Tesla becomes biggest automaker in US history by market cap

[phoenixikki]

Tesla becomes biggest automaker in US history by market cap despite struggling to scratch out a profit

Electric car maker Tesla became the first $100 billion publicly listed US carmaker on Tuesday. It eclipsed the combined value of US auto giants General Motors and Ford, despite generating far less revenue than its competitors.
The company’s shares climbed as much as 1.4 percent in after-hours trading on Tuesday to $555 after closing the regular session up 7.2 percent.

Tesla has seen its stock more than double in the last three months, fueled by a rare quarterly profit in October of just $143 million, as well as news of production ramp-up in its China factory and better-than-expected annual car deliveries.

Tesla's market value is surprising considering that its revenues are dwarfed by its non-electric rivals. Its yearly revenue for the quarter ending September 30, 2019 was $6.3 billion, a 7.63 percent decline year-over-year.

Ford Motor Company's revenue for the same period was almost $158 billion, but the automaker's market cap is about a third of Tesla's, standing at $36.5 billion as of Wednesday.

General Motors revenue for the twelve months ending September 30, 2019 was $144.8 billion and the company is valued at around $50 billion.

Tesla's $100 billion valuation means a huge payout for CEO Elon Musk if the firm’s market value stays above the mark for a sustained period.

Analysts, however, wonder how long the stock rally will continue for, with some calling it “extremely unusual.”

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[SalvadorAllende]

Thinly veiled oil company sponsored article

 

[TeTe]

What goes up, must come down.

More competition and expired federal and state tax credits are already getting the ball rolling.

 

[dissectingaorticaneurysm]

What goes up, must come down.

More competition and expired federal and state tax credits are already getting the ball rolling.

What competition? All the promised rivals have turned out to be vaporware, flops, or subject to huge production delays. Turns out that building an EV is hard, who would've thought?

The tax credit expired in 2019. Yet the stock continues to surge. And the Model Y debuts next month and it will be their biggest seller by far. I don't think people realize just how massive their moat is now- and it was all built while the other automakers were sleeping on electric. Now they've got Gigafactories on 3 continents and secured battery production out of reach of everyone else.

It's only gonna get uglier for competitors from here on out. I expect half the existing automakers to dissolve or merge within 20 years as they struggle to survive.

 

[TeTe]

What competition? All the promised rivals have turned out to be vaporware, flops, or subject to huge production delays. Turns out that building an EV is hard, who would've thought?

The tax credit expired in 2019. Yet the stock continues to surge. And the Model Y debuts next month and it will be their biggest seller by far. I don't think people realize just how massive their moat is now- and it was all built while the other automakers were sleeping on electric. Now they've got Gigafactories on 3 continents and secured battery production out of reach of everyone else.

It's only gonna get uglier for competitors from here on out. I expect half the existing automakers to dissolve or merge within 20 years as they struggle to survive.

Whatever infrastructure Tesla has, other auto manufacturers have had it for decades and they have gas powered engine cars to sell as their bread and butter in the meantime. What is it to them to take a proven platform and add an EV to it?

Also, the $7500 tax credit (for Tesla) just expired three weeks ago.

 

[dissectingaorticaneurysm]

Whatever infrastructure Tesla has, other auto manufacturers have had it for decades and they have gas powered engine cars to sell as their bread and butter in the meantime. What is it to them to take a proven platform and add an EV to it?

Also, the $7500 tax credit (for Tesla) just expired three weeks ago.

Right, and their allegiance to ICE motors is exactly why they will not be able to compete. The only one who has a fighting chance is VAG, as they have made some huge sacrifices and have a willingness to go even deeper. Everyone else is circling the drain. By the time they actually build "Tesla killers", the costs will be too high to be profitable.

Any of the automakers could have crushed Tesla back in 2008 simply by pumping out EV's. But no one did. Now it has the second largest market cap among all automakers.

 

[TeTe]

Right, and their allegiance to ICE motors is exactly why they will not be able to compete. The only one who has a fighting chance is VAG, as they have made some huge sacrifices and have a willingness to go even deeper. Everyone else is circling the drain. By the time they actually build "Tesla killers", the costs will be too high to be profitable.

Any of the automakers could have crushed Tesla back in 2008 simply by pumping out EV's. But no one did. Now it has the second largest market cap among all automakers.

And you left out one big thing here though.. the assumption that EV's will ever become a bigger part of the market share than ICE engines. Even if they do, how long will that take with the market share only being 1.5 percent right now? Not like major auto manufacturers can't make affordable EVs.. cause lets be honest Telsas aren't affordable to the average person. Who cares what their market cap is, investors are still hedging their bets right now and will be for a while.

 

[TeTe]

@brackis1

 

[dissectingaorticaneurysm]

And you left out one big thing here though.. the assumption that EV's will ever become a bigger part of the market share than ICE engines. Even if they do, how long will that take with the market share only being 1.5 percent right now? Not like major auto manufacturers can't make affordable EVs.. cause lets be honest Telsas aren't affordable to the average person. Who cares what their market cap is, investors are still hedging their bets right now and will be for a while.

Their stock price is a reflection of investor confidence. Remember that TSLA was as low as $185 last year because of the various threats that loomed (like that Porsche Taycan). Now that they've come and gone, investors see a clear path ahead for Tesla.

Ford sells more F-150's in a year than Tesla has sold in its entire history. And yet, Ford's stock keeps tanking.

 

[TeTe]

Their stock price is a reflection of investor confidence. Remember that TSLA was as low as $185 last year because of the various threats that loomed (like that Porsche Taycan). Now that they've come and gone, investors see a clear path ahead for Tesla.

Ford sells more F-150's in a year than Tesla has sold in its entire history. And yet, Ford's stock keeps tanking.

Big, shiny and new, I get it... ride the wave. But as long as Ford keeps selling a million F-150s a year, along with the other vehicles it sells, I have a hard time believing it'll be going bankrupt any time soon. And if they can perfect an EV F-150 and other EVs in the meantime, they'll be fine.

It'll all come down to cost. Let me put it to you this way. If in 2023 I decide to go to the Chevy dealer to buy a 2SS Camaro (which MSRPs for about $42,000), which I will, and they miraculously have an equivalent trimmed EV Camaro but the cost was $52,000. It'd still buy the ICE one. It would take me about five years worth of driving to make up the cost of that in gas savings. Not to mention the inconvenience of having to find places to charge it on long trips and factoring the cost of electricity to charge it. Plus lets be honest, it doesn't sound cool.

 

[dissectingaorticaneurysm]

Big, shiny and new, I get it... ride the wave. But as long as Ford keeps selling a million F-150s a year, along with the other vehicles it sells, I have a hard time believing it'll be going bankrupt any time soon. And if they can perfect an EV F-150 and other EVs in the meantime, they'll be fine.

It'll all come down to cost. Let me put it to you this way. If in 2023 I decide to go to the Chevy dealer to buy a 2SS Camaro (which MSRPs for about $42,000), which I will, and they miraculously have an equivalent trimmed EV Camaro but the cost was $52,000. It'd still buy the ICE one. It would take me about five years worth of driving to make up the cost of that in gas savings. Not to mention the inconvenience of having to find places to charge it on long trips and factoring the cost of electricity to charge it. Plus lets be honest, it doesn't sound cool.

I don't think you understand just how much the auto industry will change in the next two decades. Emissions regulations are forcing everyone to downsize or hybridize. This will be the last generation of AMG's V8. Everyone else is on borrowed time.

Young people don't give a shit about cars. They'd rather Uber everywhere than deal with the hassle of car ownership. There's nothing dorkier to a 20 year old than a boomer revving his decatted V8. It may as well be a straight piped Harley to them.

 

[dissectingaorticaneurysm]

To further elaborate on the point I was making to @TeTe :

https://www.ft.com/content/ebb85b9e-1b7d-11ea-97df-cc63de1d73f4

Last month Daimler revealed a gulf between its current emissions of 138g/km and its target of roughly 100g/km.

“What we can’t control is buyer behaviour, but we have the technologies within our portfolio to get within target range,” chief executive Ola Kallenius told investors in London last month.

The German group is expected by many dealers to cut production of its most polluting models. In its crosshairs is the Mercedes AMG range, its highest-specification models that have supercar acceleration and the body of a family saloon. A reduction of 75 per cent in the availability of some models within the AMG range is expected by several retailing executives, who spoke on the condition of anonymity.

This poses a serious profit risk. While it never breaks out the division’s earnings, AMG is believed by analysts to be a significant contributor to the bottom line. “If they kill off AMG it’s a catastrophe for profitability,” says Bernstein’s Mr Warburton.
​

Mercedes would be the most effected, but all of them will suffer- the profitability per car for the gas guzzling performance models are too great. These companies have had til 2008 to prepare for this, and the penalties will begin in 2021 which is just around the corner. None of them are prepared.

This is why VAG pulled out of all ICE motorsports. And despite 3 years and billions of dollars invested, they still don't have a viable Tesla competitor.

These companies are FUCKED. That's why there is panic and depression in their eyes. They are going to have to merge to survive, like the recent restructuring of Renault-Nissan-Mitsubishi to pool resources to develop an EV.

ICE will live on in rural third world markets that don't have the infrastructure for charging. Kids growing up today will associate that with abject poverty. By the time our generation retires, the landscape will be dramatically different.

This was what NYC looked like a century ago.

 

[TeTe]

ICE will live on in rural third world markets that don't have the infrastructure for charging. Kids growing up today will associate that with abject poverty. By the time our generation retires, the landscape will be dramatically different.

abject poverty lol. Have you seen what cars have been going for at Barrett Jackson? They had a record year for sales last year.

The landscape won't be different unless EVs come down in price and Tesla isn't the be all end all. It would not be difficult for any OE to make and sell an EV for less than Tesla.

Either way, they'll always be demand for ICEs.. especially in the commercial and off road market where there are no CAFE standards. Not to mention all of those classic cars that people store and pass down from generation to generation.

 

[dissectingaorticaneurysm]

abject poverty lol. Have you seen what cars have been going for at Barrett Jackson? They had a record year for sales last year.

The landscape won't be different unless EVs come down in price and Tesla isn't the be all end all. It would not be difficult for any OE to make and sell an EV for less than Tesla.

Either way, they'll always be demand for ICEs.. especially in the commercial and off road market where there are no CAFE standards. Not to mention all of those classic cars that people store and pass down from generation to generation.

Yeah, those are collector's relics. Keep in mind that it's wealthy boomers snatching up those cars they worshipped in their youth. The same reason why Gen X'ers are now paying 6 figures for Supras and Skylines.

And I didn't say ICE would be extinct. There are countless applications with no substitute for combustion engines. They just won't take precedence at the consumer level.

As infrastructure bends to accommodate EV's, the costs of running an ICE car will increase- everything from fuel to parts to insurance. So yeah, there will be people driving around in them- but the cost to do so will be prohibitively high. Like owning a horse.

And I say this as someone who has owned and loved V8's (Mustang GT, E92 M3) and stubbornly refuse to buy an automatic car. My preferences are obsolete. You'll see the writing on the wall too.

 

[TeTe]

You'll see the writing on the wall too.

I realize that EVs are probably here to stay and that's okay with me if people want to buy them. But until Tesla actually reports a profit and more affordable competition comes along it isn't even something to make a huge deal about.

 

[Jack Reacheround]

What competition? All the promised rivals have turned out to be vaporware, flops, or subject to huge production delays. Turns out that building an EV is hard, who would've thought?

The tax credit expired in 2019. Yet the stock continues to surge. And the Model Y debuts next month and it will be their biggest seller by far. I don't think people realize just how massive their moat is now- and it was all built while the other automakers were sleeping on electric. Now they've got Gigafactories on 3 continents and secured battery production out of reach of everyone else.

It's only gonna get uglier for competitors from here on out. I expect half the existing automakers to dissolve or merge within 20 years as they struggle to survive.

2019 is still fairly recent. Sometimes it takes a while for the effects of something like that to set in. I wish the government would continue to subsidize them and any other electric vehicles.

 

[dissectingaorticaneurysm]

2019 is still fairly recent. Sometimes it takes a while for the effects of something like that to set in. I wish the government would continue to subsidize them and any other electric vehicles.

It doesn't matter as there is still a waiting list for purchases. Keep in mind that Tesla only unrestricted sales in 11 states- direct sales everywhere else are banned or severely limited. Once they resolve this lengthy battle, the automotive industry will never be the same again. The other automakers are watching with keen interest as the dealership model cuts into their profits.

The Chinese Gigafactory isn't at full production yet, and the German factory has only just begun construction. Once they are fully operational and pumping out cars, it's going to be an uphill battle for everyone else.



And everyone arguing that the other automakers can build competing factories need to ask themselves why they haven't done it yet? Because they're all saddled with huge amounts of debt and low investor confidence in new projects. This will require billions of dollars (more than the amount Tesla spent to secure the batteries) that shareholders will be reluctant to allow until it is too late.

@TeTe thinks GM or Ford can just flip a switch and start pumping out EV's whenever they want. Profound miscalculation.

 

[Jack Reacheround]

It doesn't matter as there is still a waiting list for purchases. Keep in mind that Tesla only unrestricted sales in 11 states- direct sales everywhere else are banned or severely limited. Once they resolve this lengthy battle, the automotive industry will never be the same again. The other automakers are watching with keen interest as the dealership model cuts into their profits.

The Chinese Gigafactory isn't at full production yet, and the German factory has only just begun construction. Once they are fully operational and pumping out cars, it's going to be an uphill battle for everyone else.



And everyone arguing that the other automakers can build competing factories need to ask themselves why they haven't done it yet? Because they're all saddled with huge amounts of debt and low investor confidence in new projects. This will require billions of dollars (more than the amount Tesla spent to secure the batteries) that shareholders will be reluctant to allow until it is too late.

@TeTe thinks GM or Ford can just flip a switch and start pumping out EV's whenever they want. Profound miscalculation.

I hope you’re right about that. The auto industry oligarchs have a way of killing any innovative entrant to their market for fear of having to actually compete. See the Tucker for reference.