Tesla is now just another mid-size automaker amid EV competition that is eating its lunch.
By Wolf Richter for WOLF STREET.
Tesla reported today that global deliveries for the whole year 2024 fell by 1.1% to 1.789 million vehicles, as Q4 deliveries ticked up only 2.3% year-over-year to 495,570, a new record by a hair. And the growth story is over.
But Tesla’s EV competitors are making hay in the rapidly growing EV market. Tesla’s biggest EV competitor, China’s BYD, announced that deliveries of its battery-electric vehicles in 2024 jumped by 12%, to 1.764 million EVs. In Q4, it delivered 595,413 EVs, up by 13.1% year-over-year, outpacing Tesla’s Q4 deliveries by 100,000 vehicles or by 20%!
Other Chinese EV makers, whose names are familiar in the US because their shares/ADRs are traded in the US markets, announced big gains in EV sales in 2024, including:
Li Auto Inc. [LI], annual sales: +33% to 500,508 EVs; Nio [NIO], annual sales: +39% to 221,970 EVs; and Xpeng [XPEV], annual sales: +34% to 190,068 EVs.
Even US legacy automakers GM and Ford have been reporting big increases in their battery-electric EV sales in the US in 2024 through Q3 (Q4 deliveries will be announced over the next days):
- Ford EV sales in 2024 through Q3, in the US: +45% to 67,689 EVs
- GM EV sales in 2024 through Q3, in the US: +24% to 70,450 EVs
GM killed its popular Bolt and Bolt EUV in 2023 but came out with a bunch of new models that just recently have hit dealer lots. So in Q3, GM’s EV sales jumped by 60% year-over-year.
So this decline at Tesla in 2024 is a sign of trouble at Tesla – is Musk the biggest problem there now? – while overall EV sales continue to grow at a rapid pace, even as ICE vehicle sales have stalled at low levels.
For Q4, Tesla’s deliveries eked out a record at 495,570 vehicles, just 2.3% above Q4 2023 (red in the chart below), including:
- Model Y and Model 3: 471,930 (+2.3% year-over-year, blue)
- Cybertruck, Model S, and Model X: just 23,640 (+2.9% year-over-year, green).
The Cybertruck had been the great hoopla-hope-promise, and it has been in production for a full year, but deliveries are apparently growing at a modest pace:
The other automakers will report their US delivery figures over the next few days. So while we wait, let’s assume that EV sales grew by only 10% in the US in 2024, dragged down by Tesla, after having grown by 46% in 2023. Then total EV sales would exceed 1.3 million (EV = red segments), while ICE vehicle sales, including hybrids, would come in at about 14.6 million (ICE = black columns). And Tesla’s role in the EV segment, while still large, is diminishing rapidly, as other EV models surge:
So how much should Tesla be worth?
With stagnating vehicle sales, losing market share, getting passed by a Chinese competitor (BYD), as other competitors catch up, Tesla is now in the same position as Ford and GM, that trade at P/E ratios between the single digits and maybe 15.
P/E ratios currently:
- Ford: 11.1
- GM: 5.5
- Stellantis: 2.7
- Honda: 7.3
- Toyota: 9.6
- Tesla: 103.2
These legacy automakers with their low P/E ratios are not good deals. They’re not undervalued. That’s where automaker stocks are – and for a good reason.
The auto industry in the US, as you can see from the chart above, has been a no-growth industry for decades, interrupted by big plunges, bankruptcies, and bailouts. Similar dynamics played out in Europe, Japan, and other developed markets.
Only rampant price increases and going forever upscale have allowed automakers to increase their dollar-revenues, even as unit sales stagnated and fell. In fact, because they kept pushing up prices of their models to increase their profit margins and dollars sales, their unit sales have fallen because their models have gotten too expensive.
Tesla is still hyping a lot of stuff that it’s going to blow your socks off with, like it used to hype the Cybertruck, the Semi, and all the other things. The biggest two hype-and-hoopla elements currently are AI and a robotaxi that doesn’t exist yet.
So OK, let’s give Tesla’s hype and hoopla the benefit of the doubt, and say that as Ford trades at a P/E ratio of 11.1, Toyota at 9.6, Honda at 7.3, and GM at 5.5, then Tesla should reasonably trade at a P/E ratio of up to 15 maybe, to be valued for reality. So divide Tesla’s current share price of $378 by about 7, to get a share price of $54, at which point it would trade with at a P/E ratio of about 15, still far higher than the major automakers in the US. It still would be relatively high for an automaker.
I’m obviously just kidding. Wall Street doesn’t care about reality or P/E ratios. Wall Street sells hype and hoopla, and Musk has long known this, and has perfectly played this game, which allowed him to fund and build the company, and its success so far. That was a huge accomplishment.
As Tesla became a profitable global automaker that now sits on $33 billion in cash, it shook up the legacy automakers, forced the entire industry to invest huge amounts in developing and manufacturing EVs and batteries for EVs, many of them in the US, which has entailed a boom in factory construction in the US, etc. etc. So this was all good and very hard to do, and Tesla managed to do it.
But now Tesla is just another mid-sized automaker with stagnating vehicle sales amid EV competitors that are eating its lunch. So it should trade like an automaker.
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By my estimates, 1 Tessa share should be worth about 100 fartcoin, or maybe 10 doge. Suck it elon!
Musk alienated his biggest market with his latest child-like outbursts supporting H-1B and his affiliation with Trump. Anecdote: I actually know a liberal who said he is very sorry he bought a Tesla for these reasons and will not buy one again.
Politics are part of the decision-making process, although economists like to dismiss them. Just ask Bud Lite.
You’re right, lots of people — particularly liberals — buy products based on the political affiliation of the people who own the brand. This is why Stephen King — a rabid liberal — is losing customers among the right wing who don’t want to read his books, and why Steve Jobs garnered such a niche following for Apple 1.0 (pre-cell days) with his “be different” philosophy. Selling products identifies you with the product, and if you’re wearing a Crooks & Castles sweater, you come across gangsta.
there’s a double standard. when conservatives boycott companies, like the bud light fiasco, the media implies it’s childish and immature. but when liberals boycott chick fil a or tesla, that’s just a “commitment to values.”
Nah. It was just the way some of the idiots like Kid Rock made a big show of the boycott that was childish and immature. Doubtful many condemned conservatives who just stopped buying the product.
If someone pushes their Model 3 into the ocean, they too can be called childish and immature.
TBF, those who’ve considered themselves “right wing” have historically been far more concerned with banning books than reading them.
Tesla is losing market share because they’re no longer one of the only choices in the EV market. This is Tesla’s new normal, regardless of what drivel Musk spouts on his personal propaganda platform.
I’ve been seeing this in the news too. There is apparently a market now for bumper stickers that say things like “I bought this before Elon went crazy.”
Values are something that people factor in. I won’t be buying a Tesla, just like I don’t buy Gillette razors anymore. Can these companies please just focus on the product?
what evidence is there that tesla, as a company, has gotten involved in the politics? the fact that the ceo in his personal capacity and <10% owner has doesn't mean the company has.
That’s real clever. And completely wrong. Elon is politics whether for good or bad. Yeah he is not his ‘company’ but you’re splitting hairs son.
The CEO is the face and representation of the company. If their views and stances do not affect the compan8es business, then what is the point?
How much would TSLA be worth if Luigi Magione had targeted their CEO instead of UNC’s? Musk, for better and worse, has made the company synonymous with himself and he’s demonstrating why that’s generally thought to be a bad idea.
Elmo owns 13% of Tesla stock.
I recently saw a bumper sticker (on a Tesla) which read “Awesome wheels / Annoying CEO” next to a zoomed in pic of Elon making a goody face.
CEO’s or party chairmen don’t make anything, people make things, machines make things, people run machines, for now.
I don’t like Elon at all, haven’t for many years.
I leased a Model 3 this year because it was a good deal; so good that I expect Tesla to lose money on the deal, i.e. the lease value will be less than the depreciation.
I believe this all gained momentum (political values expressed by companies) back when the public outcry over sweatshops and child labour in the fashion industry reached a peak and convinced large companies like Nike and Addidas to start addressing their supply chain. As a result those companies did quite well and since then it’s become another marketing tool in a way, “buy our product because we aren’t just wealthy we also care about issues and people”. Trouble is that something like child labour is very hard to take a position for and get any kind of support to organize against a company addressing the issue. On the other hand all the issues companies are attaching themselves to nowadays have opposition groups, they’re not clear cut, so they get themselves in trouble pretending to care or possibly actually caring and building an activist management team around those values.
I for one miss the days when I could stand outside, have a fart, and nobody assuming what my political affiliation is based on that act. The partisanship is actually insane, but that’s the environment companies do business in now, I hope the successful ones in the long run turn out to be the ones who stay out of these messes and just try to offer services and products
What a sane comment. All the pro and anti Elon comments are so tiresome.
Exactly. Most conservatives wouldn’t be caught dead in an EV and with the natural buyers for EVs is wanting nothing do with anything Musk, the whole thing ends up being a textbook case for why businesses should avoid politics.
that’s complete nonsense. i know many conservatives who have ev’s
liberals are way more likely to live in dense urban areas, where ev use is much more practical.
liberals are also more likely to be wealthier, and evs, up until very recently, were prohibitively expensive for many people.
Obviously there are exceptions to every rule, but ev buyers are by-and-large liberal. Saying otherwise is simply untrue. To counter your anecdote, I personally know 0 Republicans that drive EVs and know several that have said they will absolutely never buy an EV. Trump is on record saying they are a dumb idea.
I agree, liberals tend to live in more dense places.
Disagree that liberals are more wealthy. Every data point I could find says that the richest income brackets lean Republican
He didn’t mean “conservatives” in the traditional good way. He meant, “raving lunatic hillbillies who get their directions from far right social media and/or evangelical church”.
Liberals have for the most part concentrated their hatred for Elon in the visage of the Cybertruck. The Y and 3 are simply too good and too mainstream to try and knock down/boycott.
In the previous century’s 20s, the conservatives stuck with the horse and buggy. Tried and true and not new-fangled.
This is what I hear from my European, mainly liberal, friends as well.
I’m so sorry you have to know a liberal.
How horrible for you, to have to know your fellow Americans.
Isn’t it great the large brain in politics can demonize your fellow Americans against you and you so willfully go along with it?
Bravo 👏
It is not an automaker ;) that might be the difficulty of that comparison.
Great article Wolf. I’ve been in the auto industry for several decades. I would not recommend anyone buy a new car. They have reached peak absurdity and will only get worse in the future.
I had always wondered how Tesla’s market cap became so astronomical.
My detailed thoughts on how we got into this mess.
I’d give the Cybertruck a couple more quarters of not living up to the hype, combined with a decline in model 3/y prices and sales before investors punish this stock down to P/E of 15 or lower. Still a lot of profitability for an automaker.
And now a Cybertruck was blown up in front of Trump’s hotel in Vegas. It’s hard to tell what the Tesla brand will be worth in the near future…
What I fail to understand is how close that vehicle got to the hotel entrance.
Where were the bollards? And a setback for the building? How about security guards, which are common in other countries?
Huh? Most hotels in the US I’ve even been to have a covered entrance you can pull right up to for ease of drop-off/pick-up purposes. Up until the other day, there have been next to no abuses of that privilege. Seems like bollards and security guards are Overkill for 95% of US hotels.
In my humble opinion, it should be worth Zero.
And that guy, E-Long, should return every single penny he ‘made’ to the US taxpayers. Or more fairly, he could keep $200,000 for every year he put in. Not a single penny more. That’s MORE than adequate compensation.
But but but! Tesla is actually a battery company, no I mean a solar panel company, no I mean an AI company. It’s not just a car company, it’s a *tech* company, Wolf. Don’t you understand?
/s
Get with the times, bruh! It’s gonna be robo-taxis and robots that can do the your household chores and who knows what else). 🤭
Tesla does sell other products besides cars. You touched on it briefly at the end, but Tesla is crushing it in the battery storage industry. Most of the utility-scale battery storage projects I see use Tesla Megapacks. Not to say Megapacks have a moat of any kind and batteries are a commodity (ie low margin business). But Tesla does exist in this space.
Either way, Tesla has been overvalued for a decade. I’d short it but the market can remain irrational longer than I can remain solvent. I’m looking forward to the day Tesla bagholders go bust.
Other car makers have other sources of revenue. The most important one for ICE car makers is spare parts that likely have higher margin than the original car as well as providing a well defined revenue stream for many years per car. EV cars are simpler and just don’t need that many replacement parts for sustained maintenance. So Tesla’s profits are primarily driven by new car sales. I understand they also sell services such as FSD and a few assorted third party entertainment/connectivity options, but other car makers have similar revenue streams.
“spare parts that likely have higher margin”
So that’s why all the OEM parts are ridiculously overpriced vs the aftermarket versions…
Energy Storage and Generation is less than 10% ($2.38 billion in Q3) of Tesla’s total revenues ($25.2 billion in Q3). It’s just a sideline business. Other automakers have sideline businesses too.
Utility scale batteries, as you mention, is a low margin business. It is completely a commodity business because competitive advantages like energy density, heat generation, etc are meaningless when you can basically string along acres of heavy lead acid batteries next to a power plant.
If Tesla wants to focus on that business their PE ratio should be even lower than 15. Even half of that would be generous.
My personal belief is that EV’s and ICE products will sell, in tandem, and split the market for a long time to come. Many many years. I am driving an EV right now (LYRIQ) and my experience is that, although an amazing vehicle, it just doesn’t suit my more-rural application of lengthy highway drives in the cold. There are tons of customers that an EV is the best fit, but also tons that its still going to take a while. As it takes a while, TESLA is not able to fall back on profiting from ICE sales, or even hybrid sales, like the others can. And now it has to split market share for EVs. So I still cant fathom how its valuation is where it is, i felt like 50 PE was even excessive and never dreamed it would grow to 100+. They have so much competition now… I feel even the legacy automakers are going to regret trying so hard to imitate them in time, but time will tell. I do believe with TESLA now a key player and Chinese competition, someone will need to go bankrupt to keep things working appropriately. Hopefully that is Stellantis, haha, as i used to work there and the way that company is ran is a complete disaster.
That’s why we’re a hybrid family. Best of both worlds right now. We’re open to full EV down the road, but there needs to be massive improvements in batteries and charging speed before we’d consider.
Frankly, anyone buying a new vehicle is a flat out idiot if they don’t go hybrid.
Unfortunately, hybrid vehicles are vastly more complex (obviously many more parts) than both ICE and EV vehicles. You will likely regret getting a hybrid in the long term based on the repairs you will have to make.
@Paul from NC most people that buy a new hybrid are looking for a new one before it is out of warranty. Few people pick a car for 100% logical reasons, it is usually a mix of what makes you happy and what you can afford and rarely is it a pure “total cost per mile over a decade” (if it was there would be a lot more Toyotas and Hondas with 250K miles driven by the original owners)…
This is always what i mention to people with multi vehicle households that could easily have a full EV as an option. EVs are actually very simple. The battery is complex, but overall its very simple. I think people who drive and charge them correctly will be surprised long term at how long the battery holds up and what little maintenance they will need. Hybrid is best of both worlds but comes at a cost: complexity and limited battery.
We have a Ford Fusion hybrid that’s 14 years old with 45k miles that has never needed a single repair.
Dang Ken!
You’re really burning up the road with your 3k miles a year!
Haha
Don’t be too hard on the old girl. ;)
Nonsense. Have driven a hybrid for 11 years with no repairs.
I have 3 evs and been driving evs for last 10 years
It works for me .
Absolutely zero maintenance other than tire rotation
“Absolutely zero maintenance other than tire rotation”
So your brakes never wear out? How does that work?
ShortTLT
Regenerative braking. Electric motors turn into generators and do much of the braking to recharge the battery while you brake. 300hp motors have a lot of braking power. You still use the brakes for emergency stops, but for most regular driving situations, regen does much of the work.
Regen. Most EVs dont use friction brakes much. Thats what makes them so efficient, getting back some of that energy they used to move forward. If you dont use the friction brakes, cant wear them out
@ShortTLT:
Adding to what WR said, there is a thing called one-pedal driving in EV which basically forgo the need of putting on brake in most city driving if you drive smartly. They way it works is: If you are approaching a signal and have to stop at the lights, then ease off your foot from gas pedal and then car uses battery regen to slow down the car aggressively.
Fascinating about the regenerative braking.
But what about suspension? Struts/coilovers, control arms, swaybar & bushings & links, power steering rack + tie rods, CV joints, wheel bearings…?
These are all things I’ve had to replace on my car just from potholes and road wear… do EVs share any of these same parts, or is the suspension a totally different design?
They still have suspension, bearings, CV joints (typically). A lot of these components are considered pretty robust but depending on duty cycle may still need maintenance. This stuff is not as routine as brakes though…when I worked at a CV joint manufacturer, I felt like if we did our job right and the boot never got punctured, it would last beyond the vehicle. I noticed on my EV the brakes get rusty because they don’t get used. So I try to panic stop here and there just to get the rust off
Thanks for sharing Blake.
“They still have suspension, bearings, CV joints (typically). A lot of these components are considered pretty robust”
That’s funny because I’ve had to replace literally all of these on my (ICE) car in the last 50k miles. But many of the roads up here in Boston are so bad you’re practically off-roading, even in the city.
What about power steering? I assume EVs have that too. I spent 10+ hours replacing my power steering rack this weekend. Most difficult repair I’ve ever done.
Sandy,
I’m king of hyperbole, so I won’t fault you for your idiot comment, but I think in a two car household with garage and charger, one EV makes the most sense with a hybrid or ICE for longer trips.
Paul,
It’s all relative. A Toyota hybrid assuredly needs less maintenance than anything American (particularly the biggest and ugliest and most expensive vehicles), and probably a lot less than most BMWs and other fancy cars.
Agree, we have the RAV4 Prime plug in hybrid. EV in it is superb if we drive around town, are easy on the throttle, lots of stop and start, in warm temps. If we drive at high speeds, have a lead foot, go long distances at a time or drive in cold weather our EV performance is about 20% or more reduced range. Make sure you know what mission you will primarily use it for.
The Tesla Optimum Techno-slaves are worth the market cap alone.
The price of a slave at auction in the pre-Civil War South was about as much as a new car today (30-40k inflation adjusted).
The robots will be cheaper AND don’t talk back to the Master :]
🤣
They already made a movie about that. I think it was called Transformers.
Anonymous may be slightly deranged :D but he’s basically correct.
If you have a Tesla-bot driving around a Tesla-car, does that still count as a robotaxi?
Elon needs to get his eye back on the ball.
yeah but it appears his involvement in all that other BS has boosted the stock big time. Ever since trump won the stock has been on an absolute tear. You would think the the US government agreed to buy 1M/yr vehicles from them directly or something. Its mind blowing.
He’s got his eye on the ball, believe me. He completely understands how a cushy relationship with the president elect, and a powerful ad-hoc government position with likely great impact on various govt agencies, can benefit Tesla as well as his other companies. What he is doing right now is far more valuable than sitting in his office at Tesla.
Notice twitter/X hasn’t been bothered by the EU or Brazil since he became best buds with Trump.
Also, I hear the old time car companies would like to stop subsidizing
EVs by having to buy carbon credits. Being friends with Trump likely prevents that from happening any time soon.
Lots of large US manufacturers got special treatment from the government during WWI and WWII, and the years thereafter. Think Ford, GM, GE, Westinghouse, AT&T.
As a technology company which has shown extraordinary ability to manufacture at giga scale (via its giga factories), Tesla can provide future value to the US military in the event of a need, and profit.
For example, during WWII Corning Incorporated practically suspended its production of consumer glassware to focus on military-grade glass ware like insulators, lenses, and tubing, just to name a few. The company profited handsomely and received numerous handouts from the US government during and after WWII.
With all that said, I sold all my Tesla shares a couple weeks ago to profit from the insanity. I won’t be buying again soon.
Smart capitalists can also create their own ‘special treatment’ during war times.
If you get bored check out the origin of the Bush family fortune. Hint – HW’s grandfather, Samuel Prescott Bush ran the “Ordnance, Small Arms, and Ammunition Section” of the War Industries Board during WW1. His company, Buckeye Steel, quickly became the leading supplier of gun forgings and billets for shells.
Right place, right time, right idea.
Musk can see that the Trump maladministration will be an orgy of crony capitalism and naked corruption for insiders and is investing his money and influence accordingly.
Yes, for now. But Musk and Ramaswamy are cast as the fall guys and when things go south (which they will) they will get a very public axe. You have not view this as a political administration, it’s a reality TV show and has been cast as such (note all the TV personalities in the cabinet nominations). If the ratings tank, someone is getting fired.
Maybe. But political characters are like cockroaches. You just can’t get rid of them…. George Soros anyone?
It’s courtiers and court behaviour tout court, mes amis …
Arguably he does have his eye on the most important ball: government bailouts. He wants to make sure Tesla is first in line when this thing crashes.
Probably sell a lot of vehicles to gvt agencies. I am sure TSLA sold next to nothing under the Biden administration. TSLA has a big battery storage biz that could sell billions$$ to the Donny Tariff feds, too. Perhaps, a new line of military vehicles running on batteries! And the biggly is keeping Chinese competition out of not just america but anywhere Donny Tariff can apply anti-china pressure!
Russia Chechyan President and General Kadyrov took a couple of Tesla cybertrucks and put heavy machine guns on the back in August 2024. Kadyrov praised the vehicles for their qualities and apparently is testing them on the Ukrainian/Russian battlefield. There are real videos of this on YouTube and a couple of news reports. Hard to imagine battery power, but perhaps the torque, quietness, and supposedly bullet resistance of the stainless steel body panels (some of those videos on YouTube as well.)
I thought Tesla disabled those vehicles?
There is a lot of humour today, mostly intended. but ‘cyber truck into battle’ gets a star. Just add an NK driver ?
In WWII a US tanker said the German 88 mm went thru a Sherman ‘like it was paper’
Modern armour piercing ammo for infantry weapons won’t do a tank but would do a cyber.
Back to practical use of CT: where is the truck part? Is it just a big trunk under the armour? So…not aimed at contractor or rancher market?
Big fat gvt contracts are like winning the lottery. Just ask AWS(AMZN), MSFT,PLTR,HAL, just to name few winners at taxpayer expense!
I figure he will swoop in and build all the chargers the govt never got around to under Biden and the rural broadband initiative will get replaced with starlink subsidies. It will be touted as a net savings to the taxpayer and line musks already full pockets.
Funny no one mentioned neurolink. That’s another scam of his but I wouldn’t be surprised that some people don’t already have implants and operate like drones. Would explain a lot.
Not sure I understand your comment Josie. Are you saying Starlink is a ‘scam’?
Starlink is not a scam at all. It’s likely a Darpa style program that proved successful, able to hide it’s military applications behind a consumer mask. Much like space X is the replacement of NASA.
But the rural broadband program spending years to study things and not having a single user makes it a prime candidate for a more efficient solution and that just happens to be starlink, courtesy of the MIC, and front man Musk.
Too busy sucking wang.
What is Tesla?
A car maker? A Tech company? An energy company?
There are good arguments for each.
A significant portion of revenue comes from cars.
One of the largest investors in KI and robotics
With its batteries, Tesla manages some grids in the US
According to their website, they want to be “Tesla is accelerating the world’s transition to sustainable energy with electric cars, solar and integrated renewable energy solutions”
They are a combination of car maker and startup. Amazon has started as an online book store and its now a warehouse, platform and cloud provider.
Energy Storage and Generation is less than 10% ($2.38 billion in Q3) of Tesla’s total revenues ($25.2 billion in Q3). It’s just a sideline business. Other automakers have sideline businesses too.
From the point of view of attracting and hiring engineering talent, it is more a tech company than a car maker. That can make a big difference when evaluating “just sideline businesses”
Ah no. It’s still a car company. That engineering talent was attracted by the possibility of stock options. If/when the stock doesn’t reliably go up any more, those engineers will head for the exits.
Just ask the other car companies how hard it is to compete for talent when your stock price trajectory doesnt guarantee that you can become a millionaire by the time you’re 30.
That’s the sort of squid ink which obscures the fundamental reality of the enterprise — I wouldn’t touch that critter with a barge pole …
He’s eye in sky guy, getting his hand into the Federal space program’s pocket book. He’s kissing the ring while he fills his pockets.
Musk ain’t the one doing the kissing. He bought the ring for what amounts to pocket change, and you can be damn sure he’s gonna get his money’s worth. It’s about to get conjugal in DC.
The 100 P/E dream is 1 million robotaxis, which will destroy the market for ownership of cars. I said dream, because you have to be asleep to believe it (quoting George Carlin).
Can I sleep or get drunk in the back seat, while Elon insures his car against any accident claims??? He hasn’t said anything about that yet. Obviously I shouldn’t need a driver’s license or insurance to robo around the countryside.
I am highly skeptical of Tesla’s robotaxi plans, which is perhaps the main premise for its absurd valuation. Many industry experts say he won’t be able to do it without lidar and from what I have read, I would have to agree.
Here is a list of Musk’s false promises (minus his plans to have them on the road this year in TX and CA) on this subject:
2016: Musk first promised a robotaxi
2017: Musk predicted that drivers would be able to sleep in their vehicle while it drives itself in about two years
2018: Tesla revised the date to demonstrate full autonomy by the end of 2019
2019: Musk promised a robotaxi network
2024: Musk posted on social media that a robotaxi would be unveiled on August 8, 2024
Musk is the consummate con artist and I admittedly have lost a lot of money shorting Tesla in part because “Wall Street doesn’t care about reality or P/E ratios” and my underestimating this fact.
Russ wrote “Musk is the consummate con artist and I admittedly have lost a lot of money shorting Tesla in part because “Wall Street doesn’t care about reality or P/E ratios” and my underestimating this fact.”
Maybe you lost the money or maybe you didn’t. If the underlying value is not there, the owners of the over-priced shares are holding an enormous contingent liability. A liability contingent on all the other owners not getting nervous at the same time.
Russ lost the money when his shorts expired.
But yes, there WILL be bag holders eventually.
Tesla’s stock should be worth what the market pays for it, regardless of fundamentals. There is still way too much money sloshing around. Unfortunately, the bulk disproportionately finds the higher wage earners.
I wonder how much of the top 10 S&P stocks are being driven up my 401k and similar retirement accounts?
“I’m obviously just kidding. Wall Street doesn’t care about reality or P/E ratios.”
FACTS.
Elon is one if the greatest story tellers of all time…right up there with Dr. Seuss except without the alliteration. And soon he’ll be the first trillionaire from the amazing stories but sadly I won’t be a nickel richer from him since I have trouble believing those stories and valuations.
‘Many a true word spoken in jest’
Elon belongs in Striped PJ’s, which will never happen due to being a subsidiary of the MIC. “Am considering taking Tesla private at $420. Funding is secured.” Hogwash. Self-driving? Do you mean self-crashing, lying to investors and all the rest of us? Utter BS. This proves Barnum was right.
What does MIC mean?
Military Industrial Complex.
Among other things Ike warned the population about this as he retired.
The corporate welfare for Tesla needs to end. The tax credit for purchasing an EV reduces the revenue that goes to the government. Tesla doesn’t pay any Federal taxes on its income. In 2023, Tesla earned $1.79 billion from carbon credits. This is madness.
Perhaps DOGE can soon eliminate that kind of fraud and waste!
Agree Tesla way overvalued. But I also thought one reason for low valuation of legacy automakers was huge unfunded pension liabilities, or is this now outdated?
With the return of realistic interest rates, those unfunded liabilities are mostly gone. (Higher interest rates mean pension liabilities can be discounted at 5% vs 2.4% in 2020, turning a massive deficit into a fully funded pension plan).
Pension funds are taking the opportunity to slowly swap their equities into fixed income. With the reduced deficits they are also reducing their contributions.
https://www.milliman.com/en/insight/2024-corporate-pension-funding-study
schadenfreude
“the emotional experience of pleasure in response to another’s misfortune. Schadenfreude is a German word that combines Schaden, which means “damage,” and Freude, which means “joy.” The concept is common to people across cultures, but some languages do have comparable words.Nov 26, 2024”
Maybe an interesting year coming up all over the World. Short Tesla, buy guillotine. :-)
Wolf,
diff topic.
First Thursday of the month, is FED balance sheet article coming today?
https://wolfstreet.com/2025/01/02/fed-balance-sheet-qt-43-billion-in-december-2-11-trillion-from-peak-to-6-85-trillion-bank-panic-facility-btfp-nearly-gone/
Wow. Lots of Elon hate here.
I recommend that you do not buy TSLA at current prices.
The good thing is you have the option to do that.
I wonder how much longer it’s going to take Tesla to come up with a less expensive SUV like the Chevy Blazer or even the 2026 Bolt?
Catering to the high-end isn’t going to cut very much longer.
And making comparisons to BYD is pointless, IMO. BYD isn’t going to be selling EVs in the US anytime soon, and everyone other than Tesla are quickly figuring out that Chinese consumers aren’t going to buy American EVs made in China. GM, Ford, et al should just exit that market and refocus their resources in the US and other nations who are likely to keep trade barriers high to Chinese EVs.
“And making comparisons to BYD is pointless, IMO. BYD isn’t going to be selling EVs in the US anytime soon”
Read the first five words of the first paragraph again. Tesla reports GLOBAL deliveries, and its China deliveries are close to its US deliveries, and it competes directly with BYD in China, and now it also competes with BYD in Europe and other countries. BYD matters A LOT to Tesla.
The main reason I fear the Trump administration. Tariffs, at a time of massive economic change, can only damage the US’s ability to compete down the road. Damaging the future for generations to come.
Nah.
Tariffs have two roles:
1. a good way of raising taxes
2. changing the economic math for production in the US, and this included the construction of pipelines (which in itself is a powerful economic activity).
Tariffs are direct and immediate tax on the profit margins of foreign producers and US importers. They may or may not be able to pass them on. And tariffs don’t stop trade, but they change the math of where something is produced.
The Chinese have used heavy tariffs very successfully in building and protecting their manufacturing industries that now dominate the world. Other countries have too, including Canada.
Tariffs shift the economics to producing more in highly automated plants in the US than producing in factories overseas. This is not instant, but it’s high time that the US protect and build its manufacturing base in order to not be entirely overrun by heavily subsidized and protected manufacturers overseas.
Fulfilling role #1: If tariffs on a product (such as T-shirts) don’t change where the product is manufactured (such as in Bangladesh), they fulfill their role of raising tax revenues for the US, which the US needs more than anything, given the huge deficits. Role #1 is fulfilled.
And yes, someone has to pay for taxes. Tariffs are a direct tax on corporate and importer profit margins, including those overseas, which is why US companies HATE tariffs. Whether or not they can pass on the tariffs depends on a lot of things. Companies are already charging the maximum amount they can get away with and still accomplish their growth goals. If they raise prices, they might lose sales, and then have to roll back prices. So it’s not a direct hit to consumers, it’s a direct hit to corporate profit margins, and then it’s up to the market to spread it around.
Fulfilling role #2: If tariffs fulfill their role of changing where something is manufactured (motor vehicles, semiconductors, components, tech equipment, ships, etc.), then they don’t raise taxes, and don’t fulfill role #1, but vastly improve the overall economy and the labor market. Highly automated manufacturing plants provide great highly qualified jobs, including tech jobs. And they have huge secondary and tertiary effects.
They’re even now making T-shirts in the US again… and supplying Walmart with them. So it can be done. And that’s good.
All true. Teslas in China are bought mostly as a status symbol (luxury car), and it still holds a connotation of being “tech” industry, which working in still maintains some degree of cache in China. Basically culturally they are lagging 7-8 years, but rapidly catching up in the “disillusioned with tech” sentiment given how truly dystopian Meituan and the surveillance state has made China. Most of the late-20s tech workers and those trying to emulate them wouldn’t buy a Tesla now as they did a few years ago. Notably, the large Tesla Shanghai complex is a ghost town (I was there recently), years behind schedule.
In 2022, Tesla predicted that its sales would grow 50% most years, but the prediction ran into an aging model lineup and increased competition in China, Europe and the U.S. In the U.S., analysts say most early adopters of technology already own electric vehicles, and more mainstream buyers have concerns about range, price and the ability to find charging stations on longer trips.
The fourth-quarter deliveries fell thousands short of Wall Street expectations. Analysts polled by data provider FactSet expected sales of 498,000 vehicles.
Poor Elon! Only the richest and most connected guy on earth! He could fart ford and gm and ask for another borreto. We may all soon be driving one of his cars with other badges on them.
15X earnings is a kinda high price for a great company with very strong growth prospects.
Last I checked TSLA is trading for 15X sales! Pass.
I do not think it is valid to simplistically compare the price/earnings ratios of the auto makers because the auto makers carry dramatically different levels of debt. The debt/equity ratios of the auto makers (from Simply Wall St) are:
Ford 354.7%
GM 174.1%
Stellantis 36.3%
Honda 82.7%
Toyota 36.4%
Tesla 10.5%
The companies that carry a large amount of debt amplify their earnings when the operating profits are greater than the interest at the expense of attenuating their earnings when the operating profits are lesser than the earnings. In effect, the profitability of those companies becomes very volatile.
To filter out this effect, one could compare the price/sales statistics (again courtesy of Simply Wall St):
Ford 0.22x
GM 0.32x
Stellantis 0.21x
Honda 0.33x
Toyota 0.89x
Tesla 12.5x
Or one could compare the enterprise value / earnings before interest, tax, depreciation and amortization (again from Simply Wall St):
Ford 18.3x
GM 8.9x
Stellantis 1.4x
Honda 4.8x
Toyota 10.1x
Tesla 96.4x
The conclusion that Tesla is overpriced remains compelling, but the ratios as between the other auto makers is really quite interesting.
Ahhhhhhh…..the famous EBITDA!!!!
EBITDA = Listen to what I say, not what’s in my financial statements.
ATIC = Adjusted Total Invested Capital = Market Value of Equity – Cash & Securities + Total Interest-Bearing Debt.
Also known as Enterprise Value.
This is the correct methodology for the numerator.
How much would WolfStreet stock be worth?
Ticker – WLFS
In the low gazillions.
To Wolf Everyone! The first Gazillionaire! Happy New Year and thanks for the great financial reporting!
And no dividends? Ford dividend yield 6%. Why is a stock that does not share profits with the share-owners worth anything? A stock is worth the present value of future dividend stream plus IP and book value (property, equipment). Just becomes a game of hope that someone else is willing to pay more than you.
No one cares about dividends or income-producing assets anymore… they just want to buy stocks and see number go up.
I’d rather increase my net worth than worry about income producing assets at this juncture of my life. Good luck with your bonds.
Are you including variance in your net worth calculation? Or simply doing what most do and selecting the maximum plausible value-at-sale of each asset and summing the total.
Net worth doesn’t pay for groceries. I can’t pay my insurance or tax bills with net worth.
But I can with income.
EV’s still have a charging issue. Many buyers who might want to purchase them have no convenient way to charge them: apartment complex, SFH with no driveway to get the vehicle close to the home, city dwellers, etc.
With car sales flat lining, but annual mileage not dropping significantly, existing vehicles are wearing out. The average vehicle age is at an all time high. Something will have to give eventually.
If you have no way to charge ev at home or at work place then ev is not a viable option
But isn’t this most people, at least some of the time? Do people not go spend a weekend in the city? Drive Janey to move into the dorms? Need to ferry the kids to out of town sports and not have an hour to charge the car built into the schedule? In real life “edge cases” are pretty frequent, in my experience.
Frank, something has already given. It doesn’t make sense to buy a new car for many people; or a used one. Many people are simply spending the money to fix the cars that they already have. Big money. My 2006 Honda CR-V has 203K miles on it. I spent big money to repair the AC. It runs fine, the insurance cost is low, and it’s paid for. The newer versions of this model have turbocharged engines that won’t last and that have oil dilution problems in cold weather. My car has the original engine and transmission. Older cars don’t have to wear out, if you can get the parts to fix them. This past summer, I saw a nice Ford Model T in my neighborhood!
Tesla global deliveries 2015-2023: you could fit an exponential curve to this graph.
Definitely not a sustainable trend.
Musk’s ‘success’ is very much akin to Trump’s: Extreme, off the charts self promotion. In Trump’s case, real estate was the medium; Musk’s is technology.
And Musk is so much more financially successful than Trump because of the current obsession with all things tech…. as tech provides the “last grasping for straws” of what we know is an unsustainable society/lifestyle in the West. Only “technology” can fix our growing major problems. Not.
All that said, like all meglomaniacs, Musk believes he can be the President’s right hand man. In fact, Musk probably thinks he is the President. Note that Trump made clear recently that Musk could not be President because he is not US born. Meglomania always ends in disaster. Musk and Trump both won’t be any different. Musk’s fall from grace will be his inability to make a dent in the federal bureacracy and spending.
This failure will signficantly tarnish his all powerful status and will be the beginning of the end in his “career”. When that happens, as it will, Tesla will lose it’s shine.
Wolf, the latest Hindenburg Research report on Carvana is public now and might be a good topic for your Auto articles. A real eye opener it is!
“I’m obviously just kidding. Wall Street doesn’t care about reality or P/E ratios.” – Wolf
This is one of the primary things that is broken in the current stock market IMHO.
I often wonder if regulation/legislation could fix this?
What if there was a law/regulation that required publicly traded companies to pay a minimum percentage of profits out as dividends?
Early-phase companies with zero/negative profits could still play the infinite value hype game, but at least once they attained profitability they could more easily be compared based on the ROI of buying the stock.
Maybe irrational investing would still prevail, but I think it’s a problem government should at least try to solve, otherwise we may as well let every company issue unregulated crypto-stock.
“I often wonder if regulation/legislation could fix this?
What if there was a law/regulation that required publicly traded companies to pay a minimum percentage of profits out as dividends?”
This is absolutely not needed. What is needed is FED not interfering with markets. The markets are crazy high on the hope that if it something bad happens, then FED would come save like they did when SVB was going down.
SAVE??? The stockholders of SVB got totally wiped out. The bondholders of SVB got totally wiped out. Stockholders and bondholders ARE Wall Street, so how did the FED bail out Wall Street?
The ones who were bailed out were the depositors, most of whom were businesses that needed those deposits to make payroll. The businesses and their employees were saved, not the Wall Street investors. I do not have a problem with that.
Ehh let stupid people make bad investments.
Full self driving works. No one else close. It is hard to place a regular value on innovation.
Waymo already has had robotaxis out in the wild for over a year, without driver at all, driving around empty, or with paying customers, and they work great. Where are the Tesla robotaxis? Maybe Tesla can license the tech from Waymo?
It shouldn’t trade like the others because its margins are healthier and it has multiple growth avenues. It probably shouldn’t trade where it is, but that’s the price of growth and hope.
Clearly, Musk’s plan is to win conservative car buyers by being BFF”s with Trump.
Trump, meanwhile, is plotting to jail Musk, then steal his car company.
Is a 112 multiple cheap for a car company with shrinking unit volume?
Maybe Musk can win MAGA buyers by offering Teslas with a super-smoky diesel engine.
I own a Chevy Bolt I bought back in 2019 and still love it, and I know several friends who hated their Teslas and ended up selling them, and let’s not even talk about the refrigerator on wheels that is the Tesla Truck. I have no idea how Tesla will continue to compete as time goes on, but then again I never expected Musk to be elected President, so what do I know?
It’s only a single data point, but I suspect Tesla is in trouble: My neighbor who bought a Tesla Model X many years ago, and was quite the Tesla fanboy just replaced the car with….a Hyundai Ionic 5.
And it’s not hard to understand why. Tesla’s quality problems are massive, and in my opinion the Ionic 5 is a much nicer car than the Tesla Model Y.
The Ionic would have been my first choice, but none were being sold in Maryland at the time. Still happy with my Bolt, but I will look into the Hyundai again when the time comes. It is a *very* nice car, and leaps and bounds ahead of anything Tesla has put out in overall quality control. I’ve heard horror stories about getting Teslas serviced for lack of parts, etc.