[BeetleB]

I hate Musk, and I'm not going to justify Tesla's crazy stock valuation, but consider the following:

Outside of China, Tesla's probably the only company that can compete on battery prices. I don't know how accurate it was, but a news report was comparing the cost the manufacturer's pay to build the battery. Chinese companies were around $6000. Tesla was at $7000. Everyone else was around $12-15K. This is why a number of companies have exited the EV market - they just can't compete. This is why Ford lost money on every EV, despite the high MSRP. This is why the Ford CEO says "We're f####d" when he saw Chinese cars.

The only hope regular Japanese/American/European auto manufacturers have is if EVs do not gain substantial market share.

If the future is EVs, Tesla is the only non-Chinese company that has a chance.

It's depressing.

[notahacker]

This assumes it is literally impossible for anyone else to reduce their battery costs to a level which makes them competitive with Tesla in an environment when battery prices are falling rapidly and the tech continues to evolve (and Tesla's EVs are not even unusually cheap or experimental in their battery supply chains)

That sounds less likely than the bull case Tesla is trying to make on "we're a robotics company now" or "one day all cars will be autonomous taxis controlled by us".

[FabHK]

Exactly. Looking at competition from China, but also the West, I don't see Tesla having a moat in EVs, in robots, or even in batteries in the medium term (compare e.g. [1]).

How can they produce the extraordinary growth and excess profits that would justify their valuation?

Fundamentals will reassert themselves sooner or later, but as we see it can take a long time.

[1] https://electrek.co/2026/05/07/tesla-4680-battery-cell-perfo...

[jmye]

> Fundamentals will reassert themselves sooner or later

I don't believe that's true, anymore.

TSLA is a pure meme stock. No one is investing in it because they believe in the numerous, actionable lies Musk tells. No one is investing because they think the P/E makes sense. They're doing it because they think the memes are fun, or because they think the people who think the memes are fun are bag-holders, or because they think the memes are fun AND Musk is actually still smart and adding value, etc.

It's the clearest, most obvious case for "the markets are not the economy".

[FabHK]

That's a thought-provoking and somewhat resigned point.

My response is this: Over time (say 20 years later) you will have gotten certain dividends, and the firm will be in a new position in terms of price and earnings. If I'm right, and the firm will not have been able to produce large profits and pay them out, then the people who bought today at today's valuation and P/E ratio will have massively overpaid for the dividends they will have gotten, and the only way they could have made capital gains to make up for it is if either the P/E ratio has increased even more, or earnings have really shot up at the end of those 20 years.

Either way, it's not sustainable. Unless, of course, people are willing to push up the P/E ratio up and up without limit. And I submit that's not going to happen indefinitely.

TL;DR: 20 years later you can see what share holders got for the price they paid 20 years ago (namely 20 yrs of dividends, plus they still have the share). If you thought the shares were cheap and you were right, you got a lot for what you paid. If the shares were overpriced, that'll have come out by then.

(I agree though that it seems to take longer than it used to take for the fundamentals to reassert themselves.)

[fragmede]

Only if you're terminally online and believe everyone else must be as well. If you don't know what a meme stock is and think the humanoid robot is going to sell like hotcakes, TSLA seems like a great investment.

[BeetleB]

Their per-car profit margin is the moat. Which non-Chinese company can compete?

[QGQBGdeZREunxLe]

Tesla's moat is bipartisan support for 100%+ tariffs on Chinese EVs in the United States.

How long that lasts remains to be seen. American consumers living close to either border are going to be able to see Chinese EVs themselves.

[BeetleB]

Tesla has vertical integration with their batteries, which is why they can make them cheaply.

> This assumes it is literally impossible for anyone else to reduce their battery costs to a level which makes them competitive with Tesla in an environment when battery prices are falling rapidly and the tech continues to evolve

No - it just means they can't do it as fast as the Chinese. The Chinese have been investing in battery technology for 10-15 years longer than most auto manufacturers. (And their labor is cheaper).

[Zigurd]

It's not depressing because it's not true. Tesla isn't investing in battery technology. Tesla also isn't developing new models at the same rate as VW, BMW, Mercedes, Hyundai Kia, etc.

[BeetleB]

> Tesla also isn't developing new models at the same rate as VW, BMW, Mercedes, Hyundai Kia, etc.

BMW and Mercedes are not in the same class. They can afford to get away by charging a premium.

VW: I'd love to know how much it costs them to make/buy a battery, and their profit margins on EVs. Ditto Hyundai and Kia.

(Edit: See https://carbuzz.com/ev-profit-margins/ for VW).

Look at all the companies scaling back on EVs or exiting them altogether (e.g. Honda). It's not that Honda can't make EVs. It's that they can't compete on profit with Tesla + Chinese EVs. It's likely why Hyundai is dropping the Kona and the Ioniq 6.

Nissan dropped the Ariya, I believe. The Bolt is also out. The general shift is for more luxury EVs (BMW/Mercedes), and not EVs for the average Joe.

See also https://www.bain.com/insights/electric-vehicles-profit-puzzl...

[dalyons]

Giving up on EVs is crazy though, it seals their fate and guarantees the death of the company in exchange for a few more years of profit. The EV takeover will not stop, as of roughly this year they’re going to be cheaper than equivalent ice cars, it’s going to accelerate quickly. It’s suicide in slow motion

[4ndrewl]

This. It doesn't really look like Tesla is doing anything rn but selling old cars. They don't appear to be the future any more.

[SirMaster]

It doesn't look like they are developing self-driving?

What other company is developing self-driving at a level of sophistication as Tesla that you can actually buy in a consumer vehicle?

[Spooky23]

The companies that have real boards would never take the risk.

Once Elon’s air cover is blown, the government is going the dissect Tesla. Once someone gets the injunction to stop deletion of crash data and allow for inspection, they are cooked.

[goalieca]

I don't think self-driving is remotely close to working at any scale. I also don't think it's the killer-app. Right now, cheap electrics and moreso cheap hybrids are the killer.

[GMoromisato]

I don’t know if you’ve tried Tesla FSD, but I use it almost every day. It is not perfect, but it is amazing.

Waymo, of course, is everywhere here in the Bay Area. The tech works at scale today.

[intended]

it works in the west. In specific areas and under specific conditions.

Driving data is cultural data.

This is one of the many blind spots from commenters, when they think about their own experience and generalize it to the larger global market.

[jmye]

It works "at scale" if you have no idea what "at scale" actually means and have never left the Bay Area or NYC. Or if you like, don't believe weather exists.

[4ndrewl]

I suppose, if you live in a jurisdiction/insurance regime where it's usable.

But people like buying new cars, new models, new designs. Not just features - those are just options.

[thenthenthen]

Its interesting, practically all car makers seem to have factories in China, why cant they compete?