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BMW sales are strong. They surpassed Mercedes so far this year in the US. BMW has plans to double their current production to about 3 million units in the next 5 years. They are building two new production plants. One in Hungry. Expanding their Chinese plant and currently expanding their US plant.
Have a very aggressive plan for electric vehicles. (All models will have PHEV option by 2025).
They have ~ 1 billion due next year, over 2 billion in cash, and massive profits from Model 3 coming in starting next quarter. So cash flow will be turning positive soon and enough cash to pay off any debts necessary in the near term.
I voted Tesla because they are going to have to deal with some serious non-operating losses. Musk tweeted false information about a private buyout to "burn the shorts" which he tweeted about a couple days before. You can be sure that the institutional investors that were short at the time of the tweet are going to sue Tesla (and presumably win). There's also going to be some sort of SEC disciplinary action.
Musk has a second problem at an individual level. He publicly announced his purchase of $10m in shares through twitter. We have since learned that at the time of his purchase, he was in negotiations with the Saudi Sovereign Wealth fund regarding a buyout. That's insider trading at a level that's orders of magnitude worse than what many people have gone to jail for. To make matters worse, he tweeted basically everything needed to get convicted. Its going to be hard for the SEC to look the other way given how publicly this all played out.
Couple these non-operating issues with the fact that they haven't turned a profit and its going to be tough to for Tesla to avoid a reorganization. Bond holders also might prefer for the company to enter a quick chapter 11 and come out with the equity of a visionary company at the end of the ordeal. Its important to remember, bankruptcy doesn't mean the Company or its operations vanish.
Lol, at best Musk personally might get fined, not Tesla.
No. I don't agree at all. Car manufacturers have an astounding amount of patents and IP. It's why we're not flooded with Chinese cars.
My point is that Tesla stock is priced as if it's a tech stock. They have been able to raise money to fund a loss-making operation by selling stock at extremely inflated values. I don't see how that can possibly continue in the long term. Tesla has nothing in their IP patent portfolio to keep the huge automobile manufacturers out of their EV market space. It's not like Xerox with a patent on the photocopy machine or Polaroid with a patent on instant photography. It's pretty clear that Tesla isn't the leader in autonomous vehicles with the huge dollars Google is pumping into the technology and all the money the big auto manufacturers are spending on R&D in that space. Tesla isn't disruptive technology.
Agree on the tech stock valuation, that cannot sustain without significant changes in cash flow soon.
I also agree I doubt Tesla is the leader in "fully autonomous" driving tech (L5). The payout for that level is many years away I believe. However, they are the leader in L2/L3, and will be profiting off of that investment in the near term.
Tesla is disruptive. I mean, other car manufacturers are admitting that much now (literally stating this), as they begrudging invest more in EV technology. You can say building cars with electric motors is not new tech, and I can see that, but making them with enough range that people want to buy is absolutely disruptive. Sucking up huge % of the pricier car market is disruptive if not innovative.
I expect other manufacturers to catch up on most things Tesla is doing pretty quickly. There are 3 however that Tesla has a lead that I don't expect it will lose anytime soon:
1) Battery tech - they and Panasonic are way ahead here, maybe 5 years ahead in terms of performance / cost combination. And of course they will keep improving, will the rate slow down enough for others to catch up?
2) Software - more generally the AI and also UI, simply because so much of that talent is in Silicon Valley. Hard for BMW to match that.
3) Brand - whether its based off anything you deem significant, the brand has huge value now.
Bankrupt, or bailed out by their home government, or bought for scraps after stock crashes, you get the idea.
Make a vote, and explain why you think so.
IMO Tesla would be a bad guess, growing very rapidly with high margins, and have financial support from big spenders (including VW apparently) to value them at over 60 billion. But if stock crashes, it could happen.
I would look at ones on sketchy financial ground with sensitive demand for vehicles, or low margins. Fiat Chrysler would be a decent guess.
BMW would be a decent guess as they are smaller size with a target market being directly hit by the newcomer (Tesla) which could punish their margins.
Ford is in a general downtrend, but still hugely profitable on their trucks, but that is really their main business now, so they would be in trouble if that market were to be disrupted (ahem, Tesla pickup). If that happened it wouldn't be for 7-10 years from now though.
I guess I would go with BMW for now. In 5 years.
Ford will never go bankrupt. They are so solid with their company, and investments. They didn't take a dime of bailout money.
Tesla cars turn a profit. Tesla as a company doesn't because they keep putting money into expansion (like the supercharger network that doesn't make a cent, the Gigafactories which are not online yet and the R&D for the Semi and roadster). But the cars themselves do in fact turn a profit at the prices they sell at.
Saying they don't is like saying that Ford doesn't turn a profit on the new F150 because it cost them a couple billion to develop it so they can't turn a profit yet...
Why Americans want a new American company to fail is beyond me, but the insulting behavior of supposed auto fans is amusing. A scam? The cars are real, they are being delivered and they work. No pyramid scheme ever delivered any actual product, and by definition, can't.
It is simple business. As a multiple business owner, I can tell you that your logic is flawed. A particular product being in the black by looking at only production costs does not equate to a business being profitable. This is simple business economics.
I don't want them to fail. I don't care either way. I don't have a Tesla, I have no desire to have a Tesla and I don't see me ever having an electric vehicle of any brand. Like most Americans, they do not and probably will not any time in the near future fit into my driving habits or style. So it does not make a bit of difference whether they succeed or fail as far as I am concerned.
Quote:
Originally Posted by ZeApelido
The adoption rate of EV's is already high enough to boost their production globally.
Why would Tesla have to invest enough to get most people to convert EVs? Are you saying they need to have 90% market share??? I would presume other companys would be taking some of that market share (and have to spend money to get there).
You act as if it would be impossible to add more cheap energy generation to the grid if needed. It wouldn't. And it would still be marginally cheaper than paying for gas.
In no way did I say they need to reach that much market share. The problem with Tesla and really EV's in general is they are going to continuously require heavy investment in research and development. So much so, it will be a constant burden on the company. To overcome it, they have to attain more market share to get production up to a high enough level so sales will generate enough revenue to fund the R&D, normal business operational overhead and still produce a profit. On top of all of that, most people consider them to be too expensive. To attain more market share and boost sales, prices need to come down which of course, reduces their ability to increase profits. I don't see it happening soon enough to keep investors from bailing out. They need a large amount of investment capital to keep going for now and most investors do not want to wait for 10 years to see if maybe the company can become profitable.
The more likely scenario would be a large car company buying them out at some point to get their technology and putting that technology into their existing line of vehicles.
What I am saying is I don't see Tesla as a company existing 10 years from now.
Ford will never go bankrupt. They are so solid with their company, and investments. They didn't take a dime of bailout money.
The sold off a lot of stuff, mortgaged the company including the logo, and even then took money from the government for operations, like many other large manufacturing firms. Remember, the problem in 2005-2008 was not a mismanagement of these large companies, but the drying up of the credit market and banking fiasco that caused manufacturing companies to not have the credit to develop and manufacture product. It was a failure of banks to lend like they had been doing that cause more than just the auto manufacturers to need help.
Although Ford did not receive TARP funds, it did receive government loans. These were critical because banks were not lending during the financial crisis. It requested a $9 billion line-of-credit from the government. In return, it pledged to spend $14 billion on new technologies.
On June 23, 2009, Ford received a $5.9 billion loan from the Energy Department's Advanced Technology Vehicles Manufacturing program. In return, it pledged to accelerate development of both hybrid and battery-powered vehicles, close dealerships, and sell Volvo.
So while they didn't receive TARP funds, they still needed money to move forward.
It is simple business. As a multiple business owner, I can tell you that your logic is flawed. A particular product being in the black by looking at only production costs does not equate to a business being profitable. This is simple business economics.
I don't want them to fail. I don't care either way. I don't have a Tesla, I have no desire to have a Tesla and I don't see me ever having an electric vehicle of any brand. Like most Americans, they do not and probably will not any time in the near future fit into my driving habits or style. So it does not make a bit of difference whether they succeed or fail as far as I am concerned.
In no way did I say they need to reach that much market share. The problem with Tesla and really EV's in general is they are going to continuously require heavy investment in research and development. So much so, it will be a constant burden on the company. To overcome it, they have to attain more market share to get production up to a high enough level so sales will generate enough revenue to fund the R&D, normal business operational overhead and still produce a profit. On top of all of that, most people consider them to be too expensive. To attain more market share and boost sales, prices need to come down which of course, reduces their ability to increase profits. I don't see it happening soon enough to keep investors from bailing out. They need a large amount of investment capital to keep going for now and most investors do not want to wait for 10 years to see if maybe the company can become profitable.
The more likely scenario would be a large car company buying them out at some point to get their technology and putting that technology into their existing line of vehicles.
What I am saying is I don't see Tesla as a company existing 10 years from now.
Okay, reading through all that, it seems your main point to why they won't succeed is they will have to pour in so much money into R&D for many years, so they won't be profitable anytime soon.
Why do you think they have to keep pouring so much money into R&D? If they ramped down R&D investment today, they have the infrastructure to build 500,000 cars / year at 10-20% margins. Not a huge company, but profitable. They already have that market demand at the current vehicle cost levels. Obviously they will likely spend money trying to bring new models that are cheaper, but they don't have to from my point of view.
Ford will never go bankrupt. They are so solid with their company, and investments. They didn't take a dime of bailout money.
While Ford Motor Company didn't take bailout money, their financial arm Ford Credit, most certainly did.
Also, I think you need to do some research on how Ford was able to avoid taking bailout money. It wasn't because their company was so strong they didn't need it, it was because they took out $23,000,000,000 in debt and leveraged every asset they had in order to restructure because they were at death's door back in 2006. It was an absolutely genius move by Allan Mulally, along with instituting the "One Ford" plan which saved the company billions, while bringing better products.
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