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Tesla market cap overtakes Ford

Tesla market cap overtakes Ford

This and many other articles:

http://www.theaustralian.com.au/business/technology/elon-musks-tesla-ove...

"Tesla, the upstart Silicon Valley electric-car maker run by Mr Musk, has overtaken Ford Motor Co, the automotive pioneer that is exactly 100 years older, as the second-largest US automaker by stockmarket value. Shares in Tesla were up 7.3 per cent at $298.52 overnight, pushing the California automaker’s market capitalisation to $US48.7 billion, above the Michigan company’s roughly $US45.5 billion, according to FactSet. The next milestone for Tesla would be General Motors, valued at roughly $US51.2 billion."

Are conventional auto makers about to enter the death spiral?

Carl Thompson | 2017年4月4日

"Are conventional auto makers about to enter the death spiral?"

The high valuation of Tesla's stock means a lot of people are betting that Tesla becomes one of the world's largest automakers. I like Tesla's cars but their stock price vs. their prospects / risks make it seem like their stock not a good value _to me_. Obviously others disagree and are OK with the risk. I'm relatively conservative financially so I'll sit this one out.

But in any case even a best-case scenario where Tesla becomes a leading manufacturer is one that takes many years. The current large car manufacturers will have plenty of time to react and I'm sure some or all of them will dedicate enough of their considerable resources to compete where ever the market goes. BMW, Mercedes, GM et. al, while surely braking EV production as much as they can, do at least offer decent EVs and PHEVs. No, they're no match for Teslas in style, performance, or charging infrastructure but they're probably good enough for many people. And I'm sure their EV products will continue to get better as they already have.

So I believe that conventional (ICE) _cars_ will eventually (10 or 15 years from now) hit a death spiral I'm pretty confident that the current big manufacturers will still be around. They'll just be building the best EVs they can when that time comes.

Carl

Captain_Zap | 2017年4月4日

Again, Ford's market cap doesn't include the retail network aka Dealerships. Tesla does. Tesla also includes the energy business. You can't compare the traditional wholesale car manufacturing business to Tesla.

Frank99 | 2017年4月4日

I think direct comparisons between Tesla and conventional auto makers miss the mark. Tesla has their fingers in so many pies loosely coupled by the term "sustainable" that it's hard to envision what any of those markets are going to look like in 10 years.

I think Tesla is going to cause great disruption in the Electric Utility field, in the Auto Manufacturing field, in the larger Personal Transportation field. I would be greatly worried if I were a PG&E or Duke Energy, because in 10 years most of their customers will have gone mostly off-grid - PG&E will be like today's newspapers which have lost 2/3 of their subscribers and are desperately trying to figure out how to stay alive.

The same may be true for auto manufacturers - the large monoliths with tens of billions of dollars tied up in engine/transmission/ECU/Emissions designs that provide a huge barrier to entry for new ICE manufacturers may find that their market has picked up and moved elsewhere when anyone with a metal stamping press can enter the EV business. It's not Tesla that's going to make them obsolete, it's going to be the evolution of the auto manufacturing business that Tesla is driving that's going to leave them fighting over scraps. Perhaps everything shakes out with a more custom model of doing business - you go to Amazon, pick a Porsche chassis, Jaguar body, HotBoyz body modification kit, Sparco seats, BMW interior, and Tesla battery pack (or a Cadillac chassis with a Rolls Royce body and interior), and your new car rolls into your driveway in two weeks. With advanced computer simulation and acceptance by the DOT, Amazon could certify your car for crash safety and mileage before it even built it and never have to sacrifice one for physical crash testing.

If Tesla's vision of personal transportation becomes a reality, the whole concept of the vehicle brand may get thrown out the window. If all you have to do is schedule a car to show up at your door every weekday at 7:30 and take you to work, you won't care if it's a BMW or a Chevy. You will probably have an equivalent choice of car level (basic, comfortable, luxurious), but your choice of brand will no longer be a way you define yourself ("I buy Volvo's because..." or "I buy Cadillacs because..."). Perhaps the transportation service brand will be the new way that you differentiate ("I use Orange cars because they're all less than six months old" or "I use Blue cars because they're the cheapest" or "I use Red cars because it comes with a massage table and masseuse and have a high-quality wine bar").

I think this disruption, like a political revolution, will be chaotic and it will be very difficult to predict what comes of it. Like many revolutions, the current leadership may come out on top by mounting a bloody purge; or they may end up begging in the streets. Tesla is in a unique position to start the revolutions, but it's not clear that they can drive the directions of the revolutions once they take hold.

swingshiftworker | 2017年4月4日

Tesla's price rise has nothing to do w/Ford, GM, Chrsyler or any other automaker's viability and/or profitability.

Short cover probably had a lot to do w/the recent rise in price of Tesla's stock.

Buying Tesla on the rise is otherwise pure speculation (almost everything about Tesla is) in the hope that Tesla will meet it's M3 targets. However, if it fails to meet the "public's" expectation for M3 sales, the stock will just as likely take a dive.

So, I'd say this is a very risky time to even consider taking a long position in Tesla without also having a protective put position in place.

KP in NPT | 2017年4月4日

I've read several articles Inc the past couple of days that have said that the short interest has actually grown - so not short covering yet. This one says besically what the others have on the subject:
http://www.valuewalk.com/2017/04/tesla-stock-record-high-short/

Carl Thompson | 2017年4月4日

Frank99:
"I would be greatly worried if I were a PG&E or Duke Energy, because in 10 years most of their customers will have gone mostly off-grid - PG&E will be like today's newspapers which have lost 2/3 of their subscribers and are desperately trying to figure out how to stay alive."

I think those companies will still have a place. But it will be less about energy production and more about storage and redistribution. My solar panels are great and make it so I pay nothing for electricity over the course of a year. But it would have cost me much, MUCH more than even the $25k I paid if I wanted to be completely off grid. I would have needed a bigger array (I am financially on the plus side over a year but I believe I'm on the minus side for actual energy production). I use a lot of electricity mainly due to my electric car so I'd also need a very expensive battery array big enough to store excess energy from the highly positive production summer months for the negative winter months. So I don't think it's feasible for most people with solar or other alternative energy production to be completely off grid. Companies like PG&E will still be needed by us to fill in our production gaps and move our excess production where it's needed.

"...when anyone with a metal stamping press can enter the EV business."

Well, we on this forum like to admit it but that _is_ an advantage of the big manufacturer's dealer / services networks. They don't need to invest very much in showroom / service infrastructure because other businesses pick up the tab. Any new company has to compete with that on its own (or make deals with existing dealers).

Carl

Carl Thompson | 2017年4月4日

@swingshiftworker

Yeah, but as E.M. has pointed out Tesla's stock has defied logic so far so I wouldn't bet _against_ it because the speculation seems endless. I don't short stocks but I wouldn't short Tesla even if I did. It's just too hard to tell when Tesla's stock price will meet reality or if it ever will.

Carl

Red Sage ca us | 2017年4月4日

Captain_Zap wrote, "You can't compare the traditional wholesale car manufacturing business to Tesla."

Perhaps not, but you can certainly take note of the Contrasts, then point and laugh at the older companies. Right? Hello...? Anybody there?

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Frank99 wrote, "I think direct comparisons between Tesla and conventional auto makers miss the mark."

+42! Man... That's all you had to say!

But... When it comes to going 'off grid'... It's a bit harder than most would like. I think that today 'most people' live within the borders of incorporated cities in the U.S. And, due to copy/paste legislation dropped into their local laws, often as a part of their charter, a grid connection is required to get a Certificate of Occupancy for a home or business. Further, similar cookie cutter regulations require that solar panels be grid connected too. In States like Arizona, the utilities have been fighting back, claiming the grid cannot handle the surplus electricity generated from a mere 2% of their Customers that installed solar panels in recent years.

The rest of your post is simply superb.

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swingshiftworker: That is very good advice. And, though the disclaimer almost always reads that past performance is not an indicator of future blah, blah, blah... I do point out that back in the first half of February 2016, when TSLA went down to around $140 from about $220 the $#0r+s were ecstatic... They thought that finally the CORRECTION they had predicted, prognosticated, prayed for had come to delivereth the smacketh downeth to Elon Musk and his worshippers... Then they checked the rest of their portfolio and realized that the entire stock market had crashed around that time. Tesla fans took the opportunity to buy in at around $150 forcing it back up to $190, and then to $205 or so within days. That rebound took place far sooner than the recovery for the rest of the stock market. I mark that as a firm indicator of market resilience for TSLA. I think the current heights for the stock are exactly where they have been headed since September 2014, only deferred a bit. Sure, there may be some pullback from time-to-time as what passes for sanity on Wall $treet sets in... But if TSLA goes over $320 prior to the actual release of Model ☰ it is highly unlikely, in my completely unqualified and entirely uneducated opinion, that TSLA will go below $225 again without the whole stock market crashing again.

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BMW (BMW), Daimler (DDAIF), and Volkswagen (VLKAY) each down at least 1% today...

https://www.model3ownersclub.com/threads/mixed-bag-of-analysts-opinions....

Frank99 | 2017年4月4日

Carl and Red -
I agree with both of your objections to people going "off the grid" - I overstated my case there. What I really expect to happen is that the electric markets are going to turn upside down. Instead of 3:00 PM being the peak demand period, it'll be the zero demand period because it'll be cheaper for everyone to use solar than use Grid power. Instead of midnight being the lowest demand period, it'll become peak demand. Electricity pulled from the Grid will drop drastically due to distributed generation, so revenues and earning will drop. Many people will use PowerWalls to essentially cut themselves off of the grid, but they'll remain connected to assure they always have electricity - meaning the Grid has to maintain it's reliability even though no ones pulling power to generate the revenues to pay for it. Many people won't use PowerWalls, and will simply use the grid for what's currently termed off-peak power - once again requiring a functional Grid while paying peanuts (I pay $0.044 / KWH for off-peak electricity). If the utilities raise off-peak rates to recover revenues, it'll simply drive more people to PowerWalls. So my thesis is still that Tesla (through Solar City and the Energy products) is going to completely disrupt electric utilities, and it's really not clear what the Grid is going to look like in 20 years.

Red Sage ca us | 2017年4月4日

Frank99: +1! Well stated. I think that utilities will try to raise their rates by a massive amount. They will also begin to apply lots of fees that have nothing to do with the amount of electricity you use. Further, they will lobby State and Local officials and regulators to allow them to do this, promising some sort of back end revenue increase for the government, all at the expense of citizens.

Much the same happened in the City of Long Beach CA some years ago. A proposal was put forth to increase the amount of local tax on natural gas for residents, and it was struck down in a public vote on the ballot. Then, the Long Beach City Council put through a measure of their own that allowed the local gas company to increase their rates by 200%. So, citizens' monthly bills went up by a factor of three, and the city still got its taxes, at the same rate, but three times as much per month.