Elon Musk once scoffed at the notion that BYD could compete with his company. Now, the automaker run by billionaire Wang Chuanfu is poised to be the new No. 1 in electric vehicles.
Until this year, most of the analysts weren’t really including FSD in any of their projections. They were projecting Tesla maintaining the really high margins instead of high margins. Some are adding AI in now.
When the really high margins became high margins, things changed pretty rapidly.
Of course retail investors amd what actually happens is different, and it’s hard to deny there must be some impact beyond what analysts are saying, but I don’t think it’s as much FSD as people think it is.
Edit: analysts weren’t even including the energy business either, but thats about to change too.
Without value as an AI company too, there is no sensible way Tesla can be valued as high as it is. Tesla should basically surpass the 10 leading car makers combined, if it should make sense by merely making cars as we know it today.
Tesla was bringing in insane margins and profits, I don’t think people necessarily appreciate how much it was.
In 2022, Tesla earned more profit (12.6b) than Ford AND GM (10.6 combined) on substantially less vehicles. Most of the legacy manufactures were also looking to suffer for an extended period of time, bringing in the question of their long term profitability, while Tesla showed growth and profits. Tesla was also on track to beat Toyota in 2023 or 2024. (Edit: It might have been VW not Toyota)
People were looking at their growth trajectory and what the company guidance was and seeing those margins were, and while the PE would be high 4-5 years down the road looking at it like this, it wasn’t going to be entirely crazy either.
When a company is growing so fast, people give it a higher multiple, until it’s not.
Then the margins dropped, Elon did his batshit insane stuff with Twitter, and some combination of that leaves us where we are today.
Right now, they really need to make their Gen 3 25k vehicle as that’s much more priced in than FSD IMO. Tesla has been guiding 50% CAGR for
years now, and if Gen 3 comes out and it doesn’t start that trend again with their standard good margins, they’re going to get brutalized. If they keeping delaying it much longer, I think they’re going to get really hurt as well.
The current price is really just a waiting period to see what happens with Gen 3 and the energy business.
I expect to see downgrades in 2024 because Tesla won’t meet the 50% CAGR target that people take to mean 50% each year.
By 2025 I think the big talking point will be their booming energy business as people start to realize it might actually be bigger than the car business for real.
Edit: it’s also worth pointing out, margins came down because interest rates went up. A car payment at these lower prices is around the same as it was when prices were higher, it’s just that money is going to the banks as interest instead of the car manufacturers. That, and Elon fucking the brand over with his twitter nonsense.
I admit what Tesla has done is very impressive, and they actually ARE as big as the rest of top 10 combined on pure electric cars here (Denmark). But the competition has arrived, and it is very unlikely that Tesla can maintain such a huge market share, and the margins will probably never come close again to what they were, again because there is more competition now.
In the energy market, Tesla presented solar roof tiles which went away again, and they had the power wall which I’m not sure is very popular anymore. Here nobody uses that, when we bought our solar solution with battery, Tesla didn’t even appear in internet searches as an option. Tesla has done some energy things for the past 15 years, including selling a battery park for mass storage in Australia, but it seems none of the projects are very successful, and Tesla is far from a market leader in any aspect of energy AFAIK.
I’m guessing by almost worthless, he means it would be valued as other car makers, and that would decrease the value to a fraction of what it is today. Unfortunately for Musk, Tesla AI is in fact basically worthless without the false promises. Because Tesla is at best #4, and in high tech generally, being #4 means your margins have to be very low.
Tesla stock goes up because it goes up. Thats about it.
The company had high margins and a commanding lead for a desirable auto segment, but at this point its losing ground. The stock goes up because it increased 7x during covid because of lies and hype, so its a Bitcoin/GameStop style meme engine now. It dips and people buy buy buy. It has very little to do with company fundamentals.
They print profits out of thin air by earning carbon credits through ZEV program and selling them to other manufacturers. It was 30% of their profits this year and enables competitors to stave off actually making any EVs, leaving Tesla as the only game in town in the US
Until this year, most of the analysts weren’t really including FSD in any of their projections. They were projecting Tesla maintaining the really high margins instead of high margins. Some are adding AI in now.
When the really high margins became high margins, things changed pretty rapidly.
Of course retail investors amd what actually happens is different, and it’s hard to deny there must be some impact beyond what analysts are saying, but I don’t think it’s as much FSD as people think it is.
Edit: analysts weren’t even including the energy business either, but thats about to change too.
Without value as an AI company too, there is no sensible way Tesla can be valued as high as it is. Tesla should basically surpass the 10 leading car makers combined, if it should make sense by merely making cars as we know it today.
Tesla was bringing in insane margins and profits, I don’t think people necessarily appreciate how much it was.
In 2022, Tesla earned more profit (12.6b) than Ford AND GM (10.6 combined) on substantially less vehicles. Most of the legacy manufactures were also looking to suffer for an extended period of time, bringing in the question of their long term profitability, while Tesla showed growth and profits. Tesla was also on track to beat Toyota in 2023 or 2024. (Edit: It might have been VW not Toyota)
People were looking at their growth trajectory and what the company guidance was and seeing those margins were, and while the PE would be high 4-5 years down the road looking at it like this, it wasn’t going to be entirely crazy either.
When a company is growing so fast, people give it a higher multiple, until it’s not.
Then the margins dropped, Elon did his batshit insane stuff with Twitter, and some combination of that leaves us where we are today.
Right now, they really need to make their Gen 3 25k vehicle as that’s much more priced in than FSD IMO. Tesla has been guiding 50% CAGR for years now, and if Gen 3 comes out and it doesn’t start that trend again with their standard good margins, they’re going to get brutalized. If they keeping delaying it much longer, I think they’re going to get really hurt as well.
The current price is really just a waiting period to see what happens with Gen 3 and the energy business.
I expect to see downgrades in 2024 because Tesla won’t meet the 50% CAGR target that people take to mean 50% each year.
By 2025 I think the big talking point will be their booming energy business as people start to realize it might actually be bigger than the car business for real.
Edit: it’s also worth pointing out, margins came down because interest rates went up. A car payment at these lower prices is around the same as it was when prices were higher, it’s just that money is going to the banks as interest instead of the car manufacturers. That, and Elon fucking the brand over with his twitter nonsense.
I admit what Tesla has done is very impressive, and they actually ARE as big as the rest of top 10 combined on pure electric cars here (Denmark). But the competition has arrived, and it is very unlikely that Tesla can maintain such a huge market share, and the margins will probably never come close again to what they were, again because there is more competition now.
In the energy market, Tesla presented solar roof tiles which went away again, and they had the power wall which I’m not sure is very popular anymore. Here nobody uses that, when we bought our solar solution with battery, Tesla didn’t even appear in internet searches as an option. Tesla has done some energy things for the past 15 years, including selling a battery park for mass storage in Australia, but it seems none of the projects are very successful, and Tesla is far from a market leader in any aspect of energy AFAIK.
Elon Musk himself has stated that without AI, Tesla would be almost worthless.
https://www.independent.co.uk/tech/elon-musk-tesla-self-driving-b2102597.html
I’m guessing by almost worthless, he means it would be valued as other car makers, and that would decrease the value to a fraction of what it is today. Unfortunately for Musk, Tesla AI is in fact basically worthless without the false promises. Because Tesla is at best #4, and in high tech generally, being #4 means your margins have to be very low.
Tesla stock goes up because it goes up. Thats about it.
The company had high margins and a commanding lead for a desirable auto segment, but at this point its losing ground. The stock goes up because it increased 7x during covid because of lies and hype, so its a Bitcoin/GameStop style meme engine now. It dips and people buy buy buy. It has very little to do with company fundamentals.
They print profits out of thin air by earning carbon credits through ZEV program and selling them to other manufacturers. It was 30% of their profits this year and enables competitors to stave off actually making any EVs, leaving Tesla as the only game in town in the US