Open Ai must be making some mad earnings that are not disclosed. Huge contracts I suppose. Meta was worth $100 billion pre-IPO but they were obviously very profitable and had lots of advertisers. It reminds me of Tesla. During 2020-2021 the stock went up 20x and it seemed irrational and the biggest bubble ever, but fast-forward to 2024 and Tesla cars everywhere especially in the Bay Area. The market correctly anticipated Tesla's popularity.
Tesla sells like 1% of the cars and has like 50% of the market cap, and it’s not because their margins are so high.
All the market correctly predicted is that the market would continue to incorrectly predict their value.
As a mental exercise, imagine there’s a bubble that went on for 5 years. They sometimes go that long or longer. Do you not think 3 years in people would think they were seeing the market just having been correct the prior few? It would look exactly the way you view this.
This has been a phenomenon of the endless liquidity train of the past 3-4 years. People doing very stupid things with money knowing more is always coming. There are certain stocks like palantir that are very obviously in bubbles where the market celebrates its inclusion in a stock index and sends the shares up 15%. The CEO just self produced a video recognizing retail traders and using the term “tendies.” The mistake this cycle though has been to assume that won’t work
> All the market correctly predicted is that the market would continue to incorrectly predict their value.
I don’t understand why so many don’t get this, especially after crypto currencies became a thing. The token can be DOGE or TSLA, the mechanism is the same, only marketing and PR content change, reality doesn’t matter. In fact Musk already said Tesla is not a car company anymore. Crypto opened the eyes of a lot of smart CEOs, and not in a good way, and investors look away as long as the dance continue.
I don't touch crypto, but one thing I took away from its rise is thinking through what money actually is and what equity valuations actually represent.
I’m not saying the should be valued higher. But it is at least notable that a Toyota has been the best selling car every year for the last 20 or so, until last year when it was the Model Y.
Meanwhile Toyota has been caught unsure of if they should build gas, electric, or hydrogen cars. Fortunately, as a fan of Toyota’s cars, it seems like they’ve figured out a good strategy forward. But for every Toyota there is a BlackBerry, IBM, Reebok, or Blockbuster who doesn’t figure out how to adapt to a changing market in time.
You are using a pretty deceptive number when looking at the highest selling car. What is the biggest seller for Toyota? the RAV4, which helpfully counts as "not a car".
I think for Toyota's main market the hybrid model still makes very much sense. EV is still a huge premium. Nice if you live outside the city and can charge your car with your own solar panels. Too clumsy to deal with in the city with the scarce public charge points.
And Toyota is a budget to mid range brand. For high end (the customers where the premium doesn't matter) they have lexus.
Massive amounts of anti-fossil fuel powered car legislation being passed, or being talked about, and Tesla being the clear market leader in the electric vehicle space.
I have no love for Tesla and I won't buy one as long as Elon Musk owns it.
But alas I think most major automakers are massively dropping the ball on EVs. I'm particularly disappointed in Toyota and Honda - I really expected better from them.
Where's the Corolla EV or the Civic EV? How about a nice little hatchback? Nope. Everyone's building crossovers, compact SUVs, fuckin' pickup trucks - it's a complete clownshow.
One thing that’s frustrating is that everyone is converging to a few form factors instead of trying to fill each other’s gaps. There aren’t really any sporty things, and even the F-150 electric is only barely at 150-class specs (the bed is tiny).
Also, the number of boneheaded moves by the legacy car companies is astounding.
Ford just pushed their roadmap out a few years. Stellantis has nothing(?). Chevy dropped the ball by discontinuing their best model and then deciding not to pursue the “people that own cell phones” market segment.
I think the list of top ten global automakers will be very different in ten years. These companies seem likely to be on it (no particular order), based on current lineups of native EV platforms:
Tesla, Rivian, Volvo (polestar), Kia, Mercedes, BMW, Hyundai, and probably Ford, despite the delays.
I’m leaving Genesis and Vinfast off my US-centric list, but they’re certainly contenders.
I suspect, without knowing the actual situation with Chevy, that this is a somewhat oblique reference to some grievance with their approach to Android Auto/CarPlay (or lack there of).
The extra up front cost and greater long term depreciation of a Corolla EV or civic EV is not worth it compared to a gas hybrid car for anyone that drives 10k miles per year, maybe even 15k miles per year.
Toyota’s gas hybrid tech has decades of track record that they will hold their value.
A Corolla or Civic EV implies a relatively cheap, really good quality, reliable car that holds its value. Not literally those bodies on an electric platform, but something that embodies those characteristics in an electric vehicle. I guess I used to have faith that if anyone could crack that problem, it would be the two Japanese giants.
The performance and cost of batteries is still changing fast enough that it doesn't make all that much sense for them to be dipping their toe in the water. They are investing in battery tech and are pretty likely to launch good vehicles when batteries that have good range and charge fast hit some target price point.
The market for electric vehicles that cost quite a bit more than similar size vehicles exists, but it's not like people that are shopping on a budget are going to choose based on performance and prestige, they are going to choose based on price, and conventional vehicles can still be built for lower costs.
The issue is, if you want to make an EV cheap enough to sit in the Civic/Carolla market, it still ends up being useless for most people because you can't afford to equip it with a large battery. Not to mention the only way an EV makes sense is if you can charge it with your own utility power, having to go and sit at a charger for 30+ minutes isn't, and will never be, tenable for most people.
Think about who's buying Civics and Corollas. It's apartment dwellers mostly, and they don't have chargers, nor can they. Maybe their parking lot has chargers, and those will be expensive, and they could use public chargers, which are also expensive, but you're talking basically making the cost 1:1 with a gas car at that point, but less convenient, less range, heavier, and all that assumes you can even sell it in that price bracket. It simply makes no sense for the majority of consumers. You'd have to invert the gas/electric pricing, which, given current trends, isn't likely to happen.
Now will that always be the case? Very likely not, eventually we'll have cheap power, eventually enough people will be driving EV's that gasoline loses its scale advantage. Until then, the EV market will stay mid-high end, and that means crossovers/suv's/trucks/etc.
Some people view that as dreadfully bad, myself, I'm happy that EV's are being developed and sold. By the time the world is ready for them, they're going to be very, very good, and that's the point which I'll be buying one. That is assuming I don't nab myself a late 90's ford ranger with a blown motor and build my own EV first.
Americans in the majority prefer pickup trucks, SUVs and crossovers. Ford entirely quit making sedans and hatchbacks a few years ago, at least for North America.
Tesla primarily sells into coastal cities where the driving conditions and use cases are ideal for an EV sedan. That said, most of the people I know with a Tesla also have an ICE SUV or truck.
The world is a lot bigger than the US. And valuation is not actual value but more whatever the current overhyped investor thinks it's going to bring in the future.
Tesla combines Model 3 and Model Y sales when they report results, so we don't actually know that. According to estimates*, and my own eyes, more Model 3s are sold than Model Ys.
* 2021 is the last year for which Wikipedia has estimates for both vehicles. The Model 3 sold over 1m, the Model Y around 400k.
Right but some countries (incl China) have explicit registration data so these estimates are not a shot in the dark. From Jose Pontes' article where the Wikipedia Y estimates came from, there were 530k 3s sold and 1.2M Ys sold
I owned a Tesla and could write a Master's dissertation on it. Interestingly, me buying the Tesla car was my life's shittiest investment but the Tesla shares I bought around that time (mid 2019) were my best investment.
I drove a Volvo after that, until landing in a very dangerous accident recently (the Volvo literally saved my life). Now I'm driving a rental Honda (which was my starter car on which I learnt to drive). Both beat Tesla by a mile.
Yeah Volvo is great at safety. And reliability too. I owned a 10 year old one that cost me a couple thousand, drove it for years without notable maintenance except the usual oil change and it kept going <3
So much better than my Skoda where half the dashboard fell apart and the gearbox suddenly just "crashed"
If I ever own a car again it'll be a Volvo :) won't be an EV for sure because I always buy old cars, i just hate spending a lot on a car. It's not important in my life and the past 6 years I haven't even owned one and rented one only once.
In my experience driving them. I like manual buttons and safety. Granted, the Tesla was the first car I bought and it was an amazing car in and of itself, but the ICE experience was far better. The software side sucks (I don't know why people keep praising Tesla for it).
Valuation is based on future, not past performance. Toyota is looking a bit stale and weak lately. They are loosing market share. Amongst others to BYD and Tesla in a market that Tesla single handedly created. And Toyota's portion of that is so pathetic it's barely worth talking about.
It's gotten so bad that Toyota is currently actually outsourcing EVs to BYD at the same time that company is grabbing market share from them. Not a great look if you have to ask your fastest growing competitor to please build a product for you.
Tesla is of course taking a few big bets that may or may not pay off. Many people are rightfully somewhat skeptical about all that but it is a bit disingenuous to portray them as just a car company given their growing number of "definitely not a car" type products and services. E.g. battery storage is bringing in quite a bit of revenue now for them and is one of the things that is rapidly growing. And of course the whole robots, AI, and FSD angle has lots of potential. Regardless of whether you believe Tesla can do that or not.
This article is about OpenAI who is getting quite stellar valuations in that area. Tesla is of course part of that market. Toyota very much isn't.
In short, Tesla might fail or they might succeed. In the same way Toyota might recover or they might not. To be honest, both companies have issues. But I have more confidence in Tesla than Toyota. Toyota seems a company without ambition and vision. Tesla can't be accused of that. Toyota's vision is to do what all their competitors are doing right now but in ten years. Tesla's vision is to do in ten years what nobody is doing right now.
Again, you might not believe in any of that. But you might be wrong. That's the gamble you make in the stock market with either company. And the share price is just a reflection of what people buying shares right now believe.
> The market correctly anticipated Tesla's popularity.
It seems like the market has priced in gains that have yet to materialize in Tesla's fundamentals. They're still far smaller than auto makers with much lower valuations.
I’d guess it’s some contracts that’s valueated at high multiple for all kind of reasons, like it’s enterprise deal so it’ll be there forever and only increase the amount; the apple deal probably was known back then but only public recently; the influential type of customer that could help them break into particular industries;
If you're going to make a 4 letter comment, at least be correct. Tesla in no way could be thought of as "short-term popularity." Every year, they've had increasing sales, about +20% between 2022 to 2023, and their latest quarter is still the highest sales of any quarter, on track to make $100 billion annual.
Yet, as mentioned elsewhere in this same comment chain, they're almost certainly overvalued and in a bubble. Not only that, but their overall image has suffered over the last few years thanks to Musk. There are plenty of concerns over their inability to produce a product of actual high quality that doesn't consistently fall apart, and their product line is stagnating without any new cars (cars, not Cybertrucks).
It's cool that sales have increased, but so many other signs point to their run being relatively short-lived that it's not an unreasonable viewpoint to expect them not to be as strong as they are long-term.
Edit: Hell, even Musk has said they're not a car company anymore. Can anyone actually tell me what kind of company they are, then? How can I expect for them to be as successful if they're having some kind of existential crisis, for lack of a better word? Good luck getting your employees moving towards the same mission if we're not entirely clear what that is.
Edit 2: Further, they've only been selling their current lines of cars for twelve years. That's a relatively tiny amount of time compared to other leading manufacturers. That's short, and all signs point to them not really knowing where to go from here. Just because there's been growth doesn't mean it's guaranteed to continue. Downvote this comment too, disagree with it, I don't really care - time will tell how this shakes out.
