The failure of the generic EV is telling me that the average Joe Q. Public has little interest in an "electric" car.

Tesla has been successful because it's become a cult thing, just like Apple under Jobs. Powerful acceleration, yes, but so what? The electronics are very cool. Build quality is "good enough." But Musk is regarded as a god in many circles, just as Jobs was, and that's very powerful.

But, "practical?" Not in the traditional sense. Running out of juice is always in the back of your mind, but you purposely cover over it with positive thoughts about wokeness and how you are saving the planet.

Sorry, perhaps a touch cynical this time of the morning, but I'm not at all surprised that EVs are failing to catch on with the meat-and-potatoes shopper.

 

Great post - this is precisely what's going on. As an aside, Tesla now has the second highest market cap of any automaker, behind only Toyota. As of the time of this post, Tesla is valued at close to $120 billion.

 

Yep - Tesla market cap approx $120 billion and at time of my post (2:30p eastern), Ford, FCA, and GM combined are $108B. So Tesla has officially (momentarily) become worth more than the big 3 combined.

I heard an analyst this morning citing a bearish case for TSLA and he said they were worth more than VW even though VW has 30X the sales revenue of Tesla. Interesting stat.

And for one of our members who stated a "fact" about 6 weeks ago that Tesla wouldn't be profitable in Q4, they posted a $105 million profit and have been profitable in back-to-back quarters. I'm still not sure how you can post a fact when it's about something in the future, but what do I know. All I know is I hope he didn't wager his nest egg based on his ability to see into the future.

 

You bring up (mostly) good and valid points, riredale....except for one thing. It is difficult to dismiss the recent success of the Model 3. It has become a sales phenomenon...they are multiplying on area roads like pregnant rabbits.

 

Arguably that's not true since the Leaf is still the best selling BEV (although Tesla will definitely catch up really soon). BEVs like the Kona EV and Soul EV are also very popular and completely limited by supply (of batteries).

 

I've lived with this car for 7 months and haven't ever worried about range on trip. Totally overblown. If you use it mostly for commuting, it's simply a SPECTACULAR car for that purpose. Their success isn't based on it being a cult. It's based on offering the best product in their segment. Apple is the same. Best product by far in their segment. Good products drive good stock price.

 

makes sense. they started up in 03. cant imagine the shear number of manhours/years tesla put into research, development and engineering and for an OEM to match that, that's a ton of $$$$

 

How good is free cash flow as a metric if they just took out a big loan to finance new factory and/or reprogram debt?

I think for Tesla main thing is sales, that is it... to become more and more mainstream, and lower the cost of components/production. Right now operating profit or cash flow is really not a great metric because they do so many things to make it look better.

Which is also fine though, and it should not be looked at like traditional company anyway.

 

I think operational free cash flow is really the metric to look at as it really provides a metric for sustainability. The financing of a factory is what every good company should do as debt is cheap and backed by hard assets (most large manufacturers do debt financing for factories too). To be fair, they shouldn't be looked at like a traditional auto anyway. They are a hybrid tech / auto/ future autonomy company. I do think they are overvalued given the risk.

 

Generic EV didn't fail, there are no generic EVs.

 

Tesla is self funding at this point. Good for them.

"We're actually spending money as quickly as we can spend it sensibly," Musk said. "There is no artificial holdback on expenditures. Anything that I see that ... looks like it's got good value for money, the answer is yes, immediately. And then despite all that, we are still generating positive cash. So in light of that, it doesn't make sense to raise money."

Tesla just proved all its haters wrong. Here's how

By Chris Isidore, CNN Business



Updated 10:47 AM ET, Fri January 31, 2020
Less than a year ago, Tesla was strapped for cash.
In May 2019, the electric carmaker was selling debt and additional shares of stock to raise $2.7 billion to replenish its coffers. A depressed share price forced the company to pay off a $920 million bond in cash rather than stock.
The term "cash crunch" was swirling around Tesla. But not anymore.
This week, the company reported its first annual profit in 10 years as a public company.
Perhaps more significant for Tesla skeptics: the company generated $1.1 billion of free cash flow last year. That means it is no longer in danger of running through its cash or depending on investors to pump more money into its operations.
The stock has skyrocketed more than 250% over the last eight months, making Tesla the second most valuable automaker in the world by market value, behind only Toyota (TM).
When CEO Elon Musk wasasked by analysts Wednesday if the company might take advantage of its higher share price to sell additional stock to fund future growth, he dismissed the idea.
"We're actually spending money as quickly as we can spend it sensibly," Musk said. "There is no artificial holdback on expenditures. Anything that I see that ... looks like it's got good value for money, the answer is yes, immediately. And then despite all that, we are still generating positive cash. So in light of that, it doesn't make sense to raise money."
This is a radically different way of doing business for Tesla.
For much of the last decade the carmaker has used the public markets like an ATM machine. It repeatedly sold additional shares and debt that could be converted into stock to raise cash, which funded ambitious research and development efforts as well as expansion plans and basic operations.
Even with that money flowing in, Tesla was often on the edge of insolvency.
Musk admitted in a 2018 interview that Tesla was weeks away from running through its cash because it had been "bleeding money like crazy" as it ramped up production of its best-selling Model 3.
The company managed to post profits in the third and fourth quarters of that year but it was soon back in the red, reporting a net loss of $702 million in the first three months of 2019. Tesla doubters questioned whether it could ever be consistently profitable.
Shares of the stock were down 44% through the first five months of 2019.
Hitting profitability targets for the last half of 2019 would be a "Kilimanjaro-like uphill climb," Wedbush Securities analyst Daniel Ives said in a note last May.
This week, Ives freely admitted he was wrong.
"In 20 years covering tech, it's the most impressive comeback I've seen," he told CNN Business. "They've gone from doomsday to a joy ride. It's been jaw dropping. And it's reflected in the stock.""In 20 years covering tech, it's the most impressive comeback I've seen," he told CNN Business. "They've gone from doomsday to a joy ride. It's been jaw dropping. And it's reflected in the stock."

Shares rose 10% to $642 in afternoon trading Thursday, a record.
And Ives predicts more growth to come. He published a $1,000 12-month target price for Tesla, more than four times his $230 target price of last May. He said its cash position and the confidence that Tesla is no longer cash poor was behind Thursday's rally.
"Any worries about a capital raise were put to bed last night," Ives said. "They proved us, and many others who were skeptical, wrong."
Even those with a far more bearish view of Tesla shares say that its current cash position could be a game changer.

Tesla posts first annual profit
"This quarter may be seen as the moment a new genre of tech investors were waiting [for]," wrote Morgan Stanley auto analyst Adam Jonas. Tesla can now be viewed "as a profitable and cash generative tech company with a reasonably-sized market cap in the same discussion as the mega-tech platform names."Even so, Jonas' is among 15 analysts with "sell" recommendations on Tesla, according to Refinitiv. His target price for the stock is $360, 40% lower than its current valuation, and he has an "underweight," or sell rating, on the company.
Ten other analysts have holds on Tesla stock, while another 10 rate it a buy, according to Refinitiv, evidence that even with it's new cash hoard, Tesla still has plenty of skeptics left to convert.

 

Correct me if I'm wrong, folks, but didn't we have a number of posts (and even threads) in Car Chat explaining why stock-price is not necessarily a measure of a company's worth?

 

Stock price is *absolutely* a key component of a company's worth.

What has had to be explained is that just because one stock is valued at say $500 and another at say $50, it does not follow that one of the stocks is under or overvalued and nor does it mean that the higher value is any more a measure of worth than the lower value.

 

The worth of a company to me is what said company could actually be sold for. Theoretical value might as well be monopoly money.

 

Balance sheet equity is not a measure of worth. In fact it's worthless measure of value. The stock market determines value because the capital markets are efficient. Stock price over time is the best measure of worth.