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Investors conclude that Tesla is a carmaker, not a tech firm

economist.com

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Re: Investors conclude that Tesla is a carmaker, not a tech firm

#71

Post by Server6 »

moonchrome wrote: post #12
msoad wrote: post #4

I have a Tesla and I also hold a short position on TSLA. My Tesla is a great car. The best car that I've ever driven but I'm not sure if it has anything that other car manufacturers can't replicate. I think Apple can make an even better car than Tesla if they build the hardware and software like their phones and computers. The idea that Autopilot has some magic sauce that nobody else can replicate is laughable.

> I think Apple can make an even better car than Tesla if they build the hardware and software like their phones and computers. I'm not sure outsourcing manufacturing and focusing on design works in auto industry - but could be wrong.

Foxconn is designing an EV platform specifically for this.

https://www.foxconn.com/en-us/products-and-services/event-hi...

We'll see if it works out. Seeing as how they're Apple's biggest partner I'd be surprised if Apple one day doesn't design a car. EV's are simpler, eventually they'll all be fast and have 500 mile ranges. The platform won't matter, so what sells the car? Design.

Re: Investors conclude that Tesla is a carmaker, not a tech firm

#72

Post by rootusrootus »

In the most optimistic scenario possible, it is difficult to imagine how their future is bright enough to justify a valuation on the order of 10x GM. They would have to take the entirety of the car market, which is obviously not going to happen.

Re: Investors conclude that Tesla is a carmaker, not a tech firm

#74

Post by mavhc »

judge2020 wrote: post #19
msoad wrote: post #4

I have a Tesla and I also hold a short position on TSLA. My Tesla is a great car. The best car that I've ever driven but I'm not sure if it has anything that other car manufacturers can't replicate. I think Apple can make an even better car than Tesla if they build the hardware and software like their phones and computers. The idea that Autopilot has some magic sauce that nobody else can replicate is laughable.

The difference seems to be that Tesla was 5-10 years ahead on everything: Minimalistic interiors, modern infotainment, mobile app performance, and of course they lead the way in making electric cars viable by showing that they can both look good and blast off in record time. But you're right that other automakers see Tesla as a threat and are catching up; for example, the range and charging curve improvements on mode…

Tesla's only competition is Chinese EV makers, everyone else can't make enough cars, and none of them are profitable.

Tesla are 5-10 years ahead on profit, due to adopting cost savings such as no buttons, more miles per kwh, thus smaller batteries, casting most of the body in 2 or 3 pieces.

And then there's in house software creation, vs everyone else. Software makes their use of their motors more efficient.

That's before you have the problem with how to get rid of your non EV business.

Then you have battery tech, opening lithium refining facilities, owning more of the supply chain. Everyone else will be paying extra for batteries for decades.

Re: Investors conclude that Tesla is a carmaker, not a tech firm

#76

Post by code_runner »

nradov wrote: post #58
judge2020 wrote: post #19

Earlier quoted context omitted.

The difference seems to be that Tesla was 5-10 years ahead on everything: Minimalistic interiors, modern infotainment, mobile app performance, and of course they lead the way in making electric cars viable by showing that they can both look good and blast off in record time. But you're right that other automakers see Tesla as a threat and are catching up; for example, the range and charging curve improvements on mode…

Most car buyers don't actually want minimalistic interiors.

I know you’re coming back in a few minutes to cite your sources. Excited to see the results of this survey!

Re: Investors conclude that Tesla is a carmaker, not a tech firm

#77

Post by md_ »

hef19898 wrote: post #52
md_ wrote: post #36

Earlier quoted context omitted.

AWS, yes. Retail? Nah.

Even back when I worked there in logistics, I wondered how much of AMZN share price comes from AWS and how much comes from retail. But then it is difficult, cash flow comes from retail, profits come from AWS. So Amazon might actually be both, and benefiting from it.

Definitely. I'm not claiming it's black and white or either/or, to be clear.

But, what are the characteristics investors should look at for "tech company P:E"? Presumably a non-linear profit curve driven by low unit costs, linear or increasing revenue per unit, and strong network effects. IOW, if you're building the next Microsoft, each unit of Windows sold costs you nothing, makes you the same revenue (and thus more profit) than the previous unit, and increases the appeal of Windows because "everyone is using it."

Retail businesses are just totally the opposite of that.

The network effects are limited. (I guess for marketplaces this isn't totally the case: if everyone is buying on Amazon, then more resellers want to become Amazon resellers. But then, for "platforms" like Uber, it seems the network effects are weaker than we might think; drivers and users both find it easy to drive for/hail on Uber, Lyft, etc, side-by-side.)

The unit costs are fixed.

As the retailer gets bigger, their growth naturally trends closer to overall economic growth. (If you sell software, and the software makes workers 10x more productive, you can expect to get a cut of that 10x in productivity. If you sell milk, your market is going to grow at the rate at which demand for milk grows.)

The real malefactors, in my mind, are people like Warby Parker, Away, Casper, etc--direct to consumer is fine and well and probably lowers costs a bit, but it's fundamentally similar to ordering from the Sears Catalog in the 19th century. But by some bizarre combination of hype and, I know I keep saying it, clever CSS, these jokers have convinced investors they're somehow different.

See https://www.economist.com/business/2021/09/09/direct-to-cons..., https://www.ft.com/content/616421f0-6946-485a-aca4-e9a2a522a..., etc.

Re: Investors conclude that Tesla is a carmaker, not a tech firm

#78

Post by rootusrootus »

checkyoursudo wrote: post #29

What happened in 2020 that made investors think Tesla was a tech company instead of a car company? Based on the graph in TFA, it seems like investors maybe used to price the valuation right. (Caveat: I have no idea if they did, but the valuation used to be in line with other car companies, I guess?)

> What happened in 2020 that made investors think Tesla was a tech company instead of a car company?

My guess is nothing. Investors just piled on looking to make a quick buck on a rising stock, and it fed an enormous bubble. Money was looking for somewhere to go. The market is only rational over a very long timeline.

Re: Investors conclude that Tesla is a carmaker, not a tech firm

#79

Post by tshaddox »

cainxinth wrote: post #45
judge2020 wrote: post #19

Earlier quoted context omitted.

The difference seems to be that Tesla was 5-10 years ahead on everything: Minimalistic interiors, modern infotainment, mobile app performance, and of course they lead the way in making electric cars viable by showing that they can both look good and blast off in record time. But you're right that other automakers see Tesla as a threat and are catching up; for example, the range and charging curve improvements on mode…

> Minimalistic interiors, modern infotainment, mobile app performance None of that is why Tesla was ahead of everyone for so long. It's because their cars have better range, and Tesla is still the range leader. They held four of the top six spots in 2022, and the number one is the Lucid Air (only 3k of them have actually been sold): https://www.caranddriver.com/shopping-advice/g32634624/ev-lo... Also, I just want to…

Is it really that simple? Is there something about Tesla’s technology that enables longer ranges? Surely they just put in bigger batteries and charge more for the car, and competitors could also do that if it was really a primary competitive advantage of Teslas.
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