[UkrainianJew]

Tesla P/E is at 94, Ford is at 4, so they are overvalued by quite a lot.

The interest rates will likely reach 3% by the end of the year, and may need to go all the way to 8% to have a meaningful effect on the inflation.

Every measurable economic metric suggests we are rolling full speed into a recession. And driving your old car for another year or two instead of upgrading to that nice luxury EV is one of the first things many people would do.

So, their sales will likely plummet. Taking on more debt will become quite expensive, and the share prices will very likely correct by a lot. They are doing everything well, if you ask me.

[geoduck14]

If inflation is going up, like you suggest, now is the time to buy the stuff that you want - before the price goes up

[331c8c71]

For many recession means a higher risk of being laid off.

[cableshaft]

The Fed can't easily raise rates all the way up to 8%. The higher rates affect the government just as much as you buying a new home or taking out a loan, and the government has a shitload of debt it has to keep refinancing.

"But with help from the Treasury and from Social Security’s actuaries, I’ve come up with a reasonable estimate of that added interest cost. By my math, the Fed’s higher rates will increase the federal government’s interest costs by about $128 billion a year."

That may not sound like much, given the trillions of dollars of investment wealth that have been vaporized by the Fed’s higher rates. Or given the $1.4 trillion deficit President Biden’s proposed budget projects for this year.

But $128 billion is in the vicinity of the $133 billion total that the Biden budget is seeking for the Energy, Homeland Security and Agriculture Departments.

Or is just $2 billion below the total that the Biden budget proposes to spend for the Interior Department, the Labor Department, the Commerce Department, the Treasury, the Environmental Protection Agency, the National Aeronautics and Space Administration, the National Science Foundation, the Social Security Administration and the Corps of Engineers. Combined."[1]

"Already, the federal government spends $330 billion per year, or $2,207 per taxpayer, on interest payments – more than on food stamps and disability insurance combined. And two-thirds of our debt is slated to roll over in the next five years, likely into higher interest rate bonds.

For every 1 percentage point increase in interest rates above projections, deficits grow by $2 trillion over a decade; that’s on top of the nearly $13 trillion in projected borrowing over the next decade."[2]

[1]: https://www.washingtonpost.com/business/2022/06/27/fed-rate-...

[2]: https://www.crfb.org/press-releases/feds-interest-rate-hike-...

[dannyw]

The numbers you use to benchmark are arbitrary.

The annual budget is about $6 trillion.

They certainly can eat another $128B or even $500B.

After all, when inflation is higher than interest rates, the real yield is negative.

[naveen99]

The fed can do qe just as easily at 8% interest rates. They just feed the interest right back to the treasury.

[331c8c71]

Well, the Fed has a clearly stated statutory mandate of "promoting maximum employment, stable prices, and moderate longterm interest rates".

Whether pursuing this mandate inconveniences the govt or not should not be a concern (at least in theory).

[DoesntMatter22]

Comparing Tesla to Ford is just comical. Tesla has a completely different technology they work on, and has a massive lead on Ford in EV's.

You don't even know what you are saying about Tesla. Take on more debt? Why would they do that? They have 17 billion dollars in cash on hand, and paid off a lot of their pre existing debt.

Even if they want to build a new gigafactory they don't need any more funding. They smartly sold more shares when the stock was insanely high and got a huge infusion.

[blitzar]

> They have 17 billion dollars in cash on hand, and paid off a lot of their pre existing debt.

Tesla total liabilities for the quarter ending March 31, 2022 were $31.091B, a 6.81% increase year-over-year.

So they may have paid off a lot of their pre existing debt and then went and borrowed even more money on different terms.

[hotpotamus]

I don't really see why the comparison is comical. I need a box with wheels to get me from place to place like many Americans. Right now I've got a manual 2016 Chevy Cruze because I got a really good deal on it. I like the idea of my next car being electric so I'd probably be cross shopping a Bolt with a Model 3, but that idea made a lot more sense when the 3 was supposed to be $30K. Now the Bolt is going to be something like $27K and the 3 is what - close to $60K? I'm sure the model 3 is faster, but I drive in traffic so I don't get to go fast anyway. If Ford makes an electric Fiesta for a reasonable price I'll throw that in the mix. I'll gladly look at the Asian makers too if they come up with something - the Ioniq looks nice by all accounts.

[DoesntMatter22]

Sure, but will Ford make money off of it? That's to be seen. Tesla is the Apple of car makers and they've grown aggressively. Ford is only going to be replacing existing cars with new electric cars, which are probably not going to be very profitable in the short term.

Meanwhile, Tesla is very profitable over the last few years and is very profitable on a per car basis. Not to mention the other tech that they are working on.

P/E is always going to be relative to growth. tons of companies have infinite P/E and are hemorrhaging money. Tesla is not.

[hotpotamus]

Well if I buy a Ford and not a Tesla, then Ford will presumably make some money from me and Tesla won't make any. I'll give it to Tesla (and Musk really) that they really mainstreamed the electric car by making it a luxury/halo type product, but it looks to me like they're losing a lot of their first-mover advantages now and they'll probably be losing some margin. Also their CEO went kinda nuts which didn't help the brand so much, but it seems like someone got him off twitter, so that might help too.

Hopefully Tesla can stay competitive and keep pushing the tech forward, but I think they've got some tough times ahead.

[panick21_]

> then Ford will presumably make some money from me

That's not at all certain when buying and EV.

> but it looks to me like they're losing a lot of their first-mover advantages now

That's what people have been saying since 2014 and Tesla has just continued to grow.

> and they'll probably be losing some margin

Given that they have improved prices quite a bit and still have lots of order backlog, I would suspect the opposite.

Maybe total operational margin will be down because of Berlin and Texas factories, but automotive margin is unlikely to go down.

[hotpotamus]

Just saw this post and it pisses me off. Not because I disagree - I truly don't know the future for Tesla and it's interesting, but what the hell is "improved prices" supposed to mean? Sure sounds like marketing bullshit for "increased" - I don't consider that an improvement.

[DoesntMatter22]

You are a on the low end of buyers, and there are a lot of them. But it's also not the most profitable segment. Tesla has been selling cars as fast as they can build them, until that changes I'm not going to fear another competitor.

Part of the reason Ford and others can even compete is that Tesla open sourced their patents. Ford and other's electric cars are being built on the house that Tesla built.

[ra7]

Hold on. No one is using Tesla's open patents because it would require them to open up all of their patents in return. What's your source Ford or others have used them?

[hotpotamus]

Indeed, I have a hard time believing that $30K is the low end (I'm not doubting you on that - other people have said so too), but I suppose these are the times we live in. Either way I'm hoping to get a few more years and 10's of thousands of miles out of the current ride, so hopefully things will keep improving for when the time comes.

[anarticle]

So far, many of the box on wheels from other manufacturers have had recalls for blowing up people's houses.

Hyundai is the lucky one so far.