Sell Tesla?

crunchman

Mattharrier said:

Swapping batteries constantly would also allow for identifying batteries that are wearing out, developing faults etc before they become problematic, as well as potentially making the recharging process take a similar amount of time as refuelling.

There might be other complications though.

There was one electric car I was, where you didn't own the batteries, but leased them from the car company (you owned the rest of the car).  The problem was it was £1200 a year to lease the batteries.  On our mileage, we were only spending about £1500 a year on petrol. That would make that electric car a total non-starter for us.  To be honest, any electric car is a total non-starter cost wise at the moment unless you are doing very high mileage.

If the battery swap idea involves a lease like that I'm definitely out.

goldtop

crunchman said:

Mattharrier said:

Swapping batteries constantly would also allow for identifying batteries that are wearing out, developing faults etc before they become problematic, as well as potentially making the recharging process take a similar amount of time as refuelling.

There might be other complications though.

There was one electric car I was, where you didn't own the batteries, but leased them from the car company (you owned the rest of the car).  The problem was it was £1200 a year to lease the batteries.  On our mileage, we were only spending about £1500 a year on petrol. That would make that electric car a total non-starter for us.  To be honest, any electric car is a total non-starter cost wise at the moment unless you are doing very high mileage.

If the battery swap idea involves a lease like that I'm definitely out.

I'm not doing high miles, and the EV is cheaper to lease over 2 years than it was to run my previous car (Lexus hybrid).

The battery leasing model was a way of lowering the initial cost, while tackling the worries of people who think they'll be on the hook for £10000 of battery replacement. Pretty much universally detested and made it more difficult to sell an EV with a leased battery. Renault (which has/had the scheme) now lets owners of leased batteries buy them outright.

crunchman

goldtop said:

crunchman said:

Mattharrier said:

Swapping batteries constantly would also allow for identifying batteries that are wearing out, developing faults etc before they become problematic, as well as potentially making the recharging process take a similar amount of time as refuelling.

There might be other complications though.

There was one electric car I was, where you didn't own the batteries, but leased them from the car company (you owned the rest of the car).  The problem was it was £1200 a year to lease the batteries.  On our mileage, we were only spending about £1500 a year on petrol. That would make that electric car a total non-starter for us.  To be honest, any electric car is a total non-starter cost wise at the moment unless you are doing very high mileage.

If the battery swap idea involves a lease like that I'm definitely out.

I'm not doing high miles, and the EV is cheaper to lease over 2 years than it was to run my previous car (Lexus hybrid).

The battery leasing model was a way of lowering the initial cost, while tackling the worries of people who think they'll be on the hook for £10000 of battery replacement. Pretty much universally detested and made it more difficult to sell an EV with a leased battery. Renault (which has/had the scheme) now lets owners of leased batteries buy them outright.

That does raise the question of how you were funding your previous car.  If you are not doing high miles, buying a decent second hand car has to be cheaper than any lease I know of.

goldtop

^ It was an RX, bought outright. It was, indeed, decent. But it still drank expensive dino-juice.

RandallFlagg

Sell Tesla?

Stock bounces 10% to all time highs on news that Hertz will buy 100,000 electric cars from Tesla

I own Tesla as a small part of my pension (S&P500) and ISA (Baillie Gifford American B )

Those who own direct shares must be reaching for the cigars

FastEddie

There was an interest piece on Tesla in the Telegraph or FT this weekend (can't remember which).
There margin is 30%!
Apparently the rest of the auto sector struggle to make >9%.
Tesla have been likened to Apple in the way they overprice but win by selling the 'cult status' instead of a simple product.

Also an electric motor must be cheap as chips to buy compared to a really nice V6 or similar. 

I'm not sure the PE multiples on Tesla at $900 but I'd say it's punchy.
The Model Y has just been opened for orders and a new plant in Germany will improve quality for the European market cars.

I am not a fan of the Tesla styling. Polestar nail it for me but the infrastructure stops me buying one. 

ToneControl

FastEddie said:

There was an interest piece on Tesla in the Telegraph or FT this weekend (can't remember which).
There margin is 30%!
Apparently the rest of the auto sector struggle to make >9%.
Tesla have been likened to Apple in the way they overprice but win by selling the 'cult status' instead of a simple product.

Also an electric motor must be cheap as chips to buy compared to a really nice V6 or similar. 

I'm not sure the PE multiples on Tesla at $900 but I'd say it's punchy.
The Model Y has just been opened for orders and a new plant in Germany will improve quality for the European market cars.

I am not a fan of the Tesla styling. Polestar nail it for me but the infrastructure stops me buying one. 

bear in mind that Tesla cars are currently effectively subsidised by governments in the UK and US, probably elsewhere

I test drove the top of the range Tesla, and it only nearly matched the experience of a mid-range BMW

ToneControl

RandallFlagg said:

Sell Tesla?

Stock bounces 10% to all time highs on news that Hertz will buy 100,000 electric cars from Tesla

I own Tesla as a small part of my pension (S&P500) and ISA (Baillie Gifford American B )

Those who own direct shares must be reaching for the cigars

your gut feel should tell you that shares in a car company don't normally go up that much on news of such a small order
I normally look for an exit point to sell when I have shares that do this.

you haven't got large exposure, so it's fine, but I'd feel very nervous if I had a large exposure to Tesla

FastEddie

ToneControl said:

FastEddie said:

There was an interest piece on Tesla in the Telegraph or FT this weekend (can't remember which).
There margin is 30%!
Apparently the rest of the auto sector struggle to make >9%.
Tesla have been likened to Apple in the way they overprice but win by selling the 'cult status' instead of a simple product.

Also an electric motor must be cheap as chips to buy compared to a really nice V6 or similar. 

I'm not sure the PE multiples on Tesla at $900 but I'd say it's punchy.
The Model Y has just been opened for orders and a new plant in Germany will improve quality for the European market cars.

I am not a fan of the Tesla styling. Polestar nail it for me but the infrastructure stops me buying one. 

bear in mind that Tesla cars are currently effectively subsidised by governments in the UK and US, probably elsewhere

I test drove the top of the range Tesla, and it only nearly matched the experience of a mid-range BMW

the subsidies are working well for Tesla in that they are building a cult following. Very clever. 

Problem with trying to time the market is that you can't.
If you want to hold this stock, buy it. It's a long term play. I am seriously considering adding it to my SIPP.

RandallFlagg

ToneControl said:

RandallFlagg said:

Sell Tesla?

Stock bounces 10% to all time highs on news that Hertz will buy 100,000 electric cars from Tesla

I own Tesla as a small part of my pension (S&P500) and ISA (Baillie Gifford American B )

Those who own direct shares must be reaching for the cigars

your gut feel should tell you that shares in a car company don't normally go up that much on news of such a small order
I normally look for an exit point to sell when I have shares that do this.

you haven't got large exposure, so it's fine, but I'd feel very nervous if I had a large exposure to Tesla

Tesla are not a traditional car company, that's what my gut feel tells me, they are a $1 Trillion technology company that don't advertise.

ArchtopDave

RandallFlagg said:

Sell Tesla?

Stock bounces 10% to all time highs on news that Hertz will buy 100,000 electric cars from Tesla

I own Tesla as a small part of my pension (S&P500) and ISA (Baillie Gifford American B )

Those who own direct shares must be reaching for the cigars

I have done likewise for a long time now via another Baillie Gifford fund (Scottish Mortgage), which had the biggest holding of Tesla outside of the USA. It was so large that, when Tesla last did a share split, Scottish Mortgage had to sell over a billion pounds worth of Tesla shares in order to stay within the requirements of the fund's covenants. I've taken profits a few times over the years. The value of my remaining current holding is over 90% pure profit.

ToneControl

good luck to anyone who made money on this, but for the long term, there are some simple facts to bear in mind, especially if you are investing heavily:

• Typically you'd want to see the tangible value per share above the share price. If it's a promising company in the early days, you might pay more than the actual value of the company's assets. As you can see from the graph above, Tesla sp already went parabolic, it's 30 times higher than the underlying value. Share price is currently around $1000, tangible value to price ratio is 37.50. This is highly unusual. DYOR
• Max target PE when you buy a share is usually about 20, you get a 5% return per year with that. Ideally it would be 10 or less, to get a 10% or better profit per year. Tesla PE = 474, which would give you an annual profit of 0.2%
• Current share valuation assumes that Tesla is worth more than about half of the largest car companies in the world combined. See earlier in this thread for the details. Who could claim that Tesla will take over such as massive share of the world market with a non-unique product?

All these things would indicate that (assuming that Tesla will not take over half the global car market) that the share price is driven by speculation and "momentum trading". The end game for that comes when people realise that the price they paid does not generate any material profit, and share prices stop rising.

ArchtopDave

Interestingly, I've just had a look at the latest Scottish Mortgage company report. The fund still has quite a substantial holding of Tesla in terms of value within the fund, but has sold a large percentage of it's holding in the last year.

RandallFlagg

ToneControl said:

good luck to anyone who made money on this, but for the long term, there are some simple facts to bear in mind, especially if you are investing heavily:

• Typically you'd want to see the tangible value per share above the share price. If it's a promising company in the early days, you might pay more than the actual value of the company's assets. As you can see from the graph above, Tesla sp already went parabolic, it's 30 times higher than the underlying value. Share price is currently around $1000, tangible value = $37.50. This is highly unusual. DYOR
• Max target PE when you buy a share is usually about 20, you get a 5% return per year with that. Ideally it would be 10 or less, to get a 10% or better profit per year. Tesla PE = 474, which would give you an annual profit of 0.2%
• Current share valuation assumes that Tesla is worth more than about half of the largest car companies in the world combined. See earlier in this thread for the details. Who could claim that Tesla will take over such as massive share of the world market with a non-unique product?

All these things would indicate that (assuming that Tesla will not take over half the global car market) that the share price is driven by speculation and "momentum trading". The end game for that comes when people realise that the price they paid does not generate any material profit, and share prices stop rising.

I don't disagree with any of that, I don't and will probably never be bothered to try and become a single stock picker, I am a convert of index fund investing for long term wealth building.

But, your opening post questioned whether an owner of Tesla stock should sell because some Tesla bear downgraded his outlook. The answer was no, not yet as I posted in reply on the same day. it would have been a costly mistake, as many of the noisy short sellers found out when the got burned. Yes all the data suggests the Tesla price is hugely over valued but so it was when you posted the question in July 2020. Which really highlights just how hard it is to successfully time the market and pick individual stocks but if I owned Tesla shares I would still be holding them for the foreseeable based on gut feel rather than technical analysis.

ToneControl

RandallFlagg said:

ToneControl said:

good luck to anyone who made money on this, but for the long term, there are some simple facts to bear in mind, especially if you are investing heavily:

• Typically you'd want to see the tangible value per share above the share price. If it's a promising company in the early days, you might pay more than the actual value of the company's assets. As you can see from the graph above, Tesla sp already went parabolic, it's 30 times higher than the underlying value. Share price is currently around $1000, tangible value = $37.50. This is highly unusual. DYOR
• Max target PE when you buy a share is usually about 20, you get a 5% return per year with that. Ideally it would be 10 or less, to get a 10% or better profit per year. Tesla PE = 474, which would give you an annual profit of 0.2%
• Current share valuation assumes that Tesla is worth more than about half of the largest car companies in the world combined. See earlier in this thread for the details. Who could claim that Tesla will take over such as massive share of the world market with a non-unique product?

All these things would indicate that (assuming that Tesla will not take over half the global car market) that the share price is driven by speculation and "momentum trading". The end game for that comes when people realise that the price they paid does not generate any material profit, and share prices stop rising.

I don't disagree with any of that, I don't and will probably never be bothered to try and become a single stock picker, I am a convert of index fund investing for long term wealth building.

But, your opening post questioned whether an owner of Tesla stock should sell because some Tesla bear downgraded his outlook. The answer was no, not yet as I posted in reply on the same day. it would have been a costly mistake, as many of the noisy short sellers found out when the got burned. Yes all the data suggests the Tesla price is hugely over valued but so it was when you posted the question in July 2020. Which really highlights just how hard it is to successfully time the market and pick individual stocks but if I owned Tesla shares I would still be holding them for the foreseeable based on gut feel rather than technical analysis.

well yes, the bears got stung

But the fact remains, it's a meme stock, vastly overpriced, hence the confidence of those massive shorters
NB: apologies, 37.5 is price to value ratio for Tesla, I read the data wrong


Even the BBC covered this today https://www.bbc.co.uk/news/business-59045100

Tesla is now worth as much as the combined market cap of the nine largest carmakers around the world, including automotive giants like Volkswagen and Toyota.

Yet Tesla makes up less than 1% of global car sales. 

next biggest market cap is Toyota 


Tesla: Share price is currently around $1000, Price/value ratio = 37.5, Tesla PE = 474, so annual profit of 0.2%
Toyota: Share price is currently around $172, Price/value ratio = 1.10, Toyota PE = 9.1, so annual profit of 11%


for underlying value of tangible assets, compared to Toyota, Tesla is over-valued by 52 times, i.e. 5208% over-valued
for underlying PE, compared to Toyota, Tesla is over-valued by 55 times

Danny1969

I've no interest in shares cos I'm not interested in building wealth but I can see why Tesla is valued so much. 

CEO -  Musk has the best track record. Zip2, Paypal, Tesla, Space X, Solar City 

No one has started a large scale successful car business in the last 100 years except Musk.
No one has started a successful rocket company that manufacturers it's own parts domestically and is awarded NASA contracts except Musk. 

Those 2 things alone make him more successful than Jobs.

Profit .... you can be a busy fool with a huge turnover but very little profit. Ford for example. Tesla have the worlds largest casting machines and can make a car far cheaper than they otherwise could. The scale of these things is staggering. As is the scale of the Giga factories. 

Tesla literally changed the motoring world. They proved an electric car could be fast and fun with the Roadster.  Then they proved it can be a desirable executive car with the model S. Then they proved it could be a car for the masses, model 3. Then they proved it was game over performance wise for the ICE powered cars with the Plaid. 

Amazing achievements really. 

crunchman

This is an old thread, so I may have said this above at point.

For me, the long term problem with Tesla is that they seem to be tied to battery technology.  If there is any sense in the world, we will be moving towards hydrogen - although it looks increasingly likely that we will end up with a VHS/Betamax situation where we end up using an inferior technology.

Also, there needs to be a massive shift away from car usage.  That will reduce the market for cars.

Danny1969

crunchman said:

This is an old thread, so I may have said this above at point.

For me, the long term problem with Tesla is that they seem to be tied to battery technology.  If there is any sense in the world, we will be moving towards hydrogen - although it looks increasingly likely that we will end up with a VHS/Betamax situation where we end up using an inferior technology.

Also, there needs to be a massive shift away from car usage.  That will reduce the market for cars.

Ironically betamax failed because it had no range .... very short recording time compared to VHS. 

That is Hydrogens problem, no domestic storage or ability to easily generate means no range except for compound vehicles like buses etc who can have safe storage. 

goldtop

crunchman said:

This is an old thread, so I may have said this above at point.

For me, the long term problem with Tesla is that they seem to be tied to battery technology.  If there is any sense in the world, we will be moving towards hydrogen - although it looks increasingly likely that we will end up with a VHS/Betamax situation where we end up using an inferior technology.

Also, there needs to be a massive shift away from car usage.  That will reduce the market for cars.

The long-term problem with Tesla is that Musk is not immortal. Watching the EV market, listening to Musk and to me it's clear that he's the type of egomaniac that drives the fanbase. The fanbase is (some) EV drivers and many investors. Imagine what would happen to Tesla share prices if Musk stops leading it.

EVs are here to stay, but we see them through the lens of our ICE-based lives. The mass market will change and cities will eventually mandate small lightweight EVs. I've said many times that 75kg of human using 1500kg of machine to commute at an average speed of 30kmh is daft waste of energy. An EV with a 5-10kW motor and 10kWh battery will work fine in cities.

crunchman

Danny1969 said:

crunchman said:

This is an old thread, so I may have said this above at point.

For me, the long term problem with Tesla is that they seem to be tied to battery technology.  If there is any sense in the world, we will be moving towards hydrogen - although it looks increasingly likely that we will end up with a VHS/Betamax situation where we end up using an inferior technology.

Also, there needs to be a massive shift away from car usage.  That will reduce the market for cars.

Ironically betamax failed because it had no range .... very short recording time compared to VHS. 

That is Hydrogens problem, no domestic storage or ability to easily generate means no range except for compound vehicles like buses etc who can have safe storage. 

Generating hydrogen can be done easily enough.  Fundamentally all you need is electricity and water.  TFL is buying in hydrogen extracted using wind power for some of their new hydrogen powered buses.

Hydrogen could actually be extracted locally in this country.  We have an electricity grid, and we have plenty of water.  We don't need to transport it hundreds of miles from a refinery like we do with petrol/diesel (lessens the number of HGV drivers needed!).

Hydrogen also solves the problem of storing intermittent renewables.

Extracting hydrogen from water isn't a very efficient process, but it's still cost effective against the alternatives, as solar prices have plummeted.  Solar panels dropped in price by 85% per KWh between 2010 and 2020.

When you look at the price the government has agreed to pay for electricity from Hinckley Point C, splitting hydrogen from water using solar is definitely cost effective.  That deal was badly negotiated, but solar is less than a third of the price of nuclear.  You also save massively on expensive battery storage on the grid by using hydrogen as your energy store.  Plus you can save on the cost of installation of millions of charging points.