Let's see Tesla's growth rate when they're closer to Toyota's size. And speaking of meaningless numbers, who cares about market cap? How does revenue compare? Toyota is about 3x, I think?
They're literally responding to someone commenting about stock price
Tesla sales growth currently seems limited by their ability to produce, so that's fairly bullish
Market cap isn't meaningless, though. Neither is debt. Market cap should be a function of assets, so presumably if Toyota had as little debt as Tesla it would be ~480b market cap.
Why is Tesla higher? It has a better story (not saying I buy it, but at least I can explain it!):
At one point, Tesla was worth more than: Toyota, Volkwagen Group, Hyundai/Kia, General Motors, Ford, Nissan, Honda, Fiat Chrysler, Renault, Suzuki, Daimler, BMW, Mazda and Mitsubishi combined. (Plus several Chinese manufacturers: SAID, Geely, Changan, Dongfeng).
I'd love anyone to justify that with a straight face.
Well no.. They don't have better self driving prospects. Tesla claimed in 2016 that the driver was only in the seat for regulatory reasons. We're now in 2023 and Tesla is still only level 2, nowhere near autonomous driving.
> Let's see Tesla's growth rate when they're closer to Toyota's size.
Not sure what point your trying to make, though. Smaller, faster-growing companies usually do trade at a premium over their larger, slower-growing counterparts. That's just... kinda how the stock market works?
You can certainly object to the magnitude of the difference between the two companies' PE ratios, but otherwise nothing seems weird here.
P/E tells most of what you need to value a company that is stable in size. Tesla could grow earnings 10x and it would still have a higher P/E with the same valuation. It's way out of line unless you believe they are going to own half the world market for cars one day. I suppose if SpaceX can obtain 90 percent of the launch market, why not Tesla?
Toyota and Tesla don’t just manufacture and sell cars they have a more complicated business model. Tesla’s EV charging network for example should clearly be part of their valuation and is unrelated to Toyota’s business strategy.
IMO people are heavily discounting Toyota’s stock compared to their car/total sales for two reasons. Most critically their 200+ Billion dollars of debt, but also the significant sign of mismanagement from their useless investment in Hydrogen.
Hydrogen aircraft/heavy equipment could have real utility, but it’s simply not compelling for passenger vehicles. High capital and operating costs + low energy density + low efficiency all for faster fueling times.
People making along trips want to charge quickly and are willing to pay ~3x the retail cost of electricity to do so. So it can be quite profitable right now.
Longer term I expect charging to become a low margin commodity business, but other networks have had serious reliability issues so people may be willing to pay a premium simply to know everything will work when they get there.
PS: Even longer term I expect in road charging to become a thing on major highways, but that’s easily 20+ years away.
This is delusional. Hydrogen is a fundamentally superior technology compared to BEVs. Tesla is the facing the next big crisis when the limitations of battery reveal itself. Batteries are simply not a sustainable technology. It is Tesla that is being disruption by innovation, not Toyota.
He's not wrong, but the world has picked a different path.
Hydrogen only creates water, and can be refuelled as quick as gas.
Wouldn't have minded driving one of those Toyota Mirais, but there isn't even a Hydrogen station at the other end of the long trip I regularly do, nor is it any cheaper than gas anyways.
And that's the story all over, better tech environmentally and practically but no infrastructure, no hype, and no momentum. It's dead.
The world has not picked a path at all. We are currently still dependent on ICE cars. And the BEV era will come and pass without ever seriously challenging that dependency.
Also I feel there are 2 other significant variables in play. Software is often an oligopoly type market. Self driving is likely to rewrite car manufacturers to those that solve this well and those that don't. Tesla for right or wrong has been viewed as one of the best bets here.
Elon factor. He's been a significant factor in quite a number of significant companies created. That seems an attractive bet he will do good things vs anyone else.
I think most have realized by now that self-driving is not a serious possibility anytime soon for anything other than a nice option to upsell the car by some small margin.
And Tesla FSD is not even best-in-class between car manufacturers (Mercedes is, with actual approved and shipped commercial L3), not to mention the entire self-driving market (where Waymo is way ahead).
>Elon factor. He's been a significant factor in quite a number of significant companies created. That seems an attractive bet he will do good things vs anyone else.
I'm pretty skeptical on all things Elon these days.
> Tesla for right or wrong has been viewed as one of the best bets here.
Really? From what I've read and seen, Tesla's self-driving is starting to feel like the butt of most jokes in the space. And Musk's absurd insistence that cameras are the only sensors anyone needs isn't doing their technology any favors.
> Elon factor.
I think Musk might be running out of steam. The Twitter fiasco shows how unstable and unfocused he is; the whole thing could collapse like a house of cards at any time. I had extreme respect for him 7 years or so ago, but that has eroded over time, and now I see him as a delusional, abusive asshole who happened to have the charisma (a nice way of putting "talent for emotional manipulation") to help build some successful businesses. (And it still remains to be seen if Tesla and SpaceX will continue to be successful in the long term.)
> GM has a P/E ration of less than 6. Are they distressed? If not, isn't that absurdly cheap?
Reminds me of amazon vs everyone or nflx vs blockbuster. The 'market' seems to think tsla is just going to keep growing and gobble up much of the auto market share. Both amazon and nflx had absurd PEs for a long time. Eventually their grew into it.
6 P/E looks enticing as long as you think the 'E' is going to maintain itself over the long term. Do you think GM is going to maintain their earnings?
Exactly! TBH, I made a few bucks on F back when their PE was similarly low. Their EV strategy made sense and their current product line was in demand too. It seemed like an easy and relatively safe bet, and it worked out.
GM is a more difficult case. Their current efforts around Ultium haven't gone so well so far, and their ICE product line isn't even that much better. I think they will do well, but they have a lot of work to do.
The car market is switching quickly to EVs, GM has not shown that they can produce them, they recently discontinued their Chevy Bolt. They keep promising wonders in 3-5 years, but the years are ticking by. You don't want to be stuck trying to sell ICE cars in 10 years... Their only bright spot is Cruise, which has a shot at making a lot of money. Right now they're burning billions though, which means that at any sight of trouble, GM might cut their losses there, or try to sell it.
The only people I know wanting a Chevy already own chevys. Of course, most of the people that I know that own chevys would be happy with something else too.
The market cap tells you what you need to know. Is there a way in which Tesla can grow the total vehicle market, expand alone into adjacent protected, high value markets, or reasonably exceed Toyota’s market share? If not, they’re over valued.
They are still valued on $300k per car future numbers from when they were supposed to be renting cars with AI drivers in 2020, and the exuberance and “playing with house money” crowd has just kept the music going.
It is a more complete number to use. Unfortunately, debt (and equivalents, and even cash depending on its location) aren’t always or even often a simple addition or subtraction.
Hah, if only Toyota... At one point, Tesla was worth more than: Toyota, Volkwagen Group, Hyundai/Kia, General Motors, Ford, Nissan, Honda, Fiat Chrysler, Renault, Suzuki, Daimler, BMW, Mazda and Mitsubishi combined. (Plus several Chinese manufacturers: SAID, Geely, Changan, Dongfeng).
If Tesla were a car company. However, Tesla is also a fuel-station company. You could just as easily value it against BP or Shell to get better market cap representation.
That's not a power plant... they are producing 0 electricity. They are allowing powerwall OWNERS to act as a grid-scale BATTERY. A battery != a power plant and produces nothing even remotely resembling a real power plant in recurring revenue.
Again, they are producing 0 electricity, they are selling a battery to someone else to use.
Let me know when Tesla starts building their own solar farms or nuclear power plants and using it to power their supercharger network. That will be the only way it's at all comparable to Shell.
It’s the attempt to fulfill the story they’ve been selling since the beginning, which is exactly the EV-company-but-with-sticky-SaaS-revenue you’d expect from SV.
A problem when you try to span those markets is you lose access to support from other major companies because you open up too many competitive fronts.
A further problem is when you try to reproduce a model (oil companies) that is dependent on finding and securing resources when almost everyone has a sufficient and unending oil-well-equivalent permanently incident on their roof.
What sort of a mega pack business does Toyota have? What are the long term prospects for their Robot? What tech is Toyota going to sell to other car companies to make money?
Why is Toyota investing in hydrogen when it makes no sense? What is Toyota going to do about it's massive debt.
These are some of the reasons Tesla is valued at what it is and Toyota is what IT is. Toyota has nothing exciting on the horizon that is going to dramatically change things for them.
Not to mention they make a pittance per car compared to Tesla.
Others discussed hydrogen. Frankly it seems to me to be a bad bet by Toyota. I assume they have better information than I do, but they also may have been prevented from a reasonable position on battery vs hydrogen by some internal politics or other dynamics.
The robot:
Tesla seems to have approximately reproduced the state of Japanese robotics in 2000 (Honda Asimo) using technology that has seriously advanced in twenty years. I am not qualified to say what the future value of that is, or why battery packs are a competitive advantage to something that never leaves the home.
Tech to sell to other car companies:
Humans run the other car companies. What will they do if they recognize a competitive threat with a technology advantage? Will they say “great, let’s buy that from our competitor since they’re clearly superior”? Or are they more likely to say something like “let’s figure out a way to neutralize or eliminate this advantage” and then go about doing it (even as a collective)?
Tesla hired Toyota execs to build their manufacturing line. There is little chance that Toyota could not, if it could get out of its own way, do what Telsa is doing from a manufacturing and technology perspective. This to me suggests that others will, even if Toyota culturally cannot make it happen.
The profit per vehicle available is primarily indicative of competition. Toyota is a mature company in a mature segment with a lot of competition. Tesla is entitled to those numbers as long as they can maintain them and stave off competition. Some people think they will be able to do that for a long time. I’m not one of them.
Tesla’s barrier in justifying their market cap is not only the other car companies, of whom there are roughly a dozen with similar revenue or higher. In the process of capturing the value they are talking about, their competition becomes major portions of the structure of global markets in the energy and transportation sectors, at least.
Hydrogen is a fundamentally superior technology to batteries. It is Tesla that will eventually have to move on to fuel cell cars, not Toyota doing the other way around.
If you realize that fuel cells are electrochemical systems, you'd also realize that there is no fundamental difference between how a fuel cell and a conventional battery works. Fuel cell cars are also EVs, just without the expensive and heavy battery.
Hydrogen is a fundamental superior technology compared to batteries. If anything, Toyota is decades ahead of Tesla. Everything Tesla is aiming to do is just a pale imitation of what Toyota is already achieving.
And yet I've seen at most a handful of hydrogen-powered cars since they've been available commercially, and I've only once seen a refueling station for them.
Superior technology -- assuming it is; I have no idea -- often doesn't win.
The problem with that thinking is that BEVs are guaranteed to be more expensive in the long run. A hydrogen car is basically an EV minus the most expensive part. That is going to be a decisive advantage.
Because PE is a key indicator for evaluating how much a company is worth, but then this dates from the days when investors were looking for sustainable growth and dividends not stock buybacks.
Toyota hasn't released a good BEV yet (bz4x's battery and drivetrain are a decade behind the state of the art), and poured a ton of money into hydrogen which isn't happening for passenger cars.
I suspect the stock is priced with the possibility that Toyota is reacting to EVs the way Nokia and Blackberry to the iPhone.
Tesla fanboys need to stop being so short-sighted. All innovation in cars will not stop at the BEV. There will be a next technology leap beyond the BEV. And if you think honestly about what that is, it will be hydrogen cars. Simply because they are EVs without the limitations of the li-ion battery.
As a result, people need to think carefully about what comes next. If anything, BEVs represent a transitional technology. You can think of them as being what Reddit is right now. Sure, it disrupted what came before (i.e. Digg), but it is not the end-result of that particular business sector. And if that is the case, then it is likely that Tesla, not Toyota, that faces the biggest challenge in the future.
Sorry to break it to you, hydrogen or e-fuels definitely have a place in the future for fertilizer, seasonal storage and maritime shipping. For personal vehicles BEVs won nearly 10 years ago.
See the "Hydrogen ladder" for further, more eloquent, information.
The simple fact is that fuel cell cars are also EVs. As a result, there are no fundamental limitations compared to BEVs. They are fundamentally guaranteed to be just as good as BEVs.
And since BEVs are not a sustainable technology, they are destined to be replaced by their truly sustainable alternative. Which is a "battery" made from water. That is the self-evident future of EVs.
> The simple fact is that fuel cell cars are also EVs. As a result, there are no fundamental limitations compared to BEVs. They are fundamentally guaranteed to be just as good as BEVs.
In other words, you pay for two cars in one when you could simply pay for one car and charge it from any wall outlet.
• Hydrogen's end-to-end efficiency is low (losses in electrolysis + transport + fuel cell), so running costs are inherently a couple times higher than BEV's. This alone IMHO kills chances of mass adoption, as people will simply not want to pay more.
• EV charging stations are already common, unlike hydrogen fuel stations that barely exist anywhere. Charging stations are easier and cheaper to install and maintain (no need to deliver fuel or deal with moving parts for high pressure or cryogenic storage), so this is likely to stay in BEV's favor.
• You can't refill the high-pressure hydrogen just by plugging into your home outlet. For people who can charge BEV at home it is a huge convenience.
• The range of the Toyota Mirai is barely higher than long-range BEVs'. It doesn't even solve BEVs' main shortcoming, despite compromising a lot of space for hydrogen tanks!
• High-end BEVs can already recharge to 80% under 20 minutes, and don't require you to be near the car while charging (so you can get a coffee/toilet break at the same time). All of this trouble and cost to shave it down to a 5 minute refill, which you have to spend attending to the pump, is just not worth all of the fuel costs, wasted car space, and rollout of a new fuel pipeline.
Hydrogen may find uses in aviation, or long-distance trucks, maybe heavy machinery, but it's a poor fit for passenger cars and has already lost.
1) That's a lie by BEV companies. I keep on telling people that fuel cell cars are EVs. So where does argument even come from? It comes from nothing. There is no basis to make this claim. Not to mention that the point of renewable energy is their lack of raw material requirements, not their inherent efficiency. If you can imagine a world where solar energy is nearly free, than so can hydrogen.
2) Which is meaningless because hydrogen distribution is fundamentally cheaper. Once you realize that pipelines are cheaper than wires, you will eventually realize that hydrogen stations will be cheap to deploy and ultimately be cheaper than building enough charging stations for everyone.
3) Actually you can because home electrolysis is fully doable. This is another completely made-up argument. The only thing to be brought up is that you don't want home recharging at all. After all, cars are driven outside on the road, not at home. Once you have a network of refueling stations, you don't need a redundant refueling system at home.
4) That's like saying an ICE car has barely longer range. Your ignoring the fact that you need something like $30k of batteries to match that range in a BEV. For a FCEV that comes at a tiny cost.
5) And yet it is still an advantage. Five minutes, especially when you realize it is guaranteed everything single time, is a major advantage. And you will never have to worry about damaging the battery when refueling this fast.
This is ultimately a short-sighted argument. When hydrogen cars are no more expensive than ICE cars and the fuel is basically free, where does that leave BEVs? It doesn't. This is the end of the BEV.
> cars are driven outside on the road, not at home
Are you just trolling now? :) Do you think people charge their BEVs in their living room?
1. Even solar is not free - hardware has a cost and finite lifetime. We're not close to post-scarcity with electricity, so there will be cost for foreseeable future. "Free" hydrogen from production peaks isn't enough for mass adoption, especially that grids start to use batteries too.
2. Even if a tanker beats UHVDC, I'd expect last mile distribution cost to be really bad for a physical good.
3. A wallbox costs $600+, which IMHO is already outrageous. I can't imagine electrolysis station with high pressure pump to be cheaper. 30 seconds plugging in a driveway beats 5 minutes refuelling.
4. Fuel cells are expensive. BEVs are already cheaper than hydrogen cars.
5. Reliability of hydrogen stations is currently pretty low, worse than uptime of DC chargers.
You imply there are going to be a breakthroughs in hydrogen storage and fuel cell efficiency that will make hydrogen cars not suck, but not account for possible improvements in batteries. They have been gradually improving over the last decade, and got an order of magnitude cheaper too. There are further improvements in the pipeline, especially that exponentially increasing demand funds further development. Physics of hydrogen storage however are as tough as ever.
Wow market cap! What a great measurement...of what a bunch of gamblers on a secondary market say a company is worth is all its shares could magically be sold without affecting the sale price.