Tesla, Revisiting The Issue Of What It's Worth

Tesla's valuation remains a bit over the moon considering on Friday it closed with the stock at a whopping P/E ratio of 710 times earnings and a market cap of over 649.8 billion dollars. Those of us without a great love for Tesla or Elon Musk see this as the poster child of absurdity. By comparison, Volkswagen, which sold over 10 million vehicles last year has a market cap of $79 billion and auto giant Toyota around $246 billion.

While valued as the most valuable car company in the world, recent earning for Tesla indicates its profits were based on $518 mm of regulatory credit sales and a $101 positive gain from its Bitcoin position and sales. Strip these out and it seems that Tesla lost $181mm selling cars. Still, it is difficult to deny another major factor keeping Tesla aloft is the promise of a shit load of government money flowing from Biden's new $2 trillion infrastructure package. Many Tesla enthusiastare counting on this transfer of wealth to move the company forward. 

While Tesla sported a valuable advantage by being the first big player in the electric vehicle (EV) category it is not protected by a great number of patents. The big advantage Tesla has enjoyed with other manufacturers being slow to release EV cars is not expected to last. Much of Tesla's technology is easy to replicate and most auto manufacturers have lines of EVs finally rolling off their production lines this year and next. Many of these cars will come at far cheaper prices and Tesla's competitors will also be offering their customers service shops and trade-ins. 

Ford's New F-150 Will Challenge Tesla

This means Tesla’s first mover advantage may vanish overnight. A great deal will depend on how Tesla's new pickup truck fairs against such rivals as Ford's new electric F-150. Any sign of failure on the part of Tesla could result in a major fall from grace and bring into question Tesla's staying power in the industry (F).

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