Originally Posted by grizy
I actually agree with everything you're saying except I must attach the modifier "short term" to valuation or success.
Tesla's current valuations are simply non-sense unless they can get the infrastructure into place and become first movers in a "mass market" of, most likely, luxury sports cars. And the infrastructure has to go into place fast. At current snail's pace, BMW/Jag/Mercedes will all have their own all electric vehicles ready to compete in the "mass market", and those guys got literally decades more experience and data on what luxury consumers want.
I have only slept an 2 hours the past 48, so bear with me if I write the wrong word occasionally (I have already typed "I dont think like very have" once today not sure what I was trying to type, either). But if you are adding the term short term to that I didn't explain my thoughts well. Reading my previous post I think I argued points too much instead of explaining my view.
I agree with you that the valuation is bad right now, but not non-sense.
If you are trying to find a way that it is a truly viable company in the next say 12months or whatever. TSLA isn't "worth" $15b right now because it is going to be making 100s of millions soon (obv). It is going up because everyone wants to ride the electric car train to early retirement(semi obv). I think we both agree on that. However, I actually think this makes TSLA more dangerous in the short term, losing a quarter or half its value if it misses earnings or something in one of the next few upcoming quarters is very reasonable, and possibly even likely. Fear and greed are generally amigos.
I am going to be ridiculed for this probably, and maybe should be. But as far as valuation of TSLA, I think it should be viewed more like how a VC would view a start up (really simple EV equation). If you think Tesla has a 10% chance of Elon killing it and it becoming a $100b company, it is worth $10b and anything below that is profit and hang on for the ride. I think looking at it any way as an investment is wrong. Or said better, I think the valuation is really just a handicap of the tech humps. *I am ignoring point of entry for simplicity (generally think at some point you will be able to buy Tesla cheaper) and short term plays because I know nothing aboout trading*
Where I begin to diverge from you and most everyone though is that I don't agree with the statements "Tesla doesn't have any advantage" or "when the market opens up (insert old guard car company here) will be there to step in and take it" or whatever else. Especially the notion that a traditional car company can just magically compete when a market gets big enough for them to bother. What most (if not all) car companies are doing with electric cars right now is closer to someone tinkering with an old lawn mower in his garage than it is setting up to compete in a market IMO.
I don't think people realize how hard it is going to be for one of the big car companies to transition into that market. Building fully electric cars that can hold huge batteries* instead of engines at-scale will be massively hard to maneuver to on demand. It is also insanely expensive and risky for them to make a real go at it now. Car companies operations are highly highly leveraged for making their own product as efficiently as possible and thus highly inflexible. It is really hard, not impossible, but very expensive and risky to transition to a completely new market for flow shop operations. This is especially true when taking opportunity cost into account.
Manufacturing is really hard and the more efficient you are the less flexible you become. When an infrastructure/market reaches the point where the big car companies can justify going all in, Tesla will be (is) already way ahead. A CEO of a huge car company is going to need huge balls (like Musk) and risk ****ty earnings for this not to be the case.
Microsoft and the tablet market is a good example of not going all in early enough (though Microsoft didn't have the resistance/restrictions car companies have, just arrogance/wrong opinion of the markets direction or whatever to not try until it was too late), you have to have the product before the market gets to a mass scale, not jump in when it gets there.
I also think a slow (though faster than snail) steady pace for infrastructure growth is better for Tesla than an explosion (at least under the above assumptions). If there is slower growth, it allows Tesla to float along and figure out the kinks in their flow shop without having to worry about real competition.
If 1 supercharging station was within a few dozen miles of my area I would be willing to bet there would be 15+ Tesla's as soon as they got through the waiting list. There is already at least one (possibly two, but not sure if it's a husband and wife driving or two owners) and the closest supercharging station is 750+ miles away.
Obviously the point above is mostly useless and anecdotal, but if I was looking in the $90k range for cars and we had a(1) super charging station say, towards Dallas (I am in OKC area) or somewhere in the city a Tesla is a no brainer. Even if it was in Dallas it probably would be. Point is, 265 miles is far enough that the infrastructure doesn't have to be THAT good for it to be a viable primary vehicle IMO. $90k price tag is different.
If any of y'all are industrial engineers or management scientist or just better informed than I am shoot holes everywhere if I am blowin' smoke. But from my understanding you can't just replace an engine with a battery on those assembly lines and press go. I am open to being told/proven otherwise though.
*Grizy, you pointed out earlier ITT that batteries were bottlenecked I now think this is one of, or is, Tesla's biggest hurdle. Definitely much more than I originally thought.