[panarky]

Nobody is buying Tesla shares based on 2017 sales. They're buying an option on the future.

You may think the company's future isn't worth a $56 billion present value, but comparing Tesla's historical production against Ford and GM is completely missing the point.

That would be like comparing Google's revenue in 2004 against its competitors in the advertising industry.

Investors who bought Google's IPO were valuing the company's potential in 2014 and 2024, not its minuscule market share in 2004.

Google's 2004 IPO valued the company at $23 billion, twice as much as WPP Group even though WPP had much higher revenue than Google.

Today Google is worth 35 WPPs, and Tesla investors think it could be worth multiple GMs and Fords ten years hence.

[Aloha]

How does it make sense that Tesla could be worth several Fords, or General Motors in ten years?

The automotive market is stable, something on the order of 80 million cars a year, and I don't see Tesla vanquishing one of the incumbents either.

I guess my argument is that an Electric Car is not a whole new category of vehicle (like a flying autonomous car might), anymore than diesel cars are looked as a separate market than gasoline ones. Whereas Google created an entirely new category of advertising, that didn't even really exist before they arrived and the market grew by two or three orders of magnitude.

[sumedh]

> I don't see Tesla vanquishing one of the incumbents either.

People didn't see that RIM and Nokia would be destroyed either.

[Aloha]

Both Nokia and RIM were vanquished because they failed to invest in their future - the big three are investing, and buying technology companies to fill in what doesnt make sense to build themselves.

[sumedh]

Nokia was doing that as well (pretty sure RIM would be too).

Just because you are buying new tech does not automatically mean you will succeed.

[Aloha]

In this case, I see no big paradigm shift that would presuppose me that any of the big global auto manufacturers would go away.

Building good cars, is a game of logistics and supply chain, something Tesla is largely still learning - the thing about building a good electric car is, it only changes one aspect of an otherwise concept, and you can buy the technology you need for that.

RIM, Nortel and Nokia, are not good example cases, because they didnt loose on their ability to manufacture shit - and Tesla likely will.

[sumedh]

We can keep on arguing back and forth on this but in the end I wont bet against Elon.

If you are sure what the future holds perhaps you should short Tesla.

[razorunreal]

Don't think about the cars, look at the charging network. I think it's plausible that all the big car companies realise that nobody will buy their electric models unless they license Tesla's charging infrastructure. They can try to replicate that infrastructure but they are already behind, and it would be very painful to do if nobody is buying your cars while you build it out. So there's your (literal) network effect.

[dirtyaura]

I assume battery sales for energy producers will play a big role in Elon’s plans. Is he right? Maybe, if there is political will to fight climate change.

[Aloha]

If batteries go like you suppose they will, they will quickly become a race to the bottom, battery packs are not terribly complex to make.

[thisisit]

You are right about Google's future valuation back in 2004. But we also have to think about the comparison here - we are comparing a software and manufacturing company.

Even if we ignore different sector we need to look at the financials. Google dint have much debt. Tesla on the other hand has lots of debt. Their financial leverage is 5.97 which is high.

Then there is also about the interest rate climate. We have seen years of unprecedented low interest rates. Feds now have started to increase it slowly. If it rises too high Tesla's interest obligation will balloon as well. If they are not building cars fast and selling them even faster, they might be a deep hole and hence overvalued.

[jryle70]

I don't have the crystal ball to tell if Tesla's market value is justified, but they are at the forefront of 2 exciting and explosive areas of growth: electric transportation and battery. You only need to count the announcements of established car makers of electric vehicles in recent time to tell how dynamic the market is. They are not compete in a typical stable manufacturing sector.

[lenley]

Absolutely. Also, Tesla doesn't really have the network effects that other industries have (like search). Companies with similar cultural cache are also catching-up like BMW...