I will get slaughtered by those knee deep in Tesla for posting this here but I actually think in the next 3 years Tesla will get to a fairer valuation of $300 to $400 and even so it would still be more expensive compared to the likes of apple , msft.
Just wondering where is the moat in Tesla?
Competition seems to be catching up fast, and have this feeling Lucid and eventually Rivian will end up encroaching on a lot of their sales. Not to say the traditional auto makers who start coming out with their own EVs.
When the market is flooded with EV options in a few years time, I know personally I will look around the different automaker options before I decide which to buy. In terms of design, I personally I like what lucid is coming up with ( not vested in Lucid).
anyways my point is competition for Tesla will only get more intense. Those long term put options on Tesla…are looking attractive.
just expressing my opinion here, end of the day it’s what we make from the stock that matters in our bank account.
Biggest Moat : Engineering
1.High margin due to vertically integrated processes (engineering prowess ) -tons of video on this
2. Battery tech , 4680 gonna drive down their cost of battery while competitions cant even find sufficient batteries.
3. Profits are reinvested to r&d or more factories, end game is to produce super affordable EV.
4. Startup-like culture in a 1T company , innovation is the key to success in this era.
and many more
Competition:
1. Besides Chinese EV and Volkswagen, there ain't much competition.
2. Lucid? Have you seen their car prices? 77k~169k vs 44k~120k. Paying premium for an alpha release EV?
3. Rivian? Might treat them seriously when I see some production.
For startups: ramping up production is very very difficult. The Model 3 ramp nearly cause Tesla to go bankrupt.
4. Legacy autos?
4.1 Japanese automakers aren't not too into pure EV, they prefer hybrid which cause more harm to the environment than ICE/EV. Also, more part = higher maintenance cost.
4.2 US autos like GM and Ford, they have to invest into brand new manufacturing line. Opposition from unions, lack of funds. They are losing money for every EV they sell by eating into their existing ICE sales. They are already struggling now, they might go bankrupt if their ICE sales shrink more.
When Tesla eventually comes out with a 25k model, there wouldn't be much competition. The only constraint is their production capacity.
Tesla is like a smartphone while other brands are 0G mobile phones
Additional bull cases which are great to have, but not necessarily needed for valuation:
1. FSD and possibility of robotaxi
2. Solar and storage solution
3. Tesla insurance
4. Tesla bot
New investors can wait out, wait for this taper tantrum to end. Dont have to rush to buy.
Existing investors can try to dca at key levels
