Tesla

[weijian]

These are indeed exciting times for Tesla (no wonder stock is the next 1 trillion market cap). While it poses a lot of risks  (logistics of car turnaround, customers' acceptance) and potential rewards (reduction in maint) for Hertz, it is surely only positive for Tesla.

Tesla-Hertz EV deal is climate change tipping point for national car rental fleets

For Tesla, the deal is a good way to introduce consumers who have never driven an electric vehicle before to the technology, especially as the sales prices of EVs relative to traditional cars come down to a level where there is more room for mass adoption. 

“Every consumer that gets into a rental car car could be a conversion to a buyer ... it’s an extended test drive,” Ives said.

https://www.cnbc.com/2021/10/25/tesla-he...ctric.html

[Wildreamz]

Just to point out that, if Tesla were to improve FSD (full self-driving) to a satisfactory degree over the next few quarters (it is already quite good). Hertz will not only be a good venue to test-drive an electric vehicle, but also to test-drive Full-Self Driving, which is available as a low cost subscription ($199/month).

[Wildreamz]

Prof Damodaran updated his Tesla valuation:

Tesla at a Trillion-Dollar Market Cap: Revisiting its Valuation


New intrinsic value per share estimate (24:43) = $571.29
New "Terminal" Revenue Estimate = $420 Bil (current TTM = $46.8bil)
New "Terminal" Operating Margin Estimate = 16% (current quarter = 9.57%)

---

Note that he has been invested in Tesla and sold his position in Jan 2020 at a price of $128 split adjusted:
‘Dean of valuation’ says Tesla would need VW-like sales and Apple-like margins to justify stock
https://www.cnbc.com/2020/02/13/damodara...stock.html

(vested)

[Dividend Warrior]

Plenty of positive catalysts in 2022!

- Giga Berlin & Austin start production
- Giga Shanghai expansion
- 4680 cells high volume ramp up
- Cybertruck in the 4Q
- Further improvements in FSD beta
- Car insurance business
- Solar energy business

Tesla is my top tech position. 

[AQ.]

Plenty of positive catalysts in 2022!

- Giga Berlin & Austin start production
- Giga Shanghai expansion
- 4680 cells high volume ramp up
- Cybertruck in the 4Q
- Further improvements in FSD beta
- Car insurance business
- Solar energy business

Tesla is my top tech position. 

True - plenty of positives with Giga Berlin+Texas ramp.

But to play the devil's advocate here, what headwinds or potential problems does Tesla have in the next 4 yrs?

The main thing i can think of is perhaps production hell for new Gigas but Giga SH seems to show they mastered the process after lessons in California.

[Wildreamz]

From my view, biggest risk factors are not competitive (no one approaches Tesla's cost efficiency, margins, product quality, software features, super-charger network etc.). More short-term issues: supply-chain, regulations (with regards to FSD, China, Gigafactory operations etc.), chips.

Both short-term (~50% CAGR revenue projections) and long-term growth (8 - 9 Trillion TAM; automotive industry revenue projected in 2030) is quite visible IMO. Hence, it's a comfortable hold for me.

By the way, interesting analysis and comments by Mohnish Pabrai on Tesla and the automotive industry in general recently:

[specuvestor]

Reduction of carbon credits and fact that EV is much more simpler than ICE cars. Range, recharge time and speed are primarily battery related. That's the key technology which Chinese are catching up fast. US and SG are depending on private sector to drive EV while Chinese public sector is taking the lead which has scale and demand to support R&D.

[Wildreamz]

Issues with China's political system aside. The competitive landscape of the EV industry reminds me a lot of the Smartphone industry. 

Basically Apple (strong brand power and vertical integration leads to differentiated product; leading to robust software and hardware ecosystem) capturing most of the economic profits, while everyone else competing for the rest, and the cheapest Chinese products eroding most of the profits at the lowest end of the market.

Tesla right now looks like the Apple of the EV industry.

[specuvestor]

Google, Microsoft, Facebook or Amazon were not the first movers. Jobs famously say Apple is a software company

So it depends on whether Tesla is able to maintain the user experience and keep it consistently ahead of competition. Cause EV has eroded a lot of the comparative advantage that differentiated ICE cars. Maybe Tesla would have to go through what Apple went through as well

[Wildreamz]

Agree that simply being a first-mover in and of itself, isn't a competitive advantage at all.

That said, I hope it’s clear by now that Tesla looks like the Apple of EVs, not because they are the first-mover (many will disagree that they are, as well) but because they are simply the clear industry leader (in terms of brand equity, product vision, and execution for the past 10 years).