Deputy Travis Junior said:I think the point that the "Tesla killer" is basically a boogeyman is well taken. Tesla is finally finding its footing and moving past the "chippy startup" phase, and the brand has a lot of panache, so I don't think anybody is going to swoop in and kill it. But let's look forward:Fizban said:
The point is that for years people have been saying that once a "real" automaker decides to make an electric car Tesla will be doomed. When these new electric cars have arrived they haven't been remotely competitive. As it turns out building a good electric car is a very hard engineering problem and requires a lot of tech that is new to the older manufacturers.
So far the next wave of challengers don't appear to be on track to do much better.
The reason TSLA is priced the way it is is because it is disrupting one of the biggest industries on earth, and is a significant participant in several emerging fields with potential.
Tesla is currently priced as the second most valuable car company in the world. However, in 2019 it shipped ~375k cars compared to 77M total car sales worldwide (Statista.com source: Link), which works out to half a percent. Toyota, meanwhile, sold something like 11M cars. Thus, I think you'd agree that to justify its current valuation, Tesla needs to approach 6-8M sales/year, which is a 16- to 20-fold increase for current production (it also needs to dramatically improve and optimize operations so that it can take advantage of the fatter margins present in the luxury car space, but let's assume they can do that).
When you look at EV sales growth projections over the next decade or two, you realize that Tesla will need to 1) own nearly all of the growth in that space and 2) continue to ramp up production without hiccups to make a real attempt at that 6-8M target. This brings us to the conclusion that while Tesla stockholders needn't fear a "Tesla Killer," simply a legitimate alternative (read: actual competition that grabs some market share) could derail the ultra-rosy future baked into the current stock price.
It's massively overvalued, and the fact that none of the traditional automakers have a nice alternative doesn't yet mean anything; the segment is still far too small for that to matter. They have years to develop and deploy true competition.
TSLA's value is certainly built around the assumption that it will continue to grow at an extremely high rate. Obviously its 2019 sales don't justify its present valuation, but valuations are forward looking.
There is also much more to things than just market share.
Tesla has the potential to be considerably more profitable than their old-school competitors because they simply have a different business model. They own their business from nose to tail. They build the cars, sell the cars, maintain the cars. They don't have parking lots full of inventory sitting all across the country in the hands of third-party dealers. They have built their own charging infrastructure. They have built their own software. They are moving into insurance. They don't have unions dictating when and where they can open and close plants.
There is a lot going on here and most of the market is just starting to figure it out.