Tesla v. GM v. Ford: Sacrilege to Mention Them in the Same Breath, But Here We Go

Just the Numbers.

By Wolf Richter for WOLF STREET.

Tesla is a supernatural phenomenon led by a guy who walks on water, and it’s not manufacturing and retailing automobiles in a stagnating or declining industry, but its conjuring up miracles with wheels in a boundless universe. So I understand perfectly well that it’s a sacrilege to mention Tesla in the same breath with Ford and General Motors. But here we go, sacrilege and all, side by side, just the numbers, Tesla, Ford, and GM.

GM reported this morning that global revenues for Q3 were flat at $35.5 billion, on strong unit sales gains in China, and declining unit sales in the US, but with a shift to more expensive vehicles in the US. GM previously announced that third-quarter deliveries in China through its joint ventures had surged 12% from the dismal levels last year, to 771,400 vehicles (other automakers also reported big year-over-year gains in Q3 in China). In the US, GM’s deliveries in Q3 fell by 10% year-over-year to 665,000 vehicles, once again selling more vehicles in China than in the US.

The Comparison: Tesla, Ford, and GM.

Global revenues at GM and Ford were over four times Tesla’s global revenues:

Net income attributable to common shareholders in Q3 at GM was 13 times Tesla’s; and Ford’s net income was 42% higher than Tesla’s:

Earnings per share in Q3 at GM were over 10 times Tesla’s. Ford’s EPS were less than half Tesla’s:

But Tesla’s market capitalization (share price times number of shares outstanding), despite being a much smaller company, is currently 13 times Ford’s market cap and nearly 8 times GM’s market cap. And it’s nearly 5 times their combined market cap:

What this market-capitalization comparison shows is not that Ford and GM are somehow undervalued by a factor of 100 or whatever, but that Tesla’s share price is just ludicrously blown out of proportion.

Tesla made EVs cool, and it forced the legacy automakers to take EVs seriously. And now, after years of dilly-dallying around, they’re all taking EVs seriously.

EV sales is where the growth is in the overall declining delivery numbers. And these legacy automakers are now investing many billions of dollars each to design and build EVs. They’ve moved their brightest brains into the segment. Some of these EVs are already on the market, others are coming on the market.

The competition Tesla faces is growing and will get huge. Before it was just Tesla by itself, and if you wanted an EV, it would have to be a Tesla. Now it’s everyone, across the spectrum, from compact cars to pickup trucks.

In that respect, Musk has performed a miracle: He created an entire industry and forced legacy giants to get off their lazy butts and move. He has shaken them up. And now they’re moving.

To face this competition, Tesla has been cutting prices all year, which is pushing down EV prices globally. This just doesn’t happen with internal-combustion-engine (ICE) vehicles. They know only one way: price increases. With ICE-vehicle prices rising, and with EV prices falling, it doesn’t take long for the price advantage to shift to EVs – especially given their lower operating costs (juice and maintenance).

Tesla is now up against all the giants it has woken up – in addition to all the newcomers that are now fighting it out in China – the largest auto market and EV market in the world – and elsewhere.

Manufacturing EVs is cheaper and simpler than manufacturing ICE vehicles — with the battery being the exception. The ICE power train, fuel systems, coolant systems, lubrication systems, exhaust systems, the transmission, the emission control and engine managements systems, etc. are highly complex. And all that gets tossed out and replaced by electric motors, a battery, and the systems that control and manage them. Much of the braking is done by electric motors, which generate electricity in the process that charges up the battery, thereby reducing not only electricity consumption but also brake maintenance. The battery is the crux, but that technology is advancing in leaps and bounds, and is being commoditized.

Tesla is losing its status as trailblazer and is becoming just another competitor in an industry dominated by giants. Tesla created a fabulous brand (“Tesla”), and for people who like to buy fabulous brands, this is a pull. But for other car and truck buyers, it’s not a pull. What they want is a well-made, reliable, and all-around good vehicle, backed by competent and easily accessible service and availability of parts – which the giants have finely honed for decades.

For the Ultimate No-Growth Industry: price increases and pushing consumers into more expensive trucks and SUVs. Read… Sales of New Cars & Trucks Through October Fell by 2.4 Million Vehicles, to 1985 Levels. Back to the Future

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.




  177 comments for “Tesla v. GM v. Ford: Sacrilege to Mention Them in the Same Breath, But Here We Go

  1. California Bob says:

    The real story here is: Why are F’s net income and EPS–with so much greater revenue–sooo much lower than GM’s?!

    • Jon W says:

      EPS depends on the number of shares issued. It’s really a bit meaningless as a measure here. Might be better to use earnings yield – divide net income by market cap. But even then, you really need to account for debt, as Ford/GM have much more debt than Tesla (buy backs anyone?).

      I mean, Tesla shares are crazy priced, but as with all things accounting, you can’t really get a detailed idea of how crazy they are from the public information. Kudos to Wolf for trying though.

      • California Bob says:

        OK, EPS I get, but why the disparity in net income (not share-count related)? Are F’s fixed costs that much greater?

        • Cas127 says:

          There are always so many questions buried under a pile of GAAP…

          Did GM sell off some asset to get that large net income margin?

          In contrast, Tesla and Ford have small and tiny net income margins…where is all that revenue disappearing to in the trip through the corporate cost structure…inquiring shareholders want to know (…well, Tesla shareholders really don’t care about anything as prosaic as net income…)

          I also wonder how the makers’ black arts consumer finance arms play into the mix.

          In many/most ways they are considered separate operations…are their financial results consolidated into the results presented above?

          And even if they are, the financial nature of their operation most likely gives them big leeway under GAAP to play around with the timing of accounting flows…that may account for GM’s disparate result (reversal of some loss reserve from early in pandemic?)

          A year’s worth of posts could be written about all the ways corporations can “legitimately” manipulate the timing of financial flows under GAAP.

          That is why, as a general rule, the top line revenue number is really the only one that can be semi-relied on in a given quarter (net income numbers come true…but it can take multiple quarters/years for everything to even out per GAAP “assumptions”).

          And even revenue numbers can/have been gamed (in the 80’s a hard drive maker shipped *bricks* in boxes to retailers to “hit” revenue numbers…those sales got unwound…but not before the quarterly numbers were reported…).

        • char says:

          F has no future, Its EV are VW in drag and it is not really in China. It sells its cars mainly in the US and EU

      • Wolf Richter says:

        Tesla raises funds by constantly selling more shares and diluting existing shareholders. That’s not a biggie when the company is losing money (EPS will be less negative). But when the company makes money, issuing shares means lower EPS because there are more shares outstanding. That said, given the astronomical share price, Tesla would be nuts not to sell more shares — and to heck with the shareholders.

        Since it’s IPO, Tesla has raised something like $25 billion by selling shares via follow-on offerings once or twice a year, including the two deals this year — total over $7 billion, if the second offering is executed fully.

        Ford and GM raise funds by selling bonds, not shares. That’s the classic model and doesn’t dilute shareholders but creates leverage (risk) and interest expense. Given their low share price (compared to Tesla), selling bonds works out better for shareholders.

        • MCH says:

          While I understand fully the concept of dilution, existing TSLA shareholders, especially long term ones should have no complaints on the trajectory of the stock price.

          The question for the share holder is always, is it better to own a large portion of a small pie, or a shrinking but a very profitable portion of a large pie. The usual, big fish in a small pond vs small fish in a big pond argument.

          I think dilution is far less a concern from that perspective to longer term holders.

          However TSLA share price got to this point in time, they’ve gotten here. The profit for the long term share holders is all that matters.

        • char says:

          If you are a shareholder that can’t sell its shares and the shares are massively overvalued then issuing shares does make sense and works out better than bonds for owners of shares that can”t sell, like for instance management

        • Lee says:

          MCH,

          “I think dilution is far less a concern from that perspective to longer term holders.”

          Dilution – the magic word for shareholders in Oz.

          We have cap raisings here too……………and the ordinary shareholder usually ends of getting the shaft in numerous ways when this happens.

          There is the cap raising that only goes to the big end of town at a discount to the current share price. So the ordinary holders gets diluted, gets to see the share price fall, and those in the cap raising probably get to sell out at a higher price if the shares don’t fall to the cap raising price. Those big holders more than likely have an inkling that a cap raising is coming and can short the crap out of the shares before the raising and then deliver against the sale pocketing a big profit.

          Then there is the mixed cap raisng where both big holders and small holders get in on the deal, but wait…………this isn’t as good as it looks. Why?

          The big holders get their shares right away and the ordinary holders have to wait for what the people in the USA call a prospectus, then send their money in, and then wait until the offer closes and then finally find out how many shares they get. The process for the ordinary shareholders can take up to six weeks.

          The small holders are screwed over in this type of cap raising too as usually the big holders get anywhere from 70 -90% of the shares being sold and the ordinary holder the rest. in many cases the number of shares they get is even further reduced as they get scaled back.

          So they still get diluted, but not as much as above, more than likely still see the share price fall while waiting for their shares and again the big holders can dump right away for a profit.

          In the last case all shareholders are allocated shares based on their ownership at the time the offering is made and everybody gets their shares at the same time. I haven’t seen one of these type of cap raising for as long as I can remember here.

          (This used to be the law in the USA until it was changed.)

          And there are numerous games played with cap raisings here. I remember one small oil and gas company sold shares to big and small holders at the same price and based on their ownership.

          So far so good. As the company had done this numerous times only to see the funds wasted on salaries, bonuses, and dubious projects, not all the shares were sold.

          Fast forward a couple months after the offering and the share price is now about 30% higher than the cap raising price through the judicious use of well timed ‘announcements’.

          So what happenes/ The BOD of the company flogs the unsold portion of the cap raising to their biddies for the cap raising price!!!

          And then those the got the cheap shares had an instant profit. The shares then fell in price as these shares were dumped on the market.

          With the virus, well all the usual rules went out the window and companies were allowed to sell more than 15% of the shares outstanding without shareholder approval. Other changes were also made.

        • KRV Rao says:

          This ability allowed to corporates to operate like Banks (creating money through fractional reserve), except instead of issuing loans to good businesses they issue shares to their own selves (i.e. they give loans to themselves through ledger/paper circuits) will be the undoing of the iokos.

          Wonder if it is a good or bad thing that this fraudulent economics has not been contagious to economies outside the USA.

    • Old School says:

      I read a 100,000 mile review of a person’s experience with Tesla and the operating cost was not cheaper than a IC car. I think EV in theory should be cheaper but his Tesla had real quality issues. He had to replace his big computer interface which if I remember was $3500 and his car was rear wheel drive only and he was chewing up tires every 25,000 miles.

  2. MonkeyBusiness says:

    Take away Tesla’s regulatory credit, and Elon Musk might have to bootstrap himself to one of his rockets.

    • Shane says:

      MonkeyBusiness,

      What does that comment even mean? Do you have a point?

      And explain, if you can, what Tesla’s regulatory credit is. Is this some kind of unique government subsidy available only to Tesla, or do other car manufacturers also have access to it? In other words, is the playing field level or is Tesla unfairly subsidized? I’m really curious why this credit takes anything away from what Tesla has accomplished in its short life.

      • MonkeyBusiness says:

        I see you are an Elon fan. Regulatory credit is the source of Tesla’s profitability. Take that away, and Tesla is a loss making company. How long has Tesla been around now?

        Other car companies aren’t reliant on a gimmick like that to make a profit. That’s the difference between Tesla and other companies. Basically Tesla is a socialist company.

        • Shane says:

          I notice you failed to answer my question: do other car manufacturers get this credit too? And related to that, please clarify: If no car companies get the credit, why not? If they do, then how is a gimmick that only works for Tesla?

          To answer your question: Tesla has been around 17 years. How long have Ford and GM been around?

          Yes, I’m an Elon fan. And I’m a Tesla fan. Tesla investors? Well, that’s a different story. You’d have to be a bit insane to invest in the company at these valuations. But, that’s an entirely different topic than the viability of the company or the quality of the CEO…and you seem to be confused about which of the three you’re being critical of and very unclear on the grounds for your criticism.

        • nick kelly says:

          I don’t why he can’t be more clear than just repeating ‘reg credit’ but he is referring to T’s sale of ‘carbon credits’ which T accumulates by not having CO2 or CO in its exhausts. These can be sold to a polluter to lower their carbon footprint. (PS: this is only a rough explanation offered since Shane has no idea what Monkey means and Monkey doesn’t want to explain.)

        • intosh says:

          @Shane

          I see what you’re trying there with the rhetorical questions but that’s beside the point. The point is that selling carbon credits is not a car manufacturer’s core business. So if 90% of the profit comes from selling the credits, it means the margin from your core business is not where it should be.

        • CRV says:

          To explain some further.
          The ‘çarbon credits’ are sold to companies that do produce CO2. So ask yourself this question: is Tesla really a ‘green’ company?
          My answer is: NO. If it was, it would shred those credits to force the polluters to change their business. But instead Tesla capitalizes on the carbon footprint of the old companies, allowing them to stay in business a little bit longer.

          Those credits are not only for Tesla. Other manufactures can get them when they start to produce EV’s. BUT. Don’t think these credits will be always there in the future. Once EV’s are common goods, the credits will no longer be issued. They would have no purpose.
          And if that would happen today or in the short term, of say 4 years, Tesla would make a loss now and after those 4 years. No way Tesla can turn the current loss into a profit in an environment that is becoming more competitive by the day. It’s losing it’s edge.

        • char says:

          @intosh

          GM made more money with its bank than with selling cars. And selling credit is core of the business. It directly depends on car sales

      • Lou Mannheim says:

        You could make the argument that Musk is very good at gaming the largess of the U.S. people. Tax credits were given for anything “green,” including solar and EVs. It was a nice way to generate working capital for the former and a buyer incentive for the latter.

        • Andy says:

          Who exactly is the bad actor here.

          You could also make the argument that GM and Ford have protected their patch for years with economic force and government lobbying, at great cost to the general good of US We the People.

          First – getting US govts to dismantle metro rail in the 50s and 60s , then suppressing EVs (basic EV tech was around, and could have been developed for 50 years now).

          Imagine if the US had no need for oil imports these last 50 years – the world, the environment, and the Middle East may have been much nicer places.

          I would suggest there are no bad actors. Elon included, only those that play the system in their own self interests.

          That why we have governments in capitalist economies- to limit the worst excesses of capitalism, (any game without an umpire is eventually chaos) not that governments do a particularly good job of that.

        • Enginer01 says:

          Within the next two years all heck will break loose in the energy sphere. When Rutherford broke up the atomic nucleus by bombarding it with high energy particles (High Energy Nuclear Physics) those working on low-energy methods were left in the dust or changed focus. Slowly, LENR has matured, not without fiascoes- eg Pons and Fleischmann, as examples. Within 2 years a small unit that produces mostly electricity from hydrogen will be on the market which can virtually eliminate batteries in electric vehicles and other hydrocarbon-consuming uses. For techies, see https://e-catworld.com

        • char says:

          @enginer

          How do you shield the passengers from radioactivity?

          You can power a car with the excrement of cows but i don’t see why you only want to use male cows?

      • TBP says:

        Other companies have been buying these credits from Tesla, thereby generating virtually all of Tesla’s profit. Now those credits are ending and other car manufacturers will have their own lines of EVs, it seems probable that source of income for Tesla will dry up over time. They have to start making a profit on their cars or their stock price will inevitably continue to come back down (with various spikes along the way).

        • Massbytes says:

          Regulatory credits made up 2.4 percent of Tesla’s revenues in 2019. They did however sell many more in them in 2020. I haven’t seen the percentage of revenue they were in 2020.

          All in all a very handy source of revenue for Tesla. Tesla is though, profitable without them.

        • Nick says:

          Hi Massbytes when we talk about profitability and credit sales you need to actually compare those values, not revenue credit sales. I see in 2020 q3 profit of $331M but credit sale revenue of $394M. All of their profit ever seems to be less than losses in the two bad quarters of 2019. Who knows what the future holds but I think your final statement is a false one.

      • DeerInHeadlights says:

        If a company is heavily (some would argue, solely) reliant on regulatory credits to turn a profit, there’s something seriously wrong with their business model or execution. You don’t have to be a Tesla critic/hater to see that. Could you name other car makers that can’t turn a profit without such credits? Also, do you think Tesla is a business or not?

        • Javert Chip says:

          Yea, Tesla gets EV credits (SPECIFICALLY DESIGNED to stimulate EV sales & readily available to all manufacturers). Other manufactures buy Tesla credits and also receive government benefits (the government allows them to continue selling cars). So what?

          If your point is Tesla receives preferential treatment, then you might be interested in how GM racked up a pure “taxpayer” subsidy (benefit only available to GM) worth $14.4B in 2009:

          1) From 1980 to its 2009 bankruptcy, unions & incompetent management resulted in GM failing to earn its cost of capital (ie: financially, GM slowly bleed to death over 30 years).

          2) In 2009, the Obama administration ignored bankruptcy precedent, GM bond holders got screwed and the UAW pension fund received substantially all remaining GM assets.

          3) Here’s the $14.4B “taxpayer” subsidy from the Obama administration: bankruptcy precedent washes away outstanding tax loss carry-forwards (technically, prior years’ losses that, when netted against future earnings, materially reduce Federal taxes). However, GM was allowed to keep $40B of loss carry-forward; given the 36% corporate tax rate, it was a pure “taxpayer” subsidy to GM of $14.4B.

          Footnote: Yea the above is somewhat obscure: the government never even tried to explain this to taxpayers; government officials claiming GM loans have been 100% re-paid completely ignore the $14.4B subsidy.

      • RightNYer says:

        I see this argument a lot, with the additional “The regulatory credit profit is as much profit as any other dollar” argument. It’s true, but it misses the point. The reason we point that out is because it’s not sustainable.

        As it is, some governments require that car manufacturers sell a certain percentage of their total vehicle sales as EVs. Let’s say that number is 5%.

        Let’s say Hypothetical ICE car manufacturer produces 1,000 vehicles a year. It needs to sell 50 EVs. But for years, it wasn’t really into the EV market, and didn’t bother to produce them. But it still needs to sell 50 EVs, or face penalties.

        Along comes Tesla. It sells only 100 vehicles a year, so only 5 have to be EVs. But since EVs are ALL that Tesla sells, it has 95 EXTRAS. It can then essentially sell 50 of those 95 “credits” to Hypothetical, and the latter is now in compliance. It still then has 45 left to sell to Hypothetical ICE 2.

        But Hypothetical is now seeing how well EVs can work and how they can be popular. So it starts making its own line of EVs. In the first year, it makes 10. That means now instead of having to buy 50 credits from Telsa, it only needs 40!

        After a few years of all of the manufacturers doing this, no one needs Tesla’s credits anymore, and that revenue source goes away.

        Basically, these credits are only a boon for so long as Tesla was one of the only faces in the EV market. As others rapidly gain share, not only will there be fewer potential buyers of EV credits, but there is an increased likelihood of additional SELLERS of EV credits. That will put downward pressure on the price Tesla can sell those credits for.

        THAT’S why we stress what percentage of profits are from credit sales. Because unless the regulatory regime changes, along with a sudden halt to EV production by other companies, the credit revenue will rapidly decline, and Tesla will have to actually make it profit from selling cars and batteries.

        There are enough people that aren’t convinced of their ability to do this. Whether or not this is true remains to be seen.

        • Zantetsu says:

          So you’re saying that Tesla becoming successful enough to make enough vehicles that the credit doesn’t make up as significant a portion of their revenue is a bad thing for Tesla … how exactly?

          I mean unless they’re losing money on every car without the credit and expanded volume would just mean expanded losses.

          But I don’t think that’s the case.

          Not to mention all of the ways that companies can change their pricing model or other aspects of their business to adapt to a differing mix of revenue streams to maximize their profitability, which Tesla as any other company would surely do.

          I really don’t get your point.

        • RightNYer says:

          I didn’t say that at all. I made no reference at all to a percentage of Tesla’s total revenue coming from the credits. I’m referring to the fact that as other manufacturers create more and more EVs, the credit revenues will dry up in absolute terms, regardless of how many cars Tesla itself is producing.

      • Lee says:

        It means that when evaluating a company’s profit sources one can not and should not assign any multiple to those regulatory credits.

        They are in effect ‘one time’ events that will not continue over the future years.

        It has nothing to do with other car companies or if the playing field with them is ‘level’.

        As Tesla no longer qualifies for these credits in the future a huge source of funds will disappear.

        It also means that its so called ‘profit margin’ will fall as well as in effect the cost of these credits is zero.

        And for information on these credit I refer you to the various Tesla quarterly and annual reports which has numerous details on them.

        • Javert Chip says:

          Lee

          This is all wonderful, but you forget that if other manufactures do not buy these credits, the government will severely restrict the number of cars they can sell.

          How do you propose to disclose that?

        • Lee says:

          Javert Chip,

          You comment has nothing to do with evaluating Tesla based on what is in my post.

          If those other companies don’t meet the requirements, they pay a penalty – the government isn’t going to make them stop producing cars.

          And when they do start making those cars, they won’t have to buy from Tesla.

          Soon Tesla cars no longer qualify for other credits that people get when they buy them so that part of the incentive to buy one from T will also disappear.

          So Tesla will soon facea situation where it can’t sell its credits and people that buy Teslas will no longer get tax incentives either.

        • Javert Chip says:

          I didn’t claim my comments reflected on the accuracy of your post. I was focused on the fact that all major manufacturers are running out of ability to use tax credits.

          The EV tax credit & EV pricing playing field is quickly being leveled in that most (if not all) major manufacturers will soon be unable to use any tax credits…and this will effect EV manufacturers’ pricing.

    • Old School says:

      I like Buffet as a value investor. He is the biggest wind operator in the USA, but he said he wouldn’t be in that business without tax credits. We are representative democracy and they make rich people richer sometimes by regulation.

      I have been involved with business where CA state govt was giving $200 tax credits to consumers to purchase super high efficiency pool pumps. Most of that money goes to corporate bottom line. It does achieve the desired affect of reducing energy consumption, increasing corporate profits and nudging the customer to buy more efficient pump, but incentive is at tax payer expense.

      • Bob says:

        The problem is the resources used to make the more efficient pump is greater than the resources saved running the pump.

        • Old School says:

          It’s was permanent magnet motor technology that was variable speed so you could always keep the flow at optimum range. My understanding was it was US technology that didn’t catch on and was sold to Denmark.

          It had the affect of importing motors from Denmark instead being made in US or Mexico.

    • Glenn Thomas says:

      Tesla is selling their REGCREDITS to legacy AutoMFGS & making billions from it. Look at Teslas cash flow now. Elon can build a factory every year just from cash flow. What auto maker makes their own chips? is an energy company with solar power, power banks, power walls? Makes their own proprietary batteries? Has an enormous data input for its autonomous driving software? Has the safest vehicles on the road? Tesla is NOT a car manufacturer, it is more than that.

      • Wolf Richter says:

        Glenn Thomas,

        Good grief. I’ll just point out a couple of things:

        1. Tesla does not have its “proprietary batteries.” It gets the battery cells from Panasonic and in China from CATL. And then Tesla puts the cells into a battery.

        2. Tesla doesn’t have enough cash-flow to “build a factory every year.” It had cash flow from operations of $261 million in the first 9 months this year. Not nearly enough to build a factory.
        https://www.sec.gov/Archives/edgar/data/1318605/000156459020047486/tsla-10q_20200930.htm#Consolidated_Statements_of_Cash_Flows

        But it raised $7 billion this year by selling more stock. It has raised $25 billion that way over the years. That is NOT cash flow from operations but money it extracts from investors. The Shanghai Gigafactory was built with money borrowed from Chinese state-owned lenders.

        3. Tesla does not “make its own chips.” Broadcom and Tesla are cooperating to develop the chip. And they’re made by Taiwan Semiconductor Manufacturing Company (TSMC). The prior version of Tesla’s chip was made by Samsung.

        4. I agree, the software in the vehicles and in the app installed on customers’ smartphones are tracking absolutely every move these customers are making and are collecting data on absolutely everything around them. Customers surrender their privacy to Musk. But fine with me.

        5. “Safest vehicle on the road? Only on Musk’s twisted Twitter feed.

  3. Point being if the monetary system resets, companies with income and revenue are at greater risk than companies which have none. In a perverse way Tesla is like having a cash account which is already frontloaded for inflation. Too late to catch the brass ring now however, but I seriously doubt the rationalization for selling Tesla shares and converting that into cash, or some other rust belt company that can have their value reset according to income. What does the short interest look like, if it’s large that is even more reason to hold, investors never sell while shorts are on the other side of the transaction (bad business) and the short can always be squeezed. Where is my Fed today?

    • Buddy says:

      Inflation was sooooo last decade. We need to get ready for deflation. These zombie companies are being led off the ridge into an active volcano.

    • Absur Ditty says:

      yes monetary resets and hyperinflations are usually straightforward, affect only prices in the economy and, therefore are very easy to hedge against by buying shares of companies like TSLA, or other well known assets.

      Monetary resets and hyperinflations almost never trigger or occur at the same time as revolutions or war which strip all asset holders of their assets.

      • sunny129 says:

        ‘ revolutions or war

        And De-leveraging DEFLATION when a major debtor (?) defaults first slowly and then suddenly, like in 2007-2008.

        And then may be hyperinflation.

        The Fed and the CBers have built ‘houses of cards’ with debt on debt since 2009. A debt has to be paid, written off or default by lender and the borrower.
        For each DEBT of any kind there is CREDITOR on the other end, be they may be, banks, hedge funds, shadow bankers, pension funds, MFunds and other investors! Who is going to left holding the bag, beside the TAX payers?!

    • Old School says:

      If you read Ben Graham’s book on intelligent investor, he has kind of a check list on buying stocks. Tesla is 180 degrees from that, but people have become filthy rich. It’s.really just speculation Russian roulette. You don’t want to be holding the stock when the gun goes off.

      • At every turn the market psychology resets. The psychology in this instance disadvantages established automakers with more income than debt, and favors new companies like Tesla. The problem being if debt to revenue advantage reverses, (revenue collapses) then psychology favors high debt companies. Tesla has the advantage, (having secured a lot of debt already, GM Ford must go shopping, and if rates rise that could be difficult). Revenue comparisons become a tradeoff and Tesla has cutting edge product. Short answer buying Tesla is like shorting the blue chip auto makers which is Tesla’s glitz, put in balance sheet terms. And GM looks like Kodak trying to make the turn. A lot of money has been made off digitial imaging, while Kodak went bust.

        • Old School says:

          There is a reason JNJ and Microsoft are AAA (only two in USA left) and whatever the automakers are. People get reminded every decade or two.

    • Powell: Fed not ‘out of ammo’ to boost COVID-19 hit economy, can expand balance sheet, liquidity….

  4. otishertz says:

    Tesla makes some fugly carputers. I find nothing to like in their designs except maybe the Darwinist self destroying autopiliot option.

    • Massbytes says:

      I can think of very few vehicles out there that are as good looking as the Model S.

      • otishertz says:

        It’s in the same league as the Taurus or Camry at least.

        • Massbytes says:

          How about performance and cost of ownership? Taurus and Camry are not even close…nor is any ICE vehicle. The Model S has it all.

    • Zantetsu says:

      Your comment was not worth my time to read. Who cares what you personally like? I don’t.

    • Javert Chip says:

      otishertz

      Well, hundreds of thousands of 2019 EV buyers strongly disagree:

      Toyota Prius: 69,718 sold (annual sales dropping like a rock)
      Nissan Leaf: 12,365 sold (annual sales dropping like a rock)
      GM Volt: less than 8,000 sold (lower than whale poop)

      Tesla: 367,500 sold

      • Wolf Richter says:

        Javert Chip,

        The Prius and the Volt are hybrids, not EVs. The Volt is out of production. The Prius is being replaced by all Toyota models that now offer hybrid power-train options, which are nearly all Toyota models. Hybrids are everywhere, every automaker has them, and you cannot tell the difference unless you read the small print somewhere on the vehicle. They now have nailed this technology.

        The Chevy Bolt (with a B) is an EV. It was a model with which GM tested a bunch of things, such as warranty issues and the like, and it never really tried to sell a lot of them. But now it’s getting serious. Huge lineup of EVs planned, and dedicated factories in the US lined up for them. It has about 10 EV models out in China, including China’s EV bestseller. But it will build the US EVs in the US, though the components might come from China.

    • Dan Romig says:

      Form follows function in design and architecture. For every 1/1000 of the coefficient of drag shaved off an EV there is a bit more range. On my new aero bike, it’s 20 mph instead of 19 mph on my ten-year old machine all things being equal.

      Franz von Holzhausen has designed the Tesla vehicles since 2008. Before that he worked on Volkswagen’s ‘New Beetle’, Saturn Sky & Pontiac Solstice and the Mazda Kabura & Furai concepts.

      Last evening I followed a beautifully restored and modified Karmann Ghia for a few minutes, and it is a classic looking work of art IMO. A few designers have left their mark on ‘auto-evolution’. Albrecht von Goertz has done a few classics that will stand the test of time.

      Give the Teslas a couple of decades to see how they endure, but in the meantime, remember their job is to slip through the air.

      My Datsun Zs and Lexus SC400s are beautiful coupes. And my M4 looks good with its steroided up front air dam and stance; it’s orders of magnitude better performing. How will it look twenty years from now?

      • p coyle says:

        if tesla made something that resembled the pontiac solstice, i would be tempted to be interested. however, the whole data harvesting thing would in the long run put me off.

  5. DM says:

    Please compare growth rates, too.

    NFLX vs. DIS vs. T has a similar result to TSLA/GM/F.

    • otishertz says:

      Lots of good reasons to buy an electric car.

      I’m just saying Telsas are the Camry of Priuses.

      Boring unimaginative 150 year old electric car design with only an added inverted 20 inch monitor to make consumers feel special.

      There is the self drive into a wall feaure they have going for them but that part is just funny. Teslas are ugly Taurus and Saturn level exterior design.

      • glenn thomas says:

        Why do they sell every car they make and have zero marketing budget? Look at F GM TOYO inventories and grotesque-to-deal-with Dealerships.

  6. Lou Mannheim says:

    At this point I’m wondering if it’s the OS, not the battery tech.

    • lenert says:

      You mail-ordered a new front left motor but now you have to download the updated driver off the company’s website or the car stays interlocked. Eventually you install your own custom kernel for better security and performance. But then you can’t get drivers for the new wiper blades you just put on. So you dig around the garage for the original CDs that came with the car and re-install all that and update the drivers and security patches so you can get to the autoparts store for an air-freshener.

      • Jos Oskam says:

        Did all that but now after the latest automatic OTA update the programming of my massaging driver’s seat has been changed. The only setting left is called MASOCH. It vibrates the seat till my fillings drop out and heats it till my pants melt. At the same time the airco switches off and the car drives itself to Death Valley. All the while the car stereo can no longer be muted and endlessly replays the same old Bobby Goldsboro song.

        The helpdesk told me that this problem can easily be solved by uninstalling the latest update manually. I only need to change 22 registry keys, empty the vehicle cache and drive in reverse for 500 miles to confirm the changes.

        Good thing that when I wreck this car it will automatically summon a taxicab and a tow truck to the correct location.

        • Lisa_Hooker says:

          Mine keeps repeating Don Ho’s Tiny Bubbles at full volume and trying to drive to Hawaii. Oh, and all the doors are locked.

        • Dan Romig says:

          Evidently, my M4 is so quiet in the cabin, that the engineers in Munich felt it was a good idea to employ “Active Sound technology” to add a little engine noise to the stereo system.

          “The engine note in the cabin is largely pure. The electronic noise is minimized and makes up only 2% to 3% of the sound you hear.”

          Yeah, the engine sounds, and works, quite well. But if I want to hear it louder there’s this new device called window openers that work with just the push of a button.

          Elvis Costello saw this coming decades ago:
          ‘Pump it up, until you can feel it
          Pump it up, when you don’t really need it’

          Oh well, bitching about this little detail seems trivial when you watch the YouTube video of Robert Kubica in an M4 on the Nurburgring.

        • Sierra7 says:

          J. Oskam:
          Finally!
          A giggle!!!!

        • 91B20 1stCav (AUS) says:

          Jos-yet another Wolfstreet commenter who has imperiled my laptop’s keyboard from the sprayed coffee launched by their wit.

          Many thanks, and-

          may we all find a better day.

  7. joshua says:

    I want to see the % increase/decrease in sales from this time last year on each company.

  8. DM says:

    Now do NIO.

  9. Lisa_Hooker says:

    I await intense competition in the new EVs to result in out-the-door pricing below costs to clear the lots. I also want the built-in espresso maker to have a milk steamer.

  10. Bob Hoye says:

    An acquaintance over the last 15 years heads up a consulting engineering group.
    Consulting on improvements to automobile assembly lines. All of the big companies, as well as Tesla.
    And when consulting to the latter, there are receptions with some goodies and drinks.
    Young ladies are enraptured by any engineer with a Tesla name tag.
    If my friend was 20 years younger he says the sexual favors would be endless.
    Sigh,

    • Cas127 says:

      For engineers?!

      As Biden would say, “Come on, man.”

    • Sam says:

      Todays “endless sexual favors” come with the caveat of:
      a)Rampant STD’s (Via my Doc’s perspectives)
      b)Unplanned parenthood replete with ‘baby mama drama’.

      Not quite the carefree playing field of decades past.

      “Lead me not into temptation… i will find it fast enough on my own.” -Unknown

      • Cas127 says:

        I’m still not buying the Vestal virgins vlinging themselves at engineers…

        Reminds me of the old Hollywood joke about the Polish Starlet…she slept with the *screenwriter*…

        • MCH says:

          rich engineers…. not just any engineer… (think senior Apple engineer, senior Facebook engineer, Snow engineers, etc)

          if you’re a regular old EE with no stock, not money, I don’t think any one will fling themselves at said EE.

    • 91B20 1stCav (AUS) says:

      BobH-old engineering joke:

      An engineering student was riding an obviously new, high-end bicycle across campus when he was flagged down by a fellow classmate.

      “Nice bike! When did you get it?”, asked the classmate.

      “About five minutes ago, actually, and it was the strangest thing”.

      “Really? How’s that?”.

      “Well, I was walking across the quad when the head cheerleader rode up to me on this, dismounted, took off her clothes and said to me: ‘…take what you want!…’. So, I did.”

      “Good choice…”.

      may we all find a better day.

  11. The rich and famous prefer Tesla over Ford
    for the same reason they prefer iPhones
    over Androids — Musk is a visionary.

    • Wolf Richter says:

      I thought they prefer F-150 Crew Cabs. Fully decked out, they get close to $100k.

      • Massbytes says:

        Hi Wolf,

        In the article, braking not breaking.

      • Kent says:

        Buddy of mine said they’re fantastic, until you need to park.

      • Wolf Richter replied ( to me ):
        > > The rich and famous prefer Tesla over Ford
        > > for the same reason they prefer iPhones
        > > over Androids — Musk is a visionary.
        >
        > I thought they prefer F-150 Crew Cabs.
        > Fully decked out, they get close to $100k.

        The F-150 Crew Cab is good for their
        newly-purchased Texan ranch;
        less useful in Hollywood proper.

        P.S. Trump could have won had he addressed
        the income disparity between the old and young,
        caused by the Federal Reserve… but he didn’t.

        The Federal Reserve’s Ponzi scheme
        is shafting young people,
        lowering the fertility rate.

    • Cas127 says:

      So…Tesla Trustfundarians?

      New to 2022 Teslas…built in beard trimmers, vaping stations, stocking cap compartments, subscription to Gentleman Douchebag…

      • otishertz says:

        Throw in a free outer space grade iHelmet that lets you change the colors of the world just by blinking in the correct sequence and has built in facial recognition to automatically pixellate people you probably wouldn’t like anyway.

  12. Sam says:

    Where do you come up with ‘close to 100k’ number for an F150?
    Neighbor recently picked up (no pun intended) a pristine ’18 Limited F450 CC 4×4 kerosene burner (under 7k mileage) for 75k.
    Tows a support trailer (motorcycle racing engine mfg/tuner) to superbike events.
    Young guy (lots of tats & and changes stunning GF’s about every 3-6 months) with his following/mojo. Said Super Duty production sold out for two years in advance.

    As always, ymmv.

    • Wolf Richter says:

      Sam,

      OK, just for the heck of it, I did one of my favorite things and just “built” a truck on Ford’s site, an F-250 Super Duty Crew Cab Lariat. I could have probably gotten it closer to $100K if I had played with it a little longer. But this is what I came up with: $94,320. Here is a screenshot. Click to enlarge:

      • Sam says:

        Senor Wolf,

        Sounds about right as my neighbor’s ’18 has the sticker from 1st owner and came in at 92k and change. Which did not include six Alcoa wheels/tire upgrade the 1st owner added.

        For your F150 amusement – https://www.f150gen14.com/forum/ has owners tracking their builds. Tab runs up quick when options added.

        Similar to ordering a Porsche: the upsells can add 100% to base price.

        Aviation takes a different tack: Bell helicopter factory pilot/rep told me that Bell does not make a dime on any helicopter sale. Where they DO make it is on parts/service support.
        Whether a washer or a complete ship: Bell will have it to you in 24hrs in the US (forgot how long for international, its been a while from a past life).
        And you will (dearly) pay for that support, but the request will be fulfilled.

        Aviation loves Gov’t contracts.

        Happy Trails……

        • Lee says:

          “Similar to ordering a Porsche: the upsells can add 100% to base price.”

          I did that here in Oz and stopped when I hit A$187,000 or so and it still didn’t have all the neat add on gizmos.

          Looks like to me that Lexus is a better deal………………

        • Mike G says:

          Porsche are famous in the car world for ridiculous option prices. For the status slaves you can get virtually everything leather-bound, logo-embossed or both. The one I remember from years ago was $300 for leather-coated doorlock buttons.

  13. Seneca’s Cliff says:

    If you follow the logic that for EV’s all the “secret sauce” is in the electronics, motors, transducers etc. then you could make the case that one day the EV business will be dominated not by Tesla or GM but by Siemens and Fujitsu.

    • Tom Pfotzer says:

      Good point.

      And not long after that, the components will be avail off the shelf for ICE re-fits, and the refit will happen in people’s garages.

      Remember back in the early 80s with the first PCs. At the time, only electronics geeks could build them (that was Woz’ role, while Jobs was…Jobs)

      Now it’s a wide-spread hobby among gamers to build (oops, “integrate”) their systems. The computer is the hot rod of yesterday. Over-clockin’, baby!

      I have a Ford F150 pickup. I will be a customer for the refit kit when it comes out. I’ll put the batteries under the bed in a sling, lower the shocks a little, and make me a new Low Rider.

      All my friends will know the Low Rider.

      • Anthony A. says:

        These retrofits are being done already with scrapped Tesla drive trains and battery packs.

    • nick kelly says:

      There is no secret sauce in any of those. It is a totally known, mature tech. The only constantly promised vaporware (so far) is a fundamental battery breakthrough. All so far use Panasonic’s Li ion tech from 1990.

      I have to say that WR’s thought that: ‘The battery is the crux, but that technology is advancing in leaps and bounds, and is being commoditized.’

      seems to me a bit problematic. If someone had made a big leap, they others would be obsolete. Commoditization is a characteristic of a mature tech where it doesn’t matter who makes it because they are all the same. The ‘improvement’ in the Leaf’s Li battery since 2013 is more about curing a flaw, it overheated as I understand it which reduces its life.

      How much has battery performance improved in the last five years?

      • Wolf Richter says:

        nick kelly,

        Just look at what is ACTUALLY happening, what automakers are planning, building, and selling. YOU might think it’s “problematic.” They don’t.

        • nick kelly says:

          There are improvements for sure. Different takes on what is a leap perhaps. I see incremental gains in a plateauing curve.

          It’s not easy to get a precise answer on what a new T battery costs. The word ‘should’ comes up a lot. The Tesla Canada warranty of 8 years only guarantees 70 % of battery during the warranty, apparently from day one.

        • nick kelly says:

          PS: ‘guarantees 70% of battery capacity’

      • Anthony A. says:

        The early Leaf batteries had no cooling system. That apparently was resolved. Also, the early ones had a pitiful short range…..40 miles or so.

      • Glenn Thomas says:

        have you seen the 4680?? Patented by Elon, made by Panasonic at joint factory in Nevada, produced exclusively for Tesla

    • Mike G says:

      Bicycles of all kinds are selling like hotcakes in the pandemic, but e-bikes in particular are really taking off, especially with the older crowd. Bosch are making a name for themselves as the premium motor-battery-controls maker in this space.

      • Mike G says:

        If Tesla made an e-bike the hipsters and fanboys would no doubt rush to buy it in droves. Musk already makes flamethrowers so it wouldn’t be a stretch.

  14. Nick says:

    I would be good to calculate the EV of the three companies as well as market cap. I assume (maybe wrongly) that GM and Ford have a ton of debt?

    Great articles though!

  15. Malibu says:

    Tom the problem with the Ford refit kit is no integration of a supercapacitor. That would boost the mileage by 30%. I think that is what Elon is doing with the Maxwell buy. Present batteries can’t accept the regen charge quickly enough. It is mostly wasted.

  16. The CEO Of Tesla, Elon Musk, has clearly stated that Tesla will show a small profit each quarter and invest the rest of their excess revenues in growth. Indeed, they are simultaneously building three massive car factories and a new battery manufacturing factory. If they no longer receive regulatory credit revenues they will simply reduce their expenditures on growth and maintain a small profit. Their gross margins are the best in the industry, and they have excellent free cash flow.

    Regarding valuation, you cannot compare Tesla to another existing automobile manufacturer unless that manufacturer owned all of its sales and service, its own oil fields, refineries, and gas stations, and provided automobile insurance for its customers. Tesla is committed to growing at a rate of approximately 50% per year. in 5 years at that rate, their revenues will be greater than either Ford or GM.

    • Wolf Richter says:

      Michael Cannon,

      You’re mixing up “investment” and “expense.” The first goes into “assets” (balance sheet), the second goes into “income” (income statement).

      You’re also mixing up “revenue” and “debt.”

      The costs of building a factory are an investment, and end up on the asset side of the balance sheet, and will get expensed over many years. The $2 billion that Tesla spent to build and equip the factory didn’t come from revenues but was borrowed from Chinese government lenders. It’s debt and ended up on the liability side of the balance sheet.

      Neither the borrowed money nor the costs of building the factory had any impact on Tesla’s income, other than interest expense and depreciation. But that $2 billion increased Tesla’s debt and the factory increased its assets.

    • Seneca's Cliff says:

      Please provide some kind of support for the Idea that Tesla’s gross margins are the best in the industry. Last time I saw a good analysis they were struggling to have any kind of gross margin on the manufacturing and sale of any of its cars.

  17. G89 says:

    If something is clear is that Tesla share can’t go up indefinitely, it is not supported by a solid ground .
    The competition will be bigger and bigger, in all markets.
    The big problem is that there very few options out there.
    Maybe buy gold , at least gold will not go down

    • Lisa_Hooker says:

      Please look at a 10 year gold chart. It’s taken gold 10 years to come back to where it is today.

      • Javert Chip says:

        …and that’s without accounting for the cumulative 19.4% inflation from 2010-2020.

        ie: 2020’s gold at $1,960 is worth 2010’s $1,641.

  18. G89 says:

    When Tesla shares will go down . Wolf will say I told you.
    Insanity can’t last.

    Thanks for warning.

  19. Yort says:

    TSLA stock gains (not actual auto sales) are entering the law of diminishing returns. I sold my TSLA a few months ago and tranferred all the funds into the top three China EV companies as they were just getting started and I do enjoy owning EV stocks. Just today alone they went up 10-30%, have all doubled in a few short weeks, and are saving my portfolio as my “safer” dividend porfolio paying around 4% dividends avg seen some decent loses today (BMY, LMT, ALL, lost 2% today). So just three China EV stocks, placed into a portfolio of over 100 value dividend stocks as an insurance tech hedge, produced about 30% of my gains today to keep me up level the SP500 gain average. Who thought placing chips in the center of the craps table would pay off so consistently. My “safe” portfolio would be toast this last few months, so thanks again TSLA mania as my China EV center table bets are my best hedge ever! Elon Musk for FED…LOL

    In summary this is definately not your father’s stock market, so make sure you blow on the keyboard before you tap “enter”…HA

    • Old School says:

      History tends to repeat. The new technology stocks tend to get over priced based on optimistic growth rates. Eventually the growth runway runs out and nearly everything becomes a low margin business over time if it’s a free market.

  20. Zantetsu says:

    TSLA is clearly priced for an anticipated large future growth at the expense of more traditional car companies. Isn’t that obvious?

    So if you bash TSLA’s stock price you are simply bashing the idea that it could grow in future to justify that price. And since none of us knows for sure whether or not that will happen, you are simply saying that you alone can predict the future better than the average guess of the millions upon millions of people who make up the stock market.

    First, I have no reason to believe that you can predict the future better than the market can.

    Second, I recognize that there is some degree of herd mentality involved in the market which is not necessarily present in any one individual.

    So it’s a toss up. Maybe your guess is better than the market, maybe not; but to continuously express the sentiment that the market’s valuations is “ridiculous” is just silly.

    It’s like claiming that a 50/50 flip of the coin is so clearly going to come up heads that anyone who thinks it will come up tails is an idiot. Sure, you may be right and you may be wrong about it being heads once the flip happens, but it’s not like the guy who instead thought that the flip would be tails was ever an idiot.

    • Wolf Richter says:

      Zantetsu,

      Tesla might be priced right if it had 60% of global market share. It has about 1%.

      It’s just a tiny automaker.

      • Massbytes says:

        They aren’t just an automaker. But I know you dismiss their power business and their chip and battery making design capabilities. Not to mention they are now manufacturing their own batteries as well as buying as many as they can from other manufacturers. Not to mention their locking in of long-term battery metals and lithium supplies. The 4680 batteries are a good example. They are a break through in batteries…but I don’t hear any talk of them here.

    • nick kelly says:

      It’s priced as though all sales lost to ICE’s accrue to Tesla and not the 100 plus other EV manufacturers.

      • Javert Chip says:

        2019 global EV sales = 2,100,000

        2019 Tesla 367,500 (= 17.5%)

        Possible data problem with 2.1M global sales: how many of those are EV tuk-tuks?

        • nick kelly says:

          The majors, VW etc. are just hitting their stride.
          Tesla has most of a ten year head start, so let’s give the majors a couple of years to see how T holds up.

        • Javert Chip says:

          Nick

          100% accurate & fair statement. Two observations:

          1) VW (or anybody else) could have entered the market at any time. Rather than invest in EV at potential Tesla ROI rates, VW chose to invest in selling fraudulent diesel cars (netting VW about $30B in fines, etc).

          2) Tesla’s design & market timing has made a lot of people a ton of money (we’ll see how well they hang on to it). Future manufactures may, indeed, surpass Tesla as an EV manufacturer, but none will come close to delivering Tesla’s investor ROI.

          Musk has done a spectacular job of Carpe Diem.

  21. MiTurn says:

    “[GM] once again selling more vehicles in China than in the US.”

    China is the future and not just for automobile manufacturers, but in seemingly countless other enterprises. And the CCP will do head stands and back flips to keep it so.

    Numbers matter, with 1.5 billion Chinese striving to enter the middle class (and higher).

    • Yort says:

      MiTurn – As the US continues the goal of containing China future growth and world power, at some point the unintended consequence will be the containment of future sales for American products in China. When that happens, who knows…yet a real risk looking at the relationships between nations that have soured throught history. I for one will not be buying a China designed and manufactured EV on American streets, no matter what the price discout or technology marvels. Why? Because recent stats show 73% of Americans have an unfavorable opinion of China, not sure I need to anger my fellow citizens daily when American made products can subsitute just as well. See the point? I’d assume the Vice Versa for China consumers. Just a thought as not my area of expertise (understanding human behavior)…

    • Brant Lee says:

      You can strive to enter the middle class when your country is actually producing goods. Seems like it happened a lot during the 40s to 60s period in the U.S. Now, whatever class you’re born into depends on how you will live with a good chance of dropping a few notches along the way.

      • MiTurn says:

        BL, that was my point. China is producing things, the US is too often just buying things. I liked the old Sears’ Craftmsn brand — great reliable products and an affordable price. But the snowblower and rototiller I bought from them had China-sourced engines. Work great so far, but hardly ‘Americsn-made.’

      • Javert Chip says:

        Brant Lee

        Your bleat about the US not making stuff the rest of the world wants to buy sounds great in a comment post, but that doesn’t make it accurate:

        2019 Top 6 global exporters:
        – China ($2.5T)
        – USA ($1.65T)
        – Germany ($1.5T)
        – Japan ($900B)
        – UK ($890B)
        – France ($883B)

        NO OTHER GLOBAL ECONOMY exports more than $750B/yr (fyi: Saudi Arabia = $285B)

        An income greater than about $32,000 places you in the global top 1%; the US median income is $40,000.

        Most people in the US haven’t done extensive international travel (especially outside tourist areas; seeing Casablanca is not seeing Morocco), and have absolutely no idea how the vast majority of humanity lives.

        • nick kelly says:

          Wow! To think that Germany with less than
          25% of US population has close to US exports.
          What a powerhouse. About 50 % of high school grads go into apprenticeships. You don’t have to be a lawyer or stockbroker. (California has as many lawyers as the rest of the world)

          An odd thing about Germany: ex autos, it has a lot of mid- size cos, that are very attentive to customer wants. The US consumer will almost never see their logo. They supply stuff to the cos that make consumer stuff. A lot of these manufacturers won’t even look at Chinese equipment. They may quote the China price to the German supplier who will reply: we are competitive but we don’t compete on price.

        • Javert Chip says:

          Nick

          Germany is a deliberately mercantilist system with a focus on profiting from exports (the US is more free trade). Further, Germany does not encourage internal consumerism as does the US (try shopping at 8p in a non-tourist area of a German city).

          Germany does engineer & build great stuff (I happily drive a BMW made in Munich), but Germany has tariffs around trade to ensure imports into Germany are artificially more expensive.

          This specific example is for cars, but the principle applies to other goods as well, illustrating how protectionism works:

          o Import an American car into Germany = 10% tariff tax paid to German government by US vendor
          o Import a German car into America = 2% tariff tax paid to US government by German vendor

  22. John Janiec says:

    Two things I have seen with my own eyes regarding Tesla. I have pictures. First, they are using wooden shipping crates to ship the large repair components of their cars, Plywood crates with 1×3 boards screwed on for reinforcement. So much for a technically advanced company. There were transmissions stacked up behind the first dealership in Scottsdale AZ. This last week in a parking lot behind a Best Buy, about 1/2 of a mile from the Scottsdale location, a fence had blown down to reveal 40 to 50 of the small Teslas parked there. They were all quite dirty, half of them were filthy and were obviously sitting for months.

    • Lisa_Hooker says:

      Good to hear Tesla is using renewable materials for shipping containers. And that they have plenty of spare parts. Those 40-50 small Teslas are undoubtedly there for paint weathering tests. /s

    • Anthony A. says:

      Big, heavy (and maybe fragile) parts need to shipped in sturdy wooden crates. How else are they going to ship them at a low material cost with adequate protection?

      • John J says:

        In plastic, reusable, vacuum formed containers like the big boys use. The question you should be asking is “why do they need transmissions so early in the life of the vehicles”.

    • Javert Chip says:

      John Janiec

      Let’s stipulate your post is 100% accurate.

      Can you explain how any of that impacts consumer demand for Tesla cars or investor demand for Tesla stock?

    • nick kelly says:

      Trivia: at one point Geezer Ford wanted thicker wood and ‘screwed not nailed’ for supplies from outside. Supplier tells shipping: ok we have a lunatic but he pays his bills so do it
      Later supplier visits Ford assembly line and sees crates taken apart and used as floor boards .

      • John Janiec says:

        For the Model T, not for the Model S…I hope! I believe Henry also specified the dimensions.

  23. NoFreeLunch says:

    When it comes to comparing prices of EV cars from China to that of Tesla, it is comparing apples to oranges. Tesla cars are luxury cars, and Chinese cars are economy cars. It’s like pointing out that a Ford contour is cheaper than a Lexus. So what.

    • Wolf Richter says:

      Who are you arguing with? No one was comparing prices of China’s EVs to Tesla’s EVs.

      • NoFreeLunch says:

        It’s a statement, or comment, not an argument. Sensitive, or what Wolf?

        • Javert Chip says:

          NoFreeLunch

          Calm down; don’t get all huffy.

          Your original comment was not posted as a free-standing comment; it was posted as a REPLY to John Janiec. Therefore, it’s logical for those of us with reading comprehension skills to read it in that context.

          Thus the valid question: “Who are you arguing with?”

  24. Sam says:

    Old Hollywood axion: “Leading Men Age, But Their Love Interests Don’t.”

    Neighbor has a stunning ex plus a 10 yr old daughter who owns Dad.

    Apologize for the overuse of ‘stunning’ in reference to appearance,
    I am in a sports apparel HQ Mcmansion ‘hood amidst multitudes of varying ethnic neighbors where the bigger the wife’s wedding ring, the larger the wife’s girth. Perhaps an anomaly centered around me.
    Except for the neighbor’s with his GF of the month or quarter and the F450/Audi go fast sedan/four car garage of Superbikes than have engineering which NASA might envy.

    • Javert Chip says:

      Sam

      Charming analysis re GFs, wives & rings.

      Am I correct in understand ring size is a function of a particular “girth”?

  25. makruger says:

    What happens to Ford as the economy further contracts, credit tightens, and unemployment continues to rise? The end of the current business cycle may bring all of these things. I suspect at some point the American appetite for $50K pickup trucks and Mustangs is likely to dry up. Will it be austerity for Ford, or another taxpayer funded bailout?

  26. Richard says:

    Mr. Wolf, tho I am somewhat of a Tesla “hater” … I can’t entirely agree with your vision on Tesla especially on your last paragraph. Look what happened to Apple, for the same price I rather go for a Lenovo laptop and Huawei phone because they are cheaper and offer better hardware/performance. However, most consumer will follow trends, and Tesla is cool right now, and once it’s a symbol or status thing like Apple, it could last a long time despite less valuation products. Tesla has the potential to expend to other markets, like Apple is going into movie streaming, watches etc, it really can grow huge. Just think how many stupid people will pay $200+ for a set of pretentious wireless iearphones… Although I really question Tesla will last long enough to see that, as well I doubt if Apple can last another 20 years before losing its throne.

    • Javert Chip says:

      Richard

      Congratulations on hating Tesla, confessing to being cheap, having determined wearing Apple ear pods make you “stupid”, and demonstrating a firm grasp of the obvious regarding corporate life-span. Recent McKinsey analysis shows:

      o In 1958, average life-span of corporations in Standard & Poohs 500 was 61 years
      o in 2019, average life-span dropped to 18 years (and still declining)

      I din’t know about McKinsey, but I chalk shrinking life-span up to the ever-increasing rate of change (especially technology), and the amazing market power of the (especially) American consumer.

      ps: in 2020, Apple is 44 years old, and currently the world’s most valuable company by market cap ($2.018T)

      LINK https://www.imd.org/research-knowledge/articles/why-you-will-probably-live-longer-than-most-big-companies/

  27. Nicholas W says:

    “…Tesla is losing its status as trailblazer and is becoming just another competitor in an industry dominated by giants”

    No way, TSLA is beyond those former industry “giants”. TSLA has grabbed the reigns and is forcing the big dumb giants to their knees. As you pointed out, TSLA is in control of the conversation, trailblazer status completely intact.

  28. Fat Chewer. says:

    I saw a Fuso electric “engineering evaluation” demo truck this morning. Fuso trucks are going electric. They are a no nonsense company. They make commercial trucks, not dreams. If they are switching, everyone will.

    • Lisa_Hooker says:

      Wish I had a dollar for every “concept vehicle” proudly shown that never made it near the street.

      • BuySome says:

        And if you held each dollar as a reserve against $100 loans you’d be a banker. If you borrowed from yourself you’d also be a corporate CEO. And if you paid out any of the profits to stockholders you’d be a sucker. And if you covered all the losses you’d be a government. If you were to simply save it you’d be called a loser by the guy who owns the gold mine and wants a fast sale. So maybe you would just spend it on a Tesla. Ha!

      • Fat Chewer. says:

        We’ll see, o doubtful one.

  29. Rcohn says:

    At about $520 , TSLAs market cap > the COMBINED market cap of ALL other auto manufacturers ( except for those based in China) .
    Anyone who does not understand that within 2 years ALL other auto manufacturers will also be major producers of EV is smoking some good stuff.
    Currently TSLA ‘s average selling price exceeds $51,000, considered in the luxury category . But the number of buyers in the luxury area is limited and will attract competition from all other luxury manufacturers , while the averaged priced car will be dominated by Toyota, Honda , Volkswagen .

    • Massbytes says:

      Tesla moves the bar up everyday. In two years, they still will lead the EV world. Tesla, in two years, will likely have a 25K 300 mile range self driving vehicle. Volkswagen seems to be the most “woke” to this, but even they say Tesla has a 10 year lead.

  30. Ronnie says:

    Mr. Wolf,
    Your article is so right on! Analysts are afraid to publish anything negative about Tesla. I’m actually a Tesla owner of the vehicles. I also have a Porsche hybrid. I take long driving trips because I live in two houses that are 500 miles apart. My time is valuable and if I drive my Tesla it takes two hours longer from door-to-door then my Porsche. I also have a Ford raptor which I absolutely love so I don’t drive the Tesla very often on long trips. I’ve actually been stranded when the power grid was out in California. There is a huge amount of range anxiety even though I have a long-range X. Going up hills for every mile traveled it eats 2 miles of the battery. In cold climates it works worse. You don’t want to open the falcon doors when it is snowing. I do like them for driving around town though. The autopilot automatically shuts down within a few minutes if you don’t constantly jiggle the steering wheel. The fit is nowhere near my Porsche, in other words the lines around the vehicle.

    I wouldn’t say that I dislike the Tesla but the fact that they are going to sell 500,000 possibly and they are a long way from the semi that was promised in 2019 the price is ludicrous!

    Elon named their high-speed ludicrous and that is what their value is. Interestingly you say the price keeps dropping and that is an absolute fact. That hurts the resale value when you can purchase a new one for less every time.

    I really don’t understand the valuation but it is a cult stock. If someone had the guts to say anything about Tesla like you did the value would probably become more realistic. You’re going to get a lot of flack from the cult followers.

    Thank you so much for telling the truth!

    • BuySome says:

      Any relationship to the guy in the Porsche about thirty years back doing 120 down I-80 fast lane heading for the bay at night with every available cop chasing him?

    • Massbytes says:

      Seriously Ronnie, You don’t think Tesla has enough people who criticize them? Lol, that is a new one.

  31. Engin-ear says:

    Insightful article and comments.

    What is missing in the discussion, is that both ICE and EV cars are carbon dirty at same order of magnitude when your look at both manufacturing and usage cycles.

    EV is dirtier to produce and cleaner to run.
    If you feel good about it – go on.

    Unfortunately the only clean way of transportation is the barefoot walking.

    • Old School says:

      Next to that would be to hitch a ride on a freight train. I think they say they can move a ton of freight about 500 miles on a gallon of gas. If you weigh 200 lbs you should be able to go across the USA on less than a gallon of diesel.

      And if you can get where you want to go on a barge your carbon footprint is even lower.

      In third world countries you see passengers traveling on freight trains and freight ships. It’s the cheapest way to go if your time isn’t money.

      • Lisa_Hooker says:

        Glorious! I had never thought of hopping barges in lieu of freight cars.

      • BuySome says:

        All very funny, but let’s not give people stupid ideas. Had some college friends playing hobo games and one ended up with a dislocated shoulder jumping off. He was lucky as trains can cut you in half. On a lighter note, the carbon footprint would be less if they’d just build us some adult size peddle cars with vintage styling. Both infrastructure costs and human asses would shrink rapidly.

      • Fat Chewer. says:

        You have to know your stuff though. When I was a teen, a friend and I jumped on a freight train that was moving very slowly. We figured we’d only take it to the next station. Unfortunately, the train rapidly accelerated and did not stop for 300 kilometers! It was one of the best adventures I ever had. Most of the fun came from trying to get home with little money. You wouldn’t believe it, we were home by dawn!

      • Engin-ear says:

        Barges…

        Did you know that early cities grew on rivers because the barges were the most reliable, practical and economical solution to provide the city dwellers with food?

    • EJ says:

      As everything does in EV land, that largely comes down to battery tech.

      The efficiency and envirnmental cost of electricity storage is advancing exponentially. ICE engines are not. So this may be true at the moment (and I’m not sure it is), but that could change in 6 months. It will almost certainly change in 6 years.

      • Engin-ear says:

        What is falling is cost due to the scale effect.
        Architecure is optimized for better output.

        As for the physics laws, they stand unbended by political injunctions.

      • nick kelly says:

        Look up ‘exponentially’ then look up storage of Tesla battery 5 years ago and now.

      • Javert Chip says:

        EJ

        I got all sweaty & excited about battery tech increasing exponentially…until I hurt myself trying to document that with the help of GOOGLE.

        Turns out, rate of increase in battery tech is very different than processing power of microchips. “Exponential increase” is not a term I’d use referring to battery tech.

  32. Duke says:

    Why are the other TESLA products never talked about here?

    Solar Roof
    Grid Storage
    Residential backup power
    Tesla makes its own computers which are computationally YEARS ahead of others. 2 days ago headline, “Mercedes Gives Up On Leading Self Driving Technology – Says It Can’t Compete”
    Tesla Insurance – Disrupt insurance industry with Big Data advantage to calculate risk and offer lower rates
    Tesla Semi (Just received order for 500 semis from truck leasing company) and Amazon and Walmart drooling to buy self driving electric trucks.
    Robotaxi network (Uber and Lyft will be obliterated) Really, why fight if employees are contractors or not when the carts and trucks will drive themselves.
    $25k Tesla coming in a few years
    Teslas have the best crash test safety ratings of any vehicle (off the chart Consumer Reports test)

    I think I will have a Tesla subscription instead of owning. On any given day, I can reserve a Cybertruck, Model S or Model Y depending on my utility needs for the day. It will drive itself to my house from nearby charging lot and I can pay by the hour. This will be substantially cheaper than owning 1 vehicle myself.

    The other car companies may start making lots of EVs. But will anyone want them? I would buy a used Model S with lifetime free supercharging (now available for $40k or less) before ever considering a Ford Mustang Mach E.

    All this is just to question whether we are comparing Apples to Oranges here. Tesla vs Traditional Automakers. Tesla is a tech company vs old subsidized automakers which are doomed laggards.

    Lots of challenges and disruption coming. China about to start selling sub $10k car after incentives and rebates in California.
    “Kandi: Chinese EV Start-up’s 59-Mile ‘K27’ Clears for Road Use, Costs $7,999 in California After Incentives!”

    • Wolf Richter says:

      Duke,

      I hate to break it to you, since you’re on such a beautiful roll. But in Q3, Tesla’s automotive revenues accounted for 87.4% of its total revenues. All the glorious other stuff accounts for just 12.6% of its total revenues.

      Tesla has been getting “orders” for its Semi for years. But there is still no Semi.

      • Duke says:

        Thanks.

        I’m just saying. Yall are on in yer little anti Tesla bubble. That 12% revenue from new initiatives is the future roadmap for growth. The high stock price is a vote of confidence, AND people voting with their investment dollars for a green future. And it will be awesome!

        Bring on the Biden Green New Deal stimulus. If they remove the cap on Fed rebates per manufacturer, Tesla sales will go crazy again.

    • nick kelly says:

      Solar roof is a hoax. Dow Chemical took a swing at this and quit. The tiles deliver the least power of any panel but look nicer.

    • nick kelly says:

      Enter ‘how to destroy yr Tesla battery’

      Short answer: running it often near empty and using supercharger. Guy is a realtor bought an S with 16 K miles, i.e., new but would do 150 K a day and then supercharge. Battery soon shot. Supercharging is a approaching a limit to the amount of juice you can safely deliver per second.

      An EV is a great idea for a couple (or group) that use it for around town and have other auto(s) for longer trips. But do you really want to inquire about charging before a road trip? I don’t want to ask about anything and sometimes resent the 5-10 minutes to fill up.

      How about charging while driving via electrified hiway. You could do it with contact (like road race toy cars) or induction via proximity to AC.

    • Duke says:

      Sure you can overuse it and lose it. But most Tesla owners know how not to abuse their batteries.

      Tesla has highest rating of customer satisfaction. So your anecdote isn’t typical.

      https://www.businessinsider.com/tesla-tops-consumer-reports-owner-satisfaction-list-2019-2

      • nick kelly says:

        OK and the guy maybe an exception. But why does Tesla’s warranty only guarantee 70 % of range from day one. More range is their main thing but they won’t guarantee it,
        That is the Canadian warranty. Think of the trauma the IC’s have gone thru for missing 10 % on fuel use.

        We don’t know how these higher density bats with SC will last past 5 years and I can’t find a quote for a new one. The word ‘should’ comes up as in ‘you shouldn’t worry about it’ and ‘it should cost from 5 to 7 K.’

        The guy who bought a 2013 Leaf was told about 5K then but when the time came it was 15K .

        • Javert Chip says:

          Nick

          There is a huge difference in Tesla delivering (for example) a 400-mile range, and warranting (ie: financially guaranteeing) only 70% of that range.

          With hundreds of thousands of owners, who knows what kind of crazy stuff the car owner will do…running a bunch of traffic-light drag races probably drops range pretty quickly.

  33. Island Teal says:

    What a great article and perfectly timed for the weekend. It will give the Tesla Fanboys something to kick around for days 🤣🤣

Comments are closed.