Tesla Passes Ford by Market Value • Hacker News Board

Re: Tesla Passes Ford by Market Value

#311

Post by bigtimeidiot » Mon, Apr 03, 2017, 7:17 PM UTC

crabasa wrote: post #57

dan1234 wrote: post #2

Interesting, but market cap isn’t everything - FTA: "While Tesla’s market capitalization has swelled in size, Ford still overshadows the Palo Alto, California-based company in most other financial metrics. Over the last five years, Ford has posted net income totaling $26 billion, while Tesla has lost $2.3 billion. Last year, Ford had annual revenue of $151.8 billion compared with Tesla’s $7 billion. And when it comes…

> Over the last five years, Ford has posted net income totaling $26 billion, while Tesla has lost $2.3 billion. Ford: "We have no idea how to invest this money. I guess let's just put it in the bank." Tesla: "We have so many idea for investments, we're only constrained by cash. Let's go back to the capital markets!"

>Ford: "We have no idea how to invest this money. I guess let's just put it in the bank."

Ford has been in business for almost 120 years, and has contributed untold billions to the economy. What a terrible company, am I right?

Re: Tesla Passes Ford by Market Value

#312

Post by calpaterson » Mon, Apr 03, 2017, 7:18 PM UTC

akhatri_aus wrote: post #301

calpaterson wrote: post #254

Earlier quoted context omitted.

No, market cap is not everything. Specifically it is not enterprise value, which is the correct measure of the value of a business. Market cap is the value of the equity. Enterprise value is the value of the business (ie including debt). Tesla's EV is $52bn. Ford's EV is $150bn.

Enterprise value isn't the value of the business, its the cost to acquire a business and assume its debt. You've assumed that you have to take on a company's debt as an acquirer to take over a company. The market cap is closest to its value representing what it takes to control/own/sell the company.

Well, ownership and value are different things. Ford has large creditors and they lay claim to a correspondingly large portion of the cash flows. Tesla (presumably, looking at the difference between EV and market cap,) does not.

The significant extra value of Ford is ignored when you focus the cost of getting control of a company rather than total value.

Re: Tesla Passes Ford by Market Value

#313

Post by bigtimeidiot » Mon, Apr 03, 2017, 7:21 PM UTC

erikpukinskis wrote: post #273

allendoerfer wrote: post #252

Earlier quoted context omitted.

> Ford: "We have no idea how to invest this money. I guess let's just put it in the bank." > Tesla: "We have so many idea for investments, we're only constrained by cash. Let's go back to the capital markets!" I think becoming as big as Ford already is, is one of Tesla's most positive possible futures if all of their many ideas play out. But they are already valued higher than that. How can this possibly work? There…

> There are so many car makers, there is no monopole they could get. Same for solar and batteries. The automobile industry will contract as we move from individual ownership to mobility. But along with that transition some manufacturers will keep up and others will not. Tesla is hoping to be one of the winners, taking perhaps 25% of the mobility market as the car buying market dries up. Tesla's valuation is also base…

>Simply get 10% of mobility and 10% of electricity storage and they'll have justified well above their current valuation.

Please show your math.

>Tesla will basically take the market from coal and petroleum.

And you base this off, what, exactly?

Sometimes I think that half of HackerNews didn't even know solar or battery backups were a thing before Tesla. These are competitive spaces where Tesla has essentially no market share (just like cars).

I think Tesla will be successful, but I doubt they end up market leader in any of these things.

Re: Tesla Passes Ford by Market Value

#314

Post by agildehaus » Mon, Apr 03, 2017, 7:21 PM UTC

erikpukinskis wrote: post #303

dabeeeenster wrote: post #282

Earlier quoted context omitted.

That makes no sense to me - can you explain further? Why don't Ford produce a 60KWH car as cheaply as they can?

The dealerships won't sell it. Any marketing they do for it will hurt their other brands. Any marketing they do for their other brands will hurt it. It's like McDonalds selling an organic, grass fed burger. If they talk about the quality of the beef, they're basically saying the Big Mac is low quality beef.

McDonald's just a couple days ago announced a change from frozen to fresh beef patties in their Quarter Pounder, clearly to compete with Wendy's who joked about it on their Twitter (https://twitter.com/Wendys/status/847478772311834626).

I'm not sure what that says about your analogy. Perhaps Ford should have gotten started on this a long time ago and taken the hit then. Perhaps once Ford gets serious about electrics, their response will be equally as weak as McDonald's.

Re: Tesla Passes Ford by Market Value

#315

Post by username223 » Mon, Apr 03, 2017, 7:22 PM UTC

MR4D wrote: post #233

iamatworknow wrote: post #142

Earlier quoted context omitted.

>What is this based on? It's based on nothing other than the weird contempt you see for large, established corporations in the SV crowd. Big established corporation = big established rule book and management hierarchy = stifled innovation. Nevermind the fact that most of the major technological breakthroughs of the past 100 years were developed by the research wings of big corporations (Bell Labs, defense contractors…

I'm not the parent poster, but I'd offer one reason why some people feel this way - Ford is a car company, while Tesla is a software company. Big difference in expectations, capital expenditures, etc. Based on committed capital, I think this is at least partially correct.

> Ford is a car company, while Tesla is a software company.

How? Uber has passed as a software company by making its drivers pay for capital and depreciation. Tesla currently sells physical cars to individual people. They may be aiming for "self-driving," but if they ever get there, there's still the question of who pays to build and maintain the cars. Compared to that, the value of the controlling software seems fairly small.

Re: Tesla Passes Ford by Market Value

#316

Post by erikpukinskis » Mon, Apr 03, 2017, 7:22 PM UTC

mcguire wrote: post #134

andy_ppp wrote: post #90

I would agree with the market that Tesla has the potential to be far far larger than Ford should things go well. If they manage to get to 500000 cars and full automation within the next year, they'll be worth even more than their current market cap. Remember that Tesla have by far the best dataset for building self driving cars and this is going to give them a huge time to market and/or safety advantage over their co…

Absolutely! By 2027, all the vehicles on the road will be Teslas.

I don't think so, but by 2027 poor people won't be able to afford to drive anything other than a Tesla. The per mile costs for ICE will dwarf electric. The per mile costs of car ownership will dwarf autonomous mobility services. And Tesla will own the biggest battery supply chain in the world, with the best economy of scale.

Rich people will still buy classic cars and Germans will still buy ICE BMWs. The vast majority of daily commute hours will be split between Teslas and whichever other manufacturers who get off their butts before it's too late.

Re: Tesla Passes Ford by Market Value

#317

Post by aanm1988 » Mon, Apr 03, 2017, 7:24 PM UTC

cmarschner wrote: post #110

drzaiusapelord wrote: post #76

Earlier quoted context omitted.

>a huge supply chain and R&D costs around combustion engines You mean largely trouble-free engines that run on ultra-cheap gas? ICE has environmental issues, of course, but the idea that electric is universally superior is questionable. There's no range anxiety with gas and any backyard mechanic can fix most issues. Your locked down $100,000 IoT car is a completely different beast. >Much of this will be of zero value…

>Says who It is foreseeable that ICEs will become banned, at least in Europe. Right now there is still too much lobbying by the traditional car makers, but long term there is no other choice for reaching climate goals. Edit: See e.g. http://bigthink.com/scotty-hendricks/the-end-of-the-internal... https://www.autoevolution.com/news/germany-asks-eu-to-think-...

That would never work in the US. It would be both impractical and politically impossible. Most people don't have 35k to drop on an electric car, and even if they did the infrastructure doesn't exist.

Re: Tesla Passes Ford by Market Value

#318

Post by Robotbeat » Mon, Apr 03, 2017, 7:25 PM UTC

mvpu wrote: post #144

Comparing Tesla with Ford is like comparing Ford with (GM + Shell + Hertz). Tesla is an energy company not an automobile company. It plans to sell you new ways to capture (solar panels), store (power wall), and consume (cars) energy. It also plans to make cars fully autonomous and ownership free. Ford will obviously compete with Tesla in some segments is not a primary competition for Tesla.

Correct. The energy side (powerpacks) are absolutely huge, even with cheap oil. When combined with solar, this provides a cheaper source of dispatchable power than diesel, which is its primary competitor, anywhere along the equator.

I actually think the residential solar roof market will remain niche, and the fancy integrated solar roof will be effectively a luxury product with a relatively small market value.

However, look at that huge Kauai solar/storage installation: http://www.theverge.com/2017/3/8/14854858/tesla-solar-hawaii...

Tesla (with acquisition of Solar City) is able to turn these commodity solar cells from other companies (now at just 19 cents per Watt: http://pv.energytrend.com/pricequotes.html) into profitable utility-scale installations very quickly and at scale. They can install them all over the developing world where electricity demand is soaring and the existing sources are expensive (i.e. diesel). A key to this is the ability to install FAST. They can install these utility-scale battery storage units in just 3 months vs 3 years for a natural gas fired power plant (vs 4-5 years for coal, 6-20+ years for a nuclear power plant). And they can work with any kind of existing or future electricity source, smoothing out peaks in demand, including advanced combined cycle natural gas plants.

So that's a huge market especially if you can tack on a solar farm on top of it. And their exposure to risk on the very low-margin solar cell manufacturing side is limited, as Solar City primarily uses whatever cells the market produces, not their in-house stuff. It has even less competition than the "non-sucky production electric cars" market, and with the 3rd world needing terawatts of electricity, the market will only grow.

Re: Tesla Passes Ford by Market Value

#319

Post by Arizhel » Mon, Apr 03, 2017, 7:26 PM UTC

mikeash wrote: post #17

John23832 wrote: post #7

Earlier quoted context omitted.

If they can properly pivot into the electric car market, a lot. Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get). They know how to mass produce cars (granted right now, ICE cars). That's not an easy feat. They have a large manufacturing and maintenance base that, frankly, Tesla can't r…

I have heard many times that the traditional car companies are heavily outsourced aside from the drivetrain. If I haven't been misinformed there (quite possible either way!) and this is true, then outsourcing that would leave Ford not adding much value themselves. Even if it would work out for them, Tesla is pushing really hard to be a major battery supplier, so they could end up benefitting either way.

>I have heard many times that the traditional car companies are heavily outsourced aside from the drivetrain.

It's true, but I don't think it matters. Traditional automakers rely on suppliers for all kinds of parts on cars: headlights, wipers, tires, glass, airbags, and many electronic modules (auto-dimming mirrors, blind-spot radars, etc.). However they do tend to always keep the body/chassis and the drivetrain in-house (sometimes they'll outsource the transmission, like to ZF).

I don't see how this would affect them moving to EVs. Going from ICE to EV means two giant changes: the chassis (to make room for an entirely different layout, esp. because of the batteries), and the drivetrain. Well, the automaker controls both of those. All those other things, like glass, headlights, electronic safety add-ons, etc., are going to be the same either way. You don't need a different blind-spot monitoring system or windshield wipers or tires just because the drivetrain is electric.

Re: Tesla Passes Ford by Market Value

#320

Post by bigtimeidiot » Mon, Apr 03, 2017, 7:26 PM UTC

jnicholasp wrote: post #196

youngtaff wrote: post #154

Earlier quoted context omitted.

Ford have also been quite innovative in the engine department building small volume turbo charged engines for greater efficiency and lower emissions https://en.wikipedia.org/wiki/Ford_EcoBoost_engine

Being innovative at small details of existing concepts isn't likely to produce huge gains in stock value, as opposed to being innovative at entire categories of new industry- and infrastructure-disrupting products. Ford does the former, Tesla does the latter, and the market is valuing them accordingly. The market could be wrong, Tesla could fail to achieve their vision, Ford and other existing big companies could som…

>Tesla does the latter, and the market is valuing them accordingly.

Suddenly we believe in a rational market when it comes to Tesla? Everytime I ask basic valuation questions in these threads, I get touchy-feely answers about "potential". And HackerNews is supposed to be a data/tech place. Imagine what average Joe thinks?