> Tesla builds approx 2 million vehicles a year. Worldwide production is approx 100 million a year.
Unless the world enters wars of attrition, these numbers aren't relevant.
Tesla is the only non-Chinese manufacturer to have figured out how to profitably manufacture the powertrain of the future. That gives them terminal value [1]. ICE manufacturers, on the other hand, have residual value [2] plus an option on a business with terminal value.
(Caveat: none of this is stock advice. I'm not saying Tesla's valuation is right. I'm just saying this popular argument for why Tesla is overvalued doesn't hold.)
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[ 3.3 ms ] story [ 23.6 ms ] threadTesla builds approx 2 million vehicles a year.
Worldwide production is approx 100 million a year.
Unless the world enters wars of attrition, these numbers aren't relevant.
Tesla is the only non-Chinese manufacturer to have figured out how to profitably manufacture the powertrain of the future. That gives them terminal value [1]. ICE manufacturers, on the other hand, have residual value [2] plus an option on a business with terminal value.
(Caveat: none of this is stock advice. I'm not saying Tesla's valuation is right. I'm just saying this popular argument for why Tesla is overvalued doesn't hold.)
[1] https://en.wikipedia.org/wiki/Terminal_value_(finance)
[2] https://en.wikipedia.org/wiki/Residual_value