With a market capitalization about $1 trillion dollars (in Nov 2021 but $0.8T in Feb 2022, or $0.56T in mid 2024), is Tesla market cap too high? The combined market cap of the next 10 auto manufacturers including Toyota, Volkwagen, General Motors Ford and Stellantis is only as much as that of Tesla. Data for each company is in the table below. For more details about global car production, check out global car sales and EV Pickup Trucks are coming. Data is taken from annual reports and Yahoo.com, and other data sources.
Market Capitalisation of Tesla versus the rest (Numbers from October 2021)
Is Telsla Market Cap Too High?
Here are just some of the reasons why some consider it too high and others suggest it will exceed $2T within 2 years.
Increasing Vehicle Sales
Tesla produced about 1m vehicles in 2021. Most forecast to grow 50% Year on Year for the next 5 years without major capital investment. Factories include doubling of the Shanghai, China factory to 2m pa., ramp up of new Gigafactory Texas of 2m, Gigafatory Berlin (1m) and existing Fremont (1m) which would take it 6 million cars by 2025. At the Q4/2021 call, the company said they were currently constrained by chip shortage and could meet 1.4m in 2022. Without production at Austin or Berlin.
Highest profitability of all manufacturers
Gross Margin from vehicle production is highest in the industry. Telsa has less than $20b in capital over past 3 years, and others have over $100b. See image below on margins from James Stephenson @ICannot_Enough
Increasing Efficiency
Tesla has no legacy dealers, factories or vehicles and is using the most advanced technology to eliminate labour. Adoption of “gigapress” that produces both front and rear casting supposedly reduced the number of robots by 50%.
Valuable Insurance Business
With its own insurance business that is based on individual driving performance, Tesla has a new business that can reduce risks and increase gross margin for no marketing costs.
Energy Business
The battery business, for households and Big Grid, has been constrained by battery availability. It is forecast to expand from 1GW to 1TW within 5 years
Robotaxi Value
Full Self Driving (FSD) is in Beta phase. Some analysts suggest some of the $12,000 revenue margin to further increase returns and only 15% of existing customers currently buy it due to availability.
Leading technology of Electric Vehicles
Leading technology of electric drive including manufacturing technologies such as manufacture, software management provides a low cost model others are trying to do but with their extended supply and OEM chain will require billions of investment.
Battery Technology
With 15 years of technology, their latest 4680 battery technology may decrease battery costs 50%. Tesla has supply chain control unlike some other manufacturers..
Despite Ford or GM delivering 3 times the number of vehicles, their margin per car is about 20% that of Tesla.
Q1 22 $millions
Tesla
Ford
GM
Reported GAAP Net Income
3,318
(3,110)
1,987
Plus mark-to-market Rivian Loss
–
5,4000
–
GAAP Net Income (Ex Rivian)
3,319
2,290
1,987
Deliveries (number)
310,048
966,000
831,000
Net Income per Delivery
$10,048
$2,371
$2,391
Data from Company reports and Twitter https://twitter.com/forwardcap/status/1519414030447910914
Global Car Manufacturers
A comprehensive list is shown below. Tesla is 17th of the number of the manufacturers but 8th most profit. It is 50% more profitable than GM, even though it currently sells just 1/6th of the vehicles.
Group
Sales
Rev
$B
EBITDA
$B
3Cap
(B)
Debt
$B
Invest
(3yr)
PE
Op
Margin %
Group
Sales
Rev
$B
EBITDA
$B
3Cap
(B)
Debt
$B
Invest
(3yr)
PE
Op
Margin %
Toyota
9,529,000
249.4
6.1
258
182
99.3
9.4
8.08
Volkswagen
9,306,000
254.1
51.0
130
227
497
7.0
6.38
Stellantis
6,915,000
98.8
16.4
61
76
35
7.8
-1.92
GM
6,828,000
122.5
27.0
88
110
77
8.1
7.43
Hyundai-Kia
6,406,000
88.1
12.3
28
91
209
4.4
5.68
SAIC Motor
5,601,000
106
0.05
37
163
91
22.5
Honda
4,399,000
121.8
1.8
49
112
198
6.0
5.01
Ford
4,187,000
127
16.0
87
145
21.7
12.4
7.17
Daimler AG
2,841,000
175.9
16.7
83
169
20.0
6.3
11.19
Suzuki
2,448,000
4.0
19
6.6
35
11.8
BMW Group
2,325,000
112.8
22.0
67
113
4.6
10.0
Geely
1,321,000
14
6.9
27
6
33.7
Mazda
1,244,000
31
2.1
6
15
11.3
Great Wall
1,116,000
62
8.9
56
27.4
Subaru
885,000
34
14
0
11.6
Tata
835,000
102
0.2
25
10
-34.0
Tesla
980,000
54
9.6
5 (Q1/22)
1,200
0.1
11
88.0
19.2
Ferrari
9,200
4.86
0.01
4
48.0
24.4
Aston Martin
3,400
0.6
2
-4.6
McLaren
2,900
0.78
1
BYD
426,000
24
123
49
35.0
Rivian
920(2021)
10,000(2022)
0
0.0
90
0.18
4.6
Lucid
300(2021)
12,000(2022)
0
68
0.216
N/A
Showing 1 to 23 of 23 entries
The following table has been constructed from a variety of sources (Organisation Internationale des Constructeurs d’Automobiles), Statista, and Companies Market Cap. The data is EOEI - as the sources of data varies.
There are a large number of other car manufacturers. E.g. There are over 240 EV companies in China alone making EV cars. Some of the new entrants (Rivian, Lucid) have high market cap but don’t yet have any major sales. Others have production and low market cap.
Some of debt is vehicle lease and inventory.
Tesla is leading the automotive industry in innovative manufacturing. EVs key focus is weight reduction. Will others catch up. The conclusion is Chinese will, but legacy will have too many barriers with management.
Tesla has established an insurance business, and the value of insurance could be 5 times more than just selling the car by itself. The margin from the insurance business could be bigger than the revenue from full self driving software, face lower barriers to adoption and reduce costs to customers.
At the Cybertruck launch event, keen observers are looking at the specifications and comparing the 4680 battery with 2170 batteries used in various Tesla models.…
Tesla is leading the automotive industry in innovative manufacturing. EVs key focus is weight reduction. Will others catch up. The conclusion is Chinese will, but…
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