.

Isn't net profit absolute though, i.e. directly comparable between the two organisations. Long tail of cheap vehicles probably does help VW stay resilient long term (perhaps in the current economic climate / recessions). It seems targetting volume could be detrimental to net profits under current/recent market conditions. Selling fewer, supposedly more upmarket vehicles has allowed Tesla to out perform VW.

They're simply different companies. VW is fairly broad spectrum when it comes to cars, even a Mercedes 'A' class (or a Smart for that matter) is fairly expensive compared to an entry level VW (say, an 'Up'). Tesla outperforms VW because they are riding a wave and have been very successful in maintaining their lead in BEVs. That won't last and then the likes of VW and possibly Toyota if they ever get with the times ar…

VW also owns some strictly cheaper brands like Skoda.

Re: Tesla shares tank after U.S. discounts doubled on key models

#149

Post by snovv_crash »

jacquesm wrote: post #144
snovv_crash wrote: post #138

Earlier quoted context omitted.

Real sales, yes, but this is why comparing sales by units doesn't mean very much relative to stock price. Tesla has ~25% margins, VW has 3% margins. A recall, unsold stock or component shortages can quickly put VW in the red. This is what I mean by downturn risk, economic downturn is not the only potential problem manufacturing companies run into. > Really, three out of three, why bother? This level of communication…

Tesla has 25% margins because they are in a different segment . If Tesla sold a large number of very cheap cars they would not be able to command 25% margins. If you lop off the top portion of VW's sales and look at their margins they will be much higher than the margins on the smaller stuff. But in absolute numbers those figures certainly help and they also help to protect VWs income stream during slow years. Their…

> because they are in a different segment.

Yes, and this is exactly why comparing stock prices and expecting them to match units sold isn't useful.

Re: Tesla shares tank after U.S. discounts doubled on key models

#150

Post by Eddy_Viscosity2 »

mutatio wrote: post #78
samwillis wrote: post #59

I just fined the Tesla share price incredible hard to justify, I know they are a growing company with big ambitions but the numbers just don't work. Tesla: - Market cap: $392.78 billion - Q3 units sold: 343,000 VW Group: - Market cap: $70.98 billion - Q3 units sold: 2,181,300 Obviously they are slightly different companies, Tesla sell solar and battery storage products. And VW Group have brands that sell to a part of…

It's not really about units sold though is it? I guess yes, usually it's a good approximation, but you could sell a single unit for $5bn and have a superior net profit. Tesla's profit margin looks to be ~15%, whilst VW is at 3% - I'd love to know what it does to those numbers. Tesla's net income for Sept 2022 actually appears to be much higher than VW, if I am interpreting the numbers correctly.

The bigger the margins, the more room there is to be undercut from competitors. This is a fundamental property of the free market. When* it works, margins reduce.

*I say 'when' here because too many counter-examples non-functioning markets to list.

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