In 10 years, virtually every car company on the planet will be delivering cars, SUVs, minivans and pick up trucks that will compete with Tesla. They already have established production factories around the world -- nothing too build.
This is an inaccurate picture of automotive production. It is true that some production hardware can be re-used. Body panel stamping is probably the most obvious example.
However, much of the other hardware used to build gasoline engines and transmissions is just dead weight. Honda can’t simply switch its K-series engine plants to PM electric motors. The clean rooms used to make CVTs become useless.
New production lines have to be built to make electric motors, batteries, and inverters. Workers have to be re-trained.
They already have distribution. They already know how to run a car company. They will put incredible price pressure on Tesla given that currently Tesla can charge whatever they want given they have no competition. But, despite being able to charge whatever they want, they lose money on every car they sell.
Tesla actually can’t charge “whatever they want”. The pricing of Model 3, for example, is roughly equivalent to what German luxury brands charge for their smaller sport sedans.
Also, Tesla “loses money” because of R&D costs and partly because of expansion.
Have you and others bothered to sit down and really take a hard look at their financial statements? If not, it's highly recommended before you put another dollar into the company.
It’s not hard to understand how Tesla works from a financial standpoint. The basic model is: Demonstrate product generation X, use sales of product generation X to get the financial markets to fund generation X+1 products through a combination of equity and debt offerings. Repeat with each successive generation, until sales of product can sustain the company without the need for outside funds.
This is all very obvious from the cash flow statements in Tesla’s filings. The Billions of $ spent on R&D and manufacturing facilities are financed through periodic equity and debt offerings. Products like Model S and X bring in some cash to cover some R&D and SG&A, but would by themselves not support rapid expansion. They are “demonstrator” products to show potential to win support for new investment.
So what makes you think, other than drinking the Kool-Aid that Tesla stock will be at $1,000/share in 10 years?
Implying that people here are stupid (the “Kool Aid” reference) is unnecessarily hostile/insulting.
Nothing makes me think that Tesla “will” be at $1000/share. Uncertainty is part of investing. The certainty of “will happen” has sunk many investors. It’s a gamble that Tesla can manufacture product much more effectively than others in the long run and I make no pronouncement other than that this is a gamble.
Invest in TSLA only what you can afford to lose. That’s my advice, which has not changed since joining the forum here.
