Tesla's market cap now accounts for roughly 1/3rd of the global automaker market

The stock price increased by 15x in 1.5 years on basically no major news. If you don&#x27;t include profits from regulatory credits, they&#x27;ve lost over $700M so far this year. Government money is not scalable or sustainable, so this an important indicator of how their finances are doing.<p>The intuition is that Tesla cars are like iPhones. I think it&#x27;s wrong. This is a low-margin business, where you increasingly compete with <i>all</i> of the goods and services people buy, like housing, education, healthcare. It&#x27;s not a &quot;buy a new phone for Christmas every 2 years&quot; business.<p>People are on the phone all the time, so paying $200 more for an improved experience for several hours per day is justified. But paying $5k or $10k more for an improved experience for 1 or 2 hours per day? If you&#x27;re rich, maybe. If not, why not move closer to your work instead, so you don&#x27;t have to use the car? Why not take a longer vacation, or eat out every day, or retire earlier, or pay for your kid&#x27;s college education?

I assume the high value is more about Tesla being more than a car company.<p>1) If they win the self driving race that will be incredible value beyond just manufacturing cars.<p>2) Battery manufacturing in general is huge on its own.<p>3) The roof top combined with domestic battery side is potentially significant in replacing (full or part?) domestic power companies<p>4) Insurance - Musk said this could grow into 30-40% of their business<p>5) Super charger network gives them a first advantage to replace petrol stations to a degree.<p>6) Elon factor of what&#x27;s next.<p>And dont get me wrong, I do feel its gone beyond reasonable value, but there is more than a car company there.

Something most underreport right now is the way we buy stocks fundamentally changed.<p>The money flow used to be pension fund - &gt; some middle men - &gt; financial assets.<p>Now it is consumer on an app - &gt; financial asset.<p>While I do not think `app traders` account for a huge chunk of investments, I still think more people are now shopping for stocks as consumers and not as traditional investors. People are picking stocks like they were goods. And they seldom move the markets.<p>Tesla as a brand is loved. The love for that brand transpires to the stock<p>You add to that the poor yield on nation bonds, the volatility, the multiple billions pulling out of the dollar, the value of city center real estate crumbling with WFH... there is a lot of money in the market right now. It&#x27;s time to build.<p>.

Tesla designs chips, builds software, sells solar panels and home batteries, operates a global charging network, sells insurance, etc in addition to just manufacturing cars. It also sells and services its own cars, as opposed to the franchised dealership model under which most other OEMs operate.<p>Therefore to make a fair comparison you&#x27;d have to add in the rest of the global automotive supply chain, not just the OEMs. Add in the valuations of all the dealers and retailers on Earth (some of which are publicly traded), add in Nvidia and other chip makers&#x27; automotive businesses, add in the market cap of Waymo, Cruise, Zoox and all those major hardware and software players that plan to compete with Tesla&#x27;s Autopilot &#x2F; FSD software. Add in the market cap of all the charging networks in China. In an apples to apples comparison Tesla&#x27;s market cap would be less than one third of the global market.

Everyone is looking at these sort of headlines and being surprised at how high Tesla&#x27;s valuation is, but I find it equally interesting as a sign of how low all the other automakers&#x27; valuations are. In that light, one hypothesis is that other automakers have pretty convincingly demonstrated that they are not able to sell significant numbers of cars at large profit margins, dooming them to perpetually hover slightly above or below breakeven depending on whether the economy is growing or in recession. Tesla hasn&#x27;t proven they can do this, but they are unique among automakers in at least _not_ proving they _can&#x27;t_, leaving open the potential of growing into an Apple-like position of commanding the majority of the profit in their industry, even if only a minority of sales.<p>Ford&#x27;s success with the F-150 line might be an exception here, but the pickup truck market will always be much smaller than the rest of the automobile market.

It’s a bubble driven by exuberance and extreme government financial stimulus. It’s like pets.com, Worldcom, AOL, BlackBerry, etc.

It&#x27;s interesting to see that most comments look at Tesla based on their fundamentals, some kind of analysis of their currents financials vs. expected future financials. This is sound, if you are hoping to get 12% returns, but I think stock market today is more about expected returns measured in 100x multipliers.<p>Money is cheap, so it makes all the sense to buy risky assets. What has the best chance at growth, Tesla or BWM, Airbnb or Hilton ...and so on. Tesla could be overvalued by 100x, and be still undervalued because its expected growth is still much higher than that of your other alternatives.<p>At the end of the day, Tesla futuristic, exciting, and keeps innovating. Every one else is just playing catch up. What is more likely, old school car companies learn to innovate, or Tesla learns to produce cars with less defects and for less? They seem like equally likely, but one is a much harder problem than the other as it is rooted in the very origins and goals of the company.

Total car production worldwide, 2019: 92 million.<p>Tesla car production (2020) about 600,000 (?)<p>So Tesla makes around 0.7% of the world&#x27;s cars. Something is wrong here.

Hi guys - long time lurker, very seldom do I post or comment, but thought that HN might be interested in this.<p>Although TSLA&#x27;s market cap is down a bit from when I wrote the article, it still makes up something like 30% of the global automaker market, despite only publicly listing 10 years ago!<p>Is it overvalued or in a bubble? I&#x27;ll leave that for you to decide.

it&#x27;s a bet that tesla <i>will</i> convert their marketshare into real production numbers. The bet is based on assumption that entire market will shift to electric cars in 5-10 years. To give you understanding the current numbers. In 2020 tesla will deliver ~19% of what BMW delivers. BMW probably is the most direct traditional competitor. Luxury sport segment. 25% of audi and 5% of what toyota delivers.<p>To keep this valuation assumption in place, tesla can lose a lot of market share and only &quot;keep&quot; 20%-30%.<p>In this case it will outsold any other car brand and will outperform it&#x27;s valuation.<p>They could remain their share higher. In this case they are undervalued.<p>They obviously can loose competition to traditional players, but also to emerging Chinese brands. Musk himself consider them a bigger competitor.<p>The market itself can shirk a lot, due to robotization, in this case you don&#x27;t have to own a car in most of the cases. In this case the entire market will be changed dramatically and current valuation doesn&#x27;t make any sense.

Another mini dot-com bubble in the making. Anybody remember when Cisco became the most valuable company in the world? I don&#x27;t, and I am pretty sure a lot of young investors in their 20s and 30s don&#x27;t. This phenomenon is nothing new. Issac Newton, after losing 3 million dollars (in today&#x27;s valuations)- &quot;I Can Calculate the Motions of the Planets, but I Cannot Calculate the Madness of Men&quot;.

I am not so sure Tesla is overvalued. Oil prices are not going to be this low forever, and I expect a massive increase in demand for electric vehicles once gas goes above $4&#x2F;gallon again.<p>Plus, millennials seem to greatly prefer the Tesla buying experience over traditional dealerships.

Is this because Tesla makes a lot more than just cars? My understanding is that Tesla is also a power infrastructure company.

Back in April during the early pandemic dip, I bought some shares in Tesla and watched them skyrocket. Sold a good chunk of the shares and watched them double again. I owned Tesla previously at around $200&#x2F; share and regrettably sold those shares.<p>Tesla is tough to value, but I hang onto my shares for a few reasons.<p>#1 I&#x27;ve profited enough that I&#x27;ve been able to cash out my original stake. Right now any investment in Tesla is house money.<p>#2 Tesla is in a fairly unique position to gain from a lot of strong trends right now. Electric cars are just part of it. Tesla has their hands in a lot of the technology required for green power. Energy storage, solar, Tesla has their hands in it all. We&#x27;re at the beginning of the curve on almost all of these technologies and Tesla has a pretty strong competitive advantage.<p>#3 Elon Musk. I&#x27;m not a fan of many of the things he says and does, but he seems to have a talent for coming out on top and being ahead of the technology curve. I would honestly prefer owning SpaceX to Tesla, but since Tesla is the only Musk company which is public, I&#x27;m content with a piece of it.<p>#4 Cars. The idea that VW&#x2F; GM&#x2F; Ford would leap frog Tesla once they started competing hasn&#x27;t happened. Almost all the Tesla competitors either have far lower ranges, higher prices, or sometimes both.<p>I have no idea if Tesla is worth 1&#x2F;3 of what the rest of the auto industry is worth. But a giant chunk of auto industry infrastructure is going to be obsolete within the next 30 years even as Tesla is perched to continue growing so perhaps this isn&#x27;t too odd.

The simple reason Tesla are valued so high is because they have plans for and are executing on MASSIVE growth. They&#x27;re building factories around the world as fast as they possibly can to massively scale up how many cars they can produce each year.<p>Toyota produce the same number of cars they did 10 years ago, and their stock price is the same as it was 10 years ago. Yes, Toyota make an insane number of vehicles and make profit doing so, but chances are they&#x27;ll be doing basically the same thing 10 years from now.<p>The article says Tesla&#x27;s Revenue grew 28x in 10 years from 100M to 28B. The market is hoping&#x2F;predicting&#x2F;betting that will be the same in the next ten to roughly equal VW and Toyota at 280B by 2030. The ten years after that might see similar growth too..

Tesla has lost market share in Europe and North America. To give a company $600B market cap and up 5x while it is losing market cap is pretty astounding to me.

I invested because I think their vision and execution will lead to them selling a ton of products and services.<p>Their vision is much bigger than the auto industry. It is to accelerate the world’s transition to sustainable energy.<p>I like their execution so far with the model 3, model y, and their focus on making a ton of batteries efficiently.<p>They seem to be one of the most innovative companies in the world: superchargers, solar roofs, power walls, energy storage, electric cars, self driving cars, etc... and their innovation seems to be based on inventing on principle as coined by Bret Victor.<p>The environment may be in flux with the financial markets frothy and governments are devaluing money, but I sure like this company’s prospects. I assign them many multiples over GM, Ford, etc... In the last 10 years, Tesla has started selling energy storage, power walls, solar roofs, etc.. . What have Ford and GM done in the same timeframe? Project out relative innovation rates over the next 5-10 years.

What people don&#x27;t seem to understand is that the market for EV is fundamentally limited by batteries. We know about how many batteries will be produced in the next 5-10 years.<p>The EV market will grow as fast as the battery market can support it, and Tesla is by far the largest current buyer of batteries and they will continue to expand that. While at the same time also attempting to be one of the biggest battery companies in the world.<p>The Tesla &#x27;pilot plant&#x27; they have in California, is targeted to be the 15 biggest battery factory in the world by end of next year. Its the same size as the plant VW and Northvolt have planned in Germany by 2026.<p>Tesla will in start building multiple huge battery factories next year, in Berlin and in Austin, Giga Nevada (biggest battery factory in the world, with Panasonic cooperation) will continue to grow and they will also continue to be one of the biggest costumers for LG and CATL.<p>We are quickly at the point where the raw material inputs will have a seriously hard time keeping up. Massive amounts of new nickel, lithium, cobalt and battery grade graphite need to be minded and refined. Nickel is the best investment, as there is basically no way around massively increasing nickel in the next 10 years.<p>This is before we even consider grid batteries. Li-Ion grid batteries, even when not able to be a backup for the cities are seriously useful for basically every grid operator in the world. While other storage mechanism exists, li-ion batteries are arguable the best in the market and will be for a long time.<p>Tesla is already a serious contender in that market (largest market share by far) both in terms of home and grid batteries. They already have all the software and electronics required, and already are in contact with utilities around the world.<p>People are very fast to claim &#x27;bubble bubble bubble&#x27; but I would push people to seriously consider the market dynamics at play and how the transition EV and renewable energy will play out in the next 15 years. Tesla if you like them or not, is well positioned, in terms of EV, Grid Batteries and Solar installation, all of these will grow globally and exponentially over the next 10-15 years.

Market cap arguments lost me a lot of money. I wonder if there&#x27;s just some flaw with this line of reasoning or I&#x27;m just unlucky and the market is too bubbly&#x2F;irrational right now.<p>For example another weird stock is Snowflake, which is currently at 100B but they themselves claim their total addressable market size is only 70B. Ditto for airbnb and doordash.

To me market cap is as meaningful as GDP - it doesn&#x27;t represent real value, just whatever the market is willing to pay for an infinitesimal amount of shares, but extrapolated to the whole stock.<p>Just how many company buy outs are done via cash?

And how much the global energy market, which they are also disrupting?

10 or so years ago I was pretty bearish on Facebook and Apple, I was proved wrong.As I said in another thread, this is the big question for the next 10 years in the automotive industry.Will TSLA justify its market cap?