[qroshan]

At $50B Market Cap, Tesla should be delivering at least $2B Annual profits.

It's clear Tesla has run through higher margin demand. There aren't many people in the world who can afford a $50,000 car. Tesla is a niche market car, but priced as a mass market (like iPhones) product.

Expect Tesla's sustainable profit to be around $500 Mil per year and it's share price must be cut in half to justify that

[lazyjones]

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits.

When Amazon reached that mark in 2009, their annual profit was slightly over 1B... And the car industry isn't famous for particularly high margins.

> Expect Tesla's sustainable profit to be around $500 Mil per year and it's share price must be cut in half to justify that

There are no such rules for share prices, especially with this kind of revenue growth. Nobody knows where Tesla will be in 5 years but most shareholders expect easily an order of magnitude higher revenues and possibly profits.

[beatgammit]

Yeah, there are plenty of avenues for Tesla to increase profit, such as:

- new vehicle markets (def. semi trucks, perhaps boats and trains as well) - solar - military

They don't have a ton of baggage like their competitors, so they can pivot their battery business in a variety of ways without too much additional investment.

The real question is if they can stay ahead of competition as they expand.

[lazyjones]

> The real question is if they can stay ahead of competition as they expand.

So far they have not only expanded their lead (e.g. Nissan Leaf used to be a bestseller), they've also proven that they got their priorities right from the start. Look at the new Audi e-tron, the Mercedes GLC and the i-Pace: they're all suffering from horrible aerodynamics that cost them 20% or more range at freeway speeds compared to Teslas. They have no fast charging networks able to support similar sales numbers even to Model S/X. Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines. They are now making expensive mistakes that Tesla avoided altogether, so I'm confident about Tesla's leadership.

[gamblor956]

Nissan has sold nearly every Leaf it has ever made. It simply doesn't make many of them, since it was first intended to be a compliance car and a loss leader for the brand.

You can't even buy a Leaf in most of the country, so if you were to scale up sales of the Leaf to the same geographic territory as Tesla sells to, the sales would be about comparable.

Tesla apparently did proper planning while the big car makers are just trying to produce their usual cars with electric engines.

Ah, proper planning. That certainly explains the billion-dollar line collecting dust, the year-long delay on every model, and their inability to properly deliver finished cars to their customers when promised (i.e., basic logistics). The cars you've mentioned aren't meant to have maximum range at high speeds; they're meant to have X range at commuter speeds while providing a luxurious ride. You'll also have to demonstrate (with cites) that the aerodynamics will cost them 20% of posted range, since those aerodynamics have already been factored into their range as part of the federally-mandated testing.

[lazyjones]

> and their inability to properly deliver finished cars to their customers when promised (i.e., basic logistics).

What are you even talking about? I bought my Model S 2 years ago and waited the same amount of time as for the previous BMW (3 months), which didn't even come from overseas (I'm in Europe).

> The cars you've mentioned aren't meant to have maximum range at high speeds; they're meant to have X range at commuter speeds while providing a luxurious rid

And this is why they are no Tesla competitors for most people - who don't want or can't afford a second car for long distances.

> You'll also have to demonstrate (with cites) that the aerodynamics will cost them 20% of posted range

Lots of people have, it's simple physics. At higher speeds, air resistance causes most of the energy consumption. The results can be calculated easily:

https://www.ecalc.ch/evcalc.php?lang=en

130 Km/h (= 80 mph)

Model S = 22 KWh/100 Km

Mercedes EQC = 30 KWh/100 Km

i-Pace = 28,5 KWh/100 Km

[ams6110]

The fast charging network only exists in a few areas. If you happen to live there, great. But for the rest of the country, "range anxiety" is still pretty real.

[JumpCrisscross]

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits

P/E ratios aren’t effective for high-growth or quickly-declining companies. The PEG ratio attempts to compensate for this.

[qroshan]

Exactly my point. US demand growth is done. There will be International pent up demand will be done in Q1.

Q2 and Q3 will show that Tesla has pretty much plateaued. Profit growth is even lower

[JumpCrisscross]

Companies can grow in a shrinking market by stealing share. I’m no Tesla bull, but you’re casting a loose prediction with far more certainty than it merits.

[toufiqbarhamov]

It is a concern though, and as a Tesla supporter I’m a little worried. Tesla is also going to be looking at serious and sustained competition from giants like VW, so if they want to steal market share they’d better do it fast. I accept the argument that such competition is a good outcome for the planet, but I’m not so sure it’s a good outcome for Tesla the company.

[johnvanommen]

Once Jaguar, Porsche and Audi are able to produce electric cars in quantity, things are going to get interesting. For instance, I was recently looking at the Jaguar I-Pace, and was stunned by how long the wait and how high the markups are. Clearly there's a demand for a $100,000 electric car, but things are going to get difficult for Tesla once the competition arrives.

[luckydata]

Competition has been arriving for quite a while though. Having just bought a Tesla, I can tell you I'm starting to appreciate more than just intellectually the huge network of chargers and other infrastructure that company has laid out. It's not perfect but anyone else wanting to play in this market will need the same, and Jaguar is in no position to do it. I don't think anyone at Tesla is losing any sleep over Jaguar TBH but they might be looking intensely towards Toyota.

[gamblor956]

I live in a nice part of LA and I see as many iPace's as Teslas, and the iPace has only been available for about 3 months locally.

And the iPace owners are absolutely glowing in their reviews of the car in a way I've never heard Tesla owners get. Indeed--while most Tesla owners I know talk their heads off about the charging network[1], they tend to be defensive about the actual quality of the car itself in ways that luxury car buyers shouldn't be.

[1] While Tesla has a geographically large charging network, it's density is pretty horrible. In DTLA for example, you're 9 miles away from the closest Supercharger, and condo/apartment dwellers are SOL for installing their own unless they want to pay excessive fees to have one installed in their parking spot. There are a number of standard EV chargers through the downtown area, and the number of non-Tesla chargers exceeds the number of Tesla-only chargers by a factor of at least 10:1.

[luckydata]

We must be living on a different planet then if you never heard a Tesla owner go on and on about how much they love their cars. Before buying one 4 days ago I had plenty of that kind of experience.

[gamblor956]

I know quite a few Tesla owners, and they all love the idea of the car far more than the actual cars themselves. After about a week, reality sets in and the misaligned panels, haphazardly responsive touchscreen, and relatively pedestrian interior furnishings start becoming noticeable. After about 2 weeks, the Tesla owners who don't live in homes (i.e., condo/apartment dwellers) even start to get annoyed at the charging cycle, since the Superchargers in the LA area are not very convenient to get to and it's roughly $10k-$20k (per charger) to get a charger installed in their parking structure. One Tesla owner, who evangelized the car before buying it, eventually sold his Model 3 (one of the first sold to the general public) and, in his words, "upgraded" to the iPace.

Also, I've ridden in all of the Teslas (including the Roadsters, thanks to a former boss who collected cars) and the Model 3, while comfortable enough, is only roughly as comfortable as my Camry and certainly isn't as comfortable as the $65k+ cars other friends drive. IMO, this is Tesla's big problem. Their cars are expensive, but you're paying a lot of money for the brand and while that can get you started, in the auto market you eventually have to start competing based on features like comfort, etc.

[zaroth]

As a Model 3 owner, I have never been happier or more impressed with any car I have ever driven.

It’s more fun to drive than my old Camero SS. It’s more comfortable than my old Infiniti. I absolutely love the interior aesthetic. And I just paid $3,500 to PPF wrap it because I think it’s absolutely gorgeous and I want to keep it looking that way.

Oh, and I paid $45k not $65k, and it saves me at least $100 a month on top of that.

You are blowing smoke with “roughly as comfortable as a Camry”. The ride quality is better than BMW in my opinion, and that’s before throwing in the mental benefits of Autopilot combined with no engine noise making my commute the most peaceful part of my day.

[luckydata]

I have a Model 3 and I don't know WTH are you talking about. It's a great car. Panel gaps are just a little too wide for my taste in the rear doors but you rapidly forget about it when you're behind the wheel. Best car I've ever driven hands down.

[matthewdgreen]

I'm confused about this entire line of argument. You're saying that people can't get chargers installed in their condos, so their solution is to switch to another electric car that also requires a charger?

[FireBeyond]

I was in a Jaguar dealership this weekend, and the iPace, though I have no intention of getting one, is a VERY nice car. Build quality. Features. Specs.

[dmode]

Tesla has the highest consumer satisfaction rating and brand loyalty of any car maker [1]

[1] https://electrek.co/2017/12/21/tesla-tsla-tops-customer-sati...

[anthonybsd]

I suspect Model 3 will change all that, unfortunately :(

[gibolt]

Evidence? Most Model S and 3 owners I've heard prefer the ride of the 3.

[davidgould]

> While Tesla has a geographically large charging network, it's density is pretty horrible. In DTLA for example, you're 9 miles away from the closest Supercharger

That's sort of the point, the Supercharger network is designed to facilitate long distance travel. So the stations are spread out along highways. The other networks are bunched up in cities. Try using plugshare.com to plan a trip using CCS chargers vs Superchargers. Say San Francisco to Portland, or Denver to Dallas, or LA to New York.

[Rapzid]

Only path forward is to share the market. Japan and Europe will enter the market in a big way without the logistics friction Tesla is so often in the news for.

But yes... I expect Toyota to have more affordable TCO, particularly on the maintenance side where Tesla gets ripped often. The will need to adjust to be competitive outside the luxury market.

[twblalock]

Other brands have dealerships all over the country where they could install chargers. I'd say the barrier to doing that is pretty low.

For example, if every BMW or Audi dealership had some charging spots for owners of their cars, it would probably have more nationwide coverage than Tesla's Supercharger network. The dealerships are also frequently located in convenient places near major highway exits, etc.

[luckydata]

You don't go charge a car to a dealership though. I charged mine yesterday in the parking structure next to the mall in Colma while getting ice cream with my son. Sorry but no, that's not a valid suggestion.

[twblalock]

I'm assuming most electric car owners would charge their cars at home and make use of Superchargers/dealership chargers on road trips.

Being able to charge at your local shopping center is nice but it's not a necessity for electric car ownership.

[newnewpdro]

I think you're underestimating the proportion of potential EV owners in situations which preclude charging at home.

[gibolt]

*Could

Even if people wanted to charge at dealerships, dealerships aren't incentivized to sell electric cars, much less charge them.

The proof is that any Chevy dealer that sells the Bolt should have a public charger already, but I'm guessing few do.

[mulmen]

I live in Seattle, east of here there is one BMW dealer on my way home and next closest BMW dealer is in Boise, Idaho. I can’t drive to my home town and visit a dealership. That means an electric BMW would need a range of 1,000-1,200 miles to be remotely comparable to an ICE car or Tesla.

Putting universal chargers at existing gas stations or buying an entire brand and converting to charging makes way more sense.

[alonmower]

Gas stations are obviously a great place for chargers because they're already properly distributed along well travelled routes. I think there's probably going to be a market for either an existing restaurant coffee chain with a lot of existing real estate (or perhaps a new chain that's a bit more upscale) to partner with Tesla and any of the other electric car manufacturers and build a concept around high quality food with quick turn around (like order ahead and eat in under the time it takes your car to charge). Gas stations as they currently exist can be pretty bleak places to spend 30 minutes

[reaperducer]

Chevron stations in Las Vegas have EV chargers. Of course, they also have tiny casinos, so there's something to do while your car charges.

[johnvanommen]

There are five BMW dealerships in Washington, including three within 30 miles of Seattle:

* Seattle

* Bellevue

* Fife

[FireBeyond]

Except for the BMW dealership in Yakima you mean?

Or if you go via PDX.

[mulmen]

PDX is the opposite direction of my part of Idaho from Seattle. Taking that route would add hundreds of miles.

The dealer in the tri cities or Yakima is out of the way and the one in Spokane would add a couple hours of driving time.

There are no dealers on the direct route home for me. Realistically I could only stop at one.

[dmode]

Chevy Bolt was supposed to end Tesla as well. Didn't really happen, did it ?

[Green_man]

The model 3 was supposed to compete with the Bolt on price- that didn't really happy either (yet), did it?

[johnvanommen]

Today there was a discussion on HN about "Sears vs Amazon."

And comparing the Tesla Model 3 to a Chevy Bolt is very similar!

For instance, Tesla is prepared to sell their cars at a loss, to gain market share. Amazon had the same strategy twenty years ago. Sears was never willing to do that, and Chevy wasn't going to do that with the Bolt either.

I like the Bolt - it's a very nice car. But the Model 3 seems to offer so much more for the money.

[DoubleCribble]

The Volt didn't do it. The Bolt couldn't either. Perhaps they're working on the Chevy Molt? (the first car wrapped in OLED!)

[DoubleCribble]

There were big markups on the reintroduced Ford Thunderbird, too.[0] Sales tanked after the first year and it was out of production 4 years later.

[0]https://en.wikipedia.org/wiki/Ford_Thunderbird_(eleventh_gen...

[dmode]

Chevy Bolt and Leaf have been available for a long time and had zero impact on Tesla

[Nursie]

The i-Pace makes me drool far more than Tesla... but it's going to be a while before I can afford either so it's rather a moot point!

[_ph_]

As deliveries are to the US and Canada only at the moment, at worst they have cut through the higher margin demand of those two countries. Deliveries to other contries are going to start in Q1 of course with the highgest margin cars. And of course, while demand for the high margin versions might drop somewhat in the US there is no reason to assume it was completely addressed in just two quarters. This was just the demand by people who could afford to buy their car in that time frame. But that is only a fraction of the possible customer base - most people buy a new car when their old one breaks down, they have the money ready or the lease of their current car runs out. So it is not clear to me that the demand for the high end configurations is going to drop significantly at all.

[dmode]

>>At $50B Market Cap, Tesla should be delivering at least $2B Annual profits

There is no rule like that on a growth stock. You don't value growth stock on a P/E ratio, but some measure of future discounted cashflows.

[querulous]

tesla already has a market cap bigger than both ford and gm. you have to believe tesla is going to be the sole major north american car manufacturer in the near future to think tesla is a growth stock

[dmode]

While we can argue whether the $50B market cap is too much, i was only commenting on a hard rule around valuation and earnings for a company in growth mode. I mean, I haven't looked at the P/E ratios but I bet Amazon's will look out of whack compared to Walmart's

[dominotw]

Wouldn't they be used as self driving pods in future? 50k is low end for that.

[astrodust]

The future as in 2030 or the future as in 2090?

[IshKebab]

In the far future. Tesla is unlikely to be able to wait 20+ years for driverless cars to become a reality.

[btian]

> At $50B Market Cap, Tesla should be delivering at least $2B Annual profits.

LOL what?

Show me another company with $50B market cap growing at 50% a year on the top line to deliver $2B in profits.

I'll wait.

[dang]

Please don't post in the flamewar style to Hacker News. It degrades discussion, regardless of how right you are. Your comment would be fine with just the middle sentence.

https://news.ycombinator.com/newsguidelines.html

[qroshan]

Huh? Did you compare Q3 and Q4 numbers, the growth has pretty much reached steady state. 90,000 per quarter is what Tesla will be and probably 500 Million annual profit.

50% profit growth is delusional at this stage

[300bps]

Q32018: 55,800 Model 3s delivered.

Q42018: 63,100 Model 3s delivered.

That's a 13% growth rate in a single quarter which is more than 50% growth rate annualized.

[microtherion]

Yes, but during Q3, weekly production ramped up from ~2000 to ~4200. During Q4, weekly production stayed pretty much flat.

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iqPFhpeWEIS...

Article: https://www.bloomberg.com/graphics/2018-tesla-tracker/

[zaroth]

It’s almost like the company should consider manufacturing and selling Teslas in a country other than the USA...

[gamblor956]

If Tesla was expecting 50% annualized growth, or even growth comparable to their recent historical trends, they would not have cut the price tag on every model of car they sell.

[_ea1k]

I don't follow your logic here. With the reduced tax incentive, Teslas have seen an effective increase of ~$1,750 USD.

Would you normally argue that a yearly price increase of ~3% on a car portends anything in particular about demand? I guess it implies that they expected demand to fall if the increase had been ~6% instead, but that doesn't seem like anything that would preclude 50% worldwide growth.

[mulmen]

That... isn’t how economies of scale or elasticity of demand work.

[gamblor956]

I think you might need to brush up on your understanding of demand elasticity curves.

Tesla is dropping the sticker price of their vehicles because they think that demand for their cars is at least somewhat elastic with respect to sticker price, and they're in a better position than you or me to have the data and analysis on this. (Tesla has also announced that this is why they're dropping the price so I'm not sure why you're arguing this point?)

Economies of scale are not related to this drop in price. Economies of scale refers to it being cheaper to product an product at scale due to efficiencies in the use of the largely fixed-cost capital expenditures. Companies don't usually drop prices due to EOS until at least a quarter or two after they've reached that point in the production cost cycle, largely to confirm that they've actually reached EOS operationally, and some company's retain the efficiencies from EOS as profit until/unless they need to for competitive market reasons.

[jacobkranz]

I think OP's point is that Tesla isn't just a car company but they're also an energy storage & solar producer. While the car biz may have be leveling off (and that's not accounting for the semi & modely Y launching this year and next respectively), their energy storage is starting to take off along with the solar roofs so this provides huge growth opportunities in the future.