This blog post is not about the "inherent value" of Tesla, but more a summary of "Enterprise Value" as defined by:<p>"enterprise value = market cap + borrowings - cash"<p>It's neat and not too long.
Isn't this a strange way to put Toyota to be "closer" to Tesla by "enterprise value"? I mean, if toyota had 1T USD debt, it's enterprise value would have been 1.25T, and it would have been more "valuable" than Tesla. But, how is that "better", if you want to invest in a company?<p>I'm surprised TSLA is in such a good shape, debt-wise.
If we're really digging into it, the actual value of a company should be the amount of money you need in total to buy it. Including the parts that are not for sale (so not just the public shares)<p>That also means for instance convincing the US gov to let you have Tesla, and vice versa convincing the Japanese government and all Toyota's debt holders to not intervene in case of a Toyota buyout.<p>And that becomes a completely different story with undefinable numbers and so much more politics.
One of those companies has been sinking money into the "Uncompetitive" section of the hydrogen ladder. The other hasn't.<p><a href="https://www.linkedin.com/pulse/hydrogen-ladder-version-50-michael-liebreich" rel="nofollow">https://www.linkedin.com/pulse/hydrogen-ladder-version-50-mi...</a>
I see that a lot of people struggle with the term enterprise value. It might make sense to think about this in terms of housing and mortgages.<p>You can say that the total value of a house is the mortgage + equity.<p>When you take out a loan on a house, the value of the house does not change. Just the proportion of mortgage vs. equity.
Buying the debt is different than paying off the debt. I see so many comments here assuming that to buy the company totally (or to have total control over a company), one should pay off all debts of the company. It is simply not true. I feel this whole concept of "Enterprise Value" does not really correlate any meaningful value.
Simplistic valuation is not particularly useful. Take even just 1 more factor into account, Japan's tremendous debt and multiple lost decades and inevitable nightmare situation. Toyota basically doesnt exist until they built their bzx4 factor in the usa. <a href="https://www.bloomberg.com/news/articles/2023-03-27/fears-of-societal-collapse-prompt-new-push-for-babies-in-japan" rel="nofollow">https://www.bloomberg.com/news/articles/2023-03-27/fears-of-...</a><p>From the public information I know about Toyota, they are about 15 years behind Tesla.<p>Comparatively VW is probably only about 5 years behind now. GM/Ford are about 7 years.<p>So is tesla more valuable? It's practically infinite money more valuable. GM could spend $100 billion to try to catch up and could not. Its not about money, it's about the people who work for them.
This is a very bad term.<p>When I think about value and price, price is what I pay, value is what I get.<p>Enterprise value is not what you get - it's what you pay...
Only one (dismissive) side note about self-driving in the article.<p>I have yet to hear a solid argument against Tesla achieving full self-driving within the next ten years.<p>Self-driving will automate billions of daily man hours.<p>Capturing even just a very small fraction of that value results in enough earnings to justify Tesla's current market cap. Even if you have to discount the earnings for another ten years, in case it takes so long to start selling FSD software.<p>Talking rationally about FSD always results in reflexive downvoting here on HN. Which I take as a sign, that the thinking about Tesla's future is muddied by emotions among many people. Maybe because people can't imagine fundamental change and also fear change.