Amazon makes more than half its income on AWS (a high growth/high margin business). I’d assume prime (online) services are also a large part of the non AWS income.
Are tesla non-car ventures a significant fraction of the income or revenue?
Here’s a video especially for you.
He predicts that in 2030, Tesla will produce 20 millions cars per year and deliver $1.5 trillion revenue.
With 1 billion outstanding shares, that’s 50 shares per car produced, or $1’500 revenue per share (possibly $150 earnings per share).
Of course, he’s pulling these numbers out of his ass, but he himself owns 5000 shares and makes a Tesla video almost every day, so I’m sure he has put some thought into it.
What do you think? Are these numbers completely unrealistic?
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Why only 1 billion shares? That’s what they’ve (almost / rounded) outstanding today. An increase of about 50% to 5 years ago (adjusted for the stock split). At their historic/current rates of dilution, they are going to have to have more than 2 billion stocks by then.
…or 75’000 USD per car?
Is that figure in tomorrow’s dollars - or today’s? Now, since we don’t know what the USD is going to be worth then, let’s assume it’s current dollars. The average sales price of a new (passenger) car in the U.S. today is approximately just half of that 75’000 USD figure. And that’s with the luxury manufacturers selling cars that Tesla just has been unable to match in quality so far.
Sure, sales price doesn’t equal revenue for a car, especially if you’re planning to sell software upgrades. So what has their most recent revenue per sold unit has been? Between 50’000 and 60’000 USD.
So… are you going to believe they’re going to become the biggest car manufacturer in the world (in units), which they’d likely have to to achieve that 20 million unit sales goal - by having higher average price tags than today?
Side note: So far, they just haven made either heavy vehicles and/or luxury vehicles to justify that.
Why am I saying they need to become the biggest car manufacturer by then 2030, to achieve these numbers?
Tesla will either have to crowd out existing manufacturers substantially to do so - and their ability to do so remains to be seen. Are they going to do it at 55k per car, on a world wide basis?
Or the market has to grow.
So let’s talk about “peak car”. According to the international organization of motor vehicle manufacturers, sales of cars have peaked a few years ago.
But there’s more detailed numbers on a per country and region basis. What you can observe is:
- Sales of cars have overall relatively flat compared to 15 years ago, not only throughout the developed world but across all regions.
- The effects of economic crises and unemployment seem to be clearly reflected in the figures and trends, as seems exemplarily evidenced in figures for the US, EU and Brazil. The stock markets might have digested the impact of COVID easily so far - but I remain very skeptical about the average buyer of a car and think COVID will likely dampen demand for cars for a few years.
- There is one obvious exception that has bucked the trend in markets bigly: China. Without China alone, we would have seen declining car sales for years already. Today, almost three in ten cars are sold in China alone. And they (maybe somewhat ironically) seem to have dealt with COVID harshly and swiftly - but emerged very well from it.
Do you believe developed Europe will abandon their domestic car manufacturers and buy American cars in the future - which might be fancy but are otherwise rather crappily built?
Do you believe the European states will let Tesla largely take over that market?
Chinese consumers might have certain preferences for foreign goods. But do you believe that China will let Tesla take over and dominate their domestic market?
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tl;dr
- Tesla are a small high-growth player in a low-growth (or rather no-growth) market.1
- Their current valuation is already astronomical. Them taking over the biggest share of that market seems already priced in.
1 And the one (relevant country car) market that isn’t low-growth but isn’t only growing substantially but already has the world’s biggest electric car stock , isn’t a free and open market economy - but a highly protectionist one, therefore being at odds with the U.S. Which is unlikely to change under the incoming new president.
I’ll pass, thanks.
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You could save yourself the whole rant if you saw the video, he calculated the car price at $35’000, so very affordable for a car that is cheap to service and recharge.
The remaining revenue should come from other areas: solar, battery packs, taxi fleet, in-car entertainment, licensing deals, etc.
Maybe you just wait until the Berlin factory is up and running to talk about build quality? In America they also scoffed at Japanese cars and look what happened…
Regarding peak car, sure, in cities car is bad. But I think the recent urbanisation trend could be slowed down by covid. Suddenly you have many more options to work remote, so why not live somewhere without a neighbour over your head?
Plus, I think already now some people are starting to postpone their car purchase until EV prices go down. So we might see a slump in ICE car sales in the following years, which is not going to be fully filled by EVs due to supply problem. I think the problems for ICE car manufacturers might just pile up.
I’m 100% sure that Musk is an exceptional entertainer 
…
Thanks - I assumed that was indeed just the automotive sales. But then…
35’000 USD x 20 million units = 700 billion USD.
That - literally - doesn’t (yet) add up with…
It rather echoes SwissMustachian’s suggestion that the non-automotive business could be as big as the automotive revenue.
…all of which amount to a small if not negligible share of their revenue today.
Whatever the history of Japanese cars, literally no comparative review I’ve seen for Tesla claimed they were particularly well-built or luxurious. Quite the contrary.
I would rather say prophet then 
https://www.youtube.com/watch?v=uywsu-hF78A
So Tesla’s non-car-sales revenues should make up 800 billion USD in 10 years.
That is about as much Amazon, Apple and Google/Alphabet today. Combined.
Of course that’s with a conservative estimate of 1.5 trillion USD revenue overall.
“Could be two or three times higher than this” though, couldn’t it?
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You have a point, he could provide more detail to these estimates. For sure he mentioned it in some of earlier videos, I just can’t find it now.
But even with $700 billion revenue and $100 billion earnings ($100 per share), the current share price of $700 is not totally absurd. You know, no need to take it so emotionally. Nobody forces you to invest, and I don’t think I ever suggested it to anyone. It’s just what I did, and we will see where it goes.
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Well, Tesla and bitcoin are both very emotional, especially if you don’t own any share/coin.
You guys don’t worry, I’m not taking it emotional.
…no less if you do own them, so it seems.
I am sure they’re less “emotional” and more straight business, if you’re in the business of selling personal finance online courses or expensive Patreon subscriptions. 
Even those numbers still imply they are absolutely going to dominate the industry.
Not only in unit sales but also in profitability. I only quickly googled it, but even the best big car makers have operating margin of 10% or less.
They’re pulling them out of their asses and Elon’s twitter feed.
Regarding the “additional” revenues, where are they supposed to come from?
Let’s look at Tesla’s Q1-Q3/2020 results (millions of USD)
| 20792 | Total revenues |
|---|---|
| 837 | Energy generation and storage sales |
| 405 | Energy generation and storage leasing |
| 1628 | Services and other1 |
| 1179 | Automotive regulatory credits |
| 15578 | Automotive sales without resale value guarantee |
| 393 | Automotive sales with resale value guarantee |
| 772 | Automotive leasing |
1 Services and other is part of their automotive segment and includes “non-warranty after-sales vehicle services, sales of used vehicles, retail merchandise, sales by our acquired subsidiaries to third party customers, and vehicle insurance revenue”
I am not going to dissect the latter further. A lot of this services, just like the regulatory credits, will be dependent on them actually making cars (which I’d consider the last three items, totalling 16743 millions of USD).
But just for the sake of the argument of how diversified they are as a company and how profitable and high-margin their “add-on” business supposedly is: Let’s say everything else than the last items is “other revenues”. How big is that today?
Extrapolated to a full year, everything not “actually making” cars accounts for about 20% or 5 billion USD in revenues.
That’s round about the same figure like Empresas CMPC (Compañía Manufacturera de Papeles y Cartones). A Latin American manufacturer that makes the toilet paper to wipe one’s ass with, after having pulled one’s revenue estimates for Tesla out of it.
How that figure is supposed to grow to larger by 2030 than AAPL, AMZN & GOOG combined today (as they claim on YouTube) would be very interesting to hear - yet probably beyond me.
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So let’s do my own back-of-the-envelope calculation:
10 million cars (why not?)
x 35’000 USD revenue per car (why not?)
= 350 billion USD total revenue from making cars
x 10% operating margin (among the best - why not?)
= 35 billion USD operating income
= 35 billion USD net income (generously all of it, why not?)
/ 2 billion shares outstanding
= 17.5 USD earning / share from making cars
What about their other businesses? The awesome insurance, software and robo-taxi stuff?
Let’s assume that it also contributes 20% of total revenues (or another 88 billion USD).
Half of it costs nothing to make (reg. credits), the other half 50% of revenues (software?).
That would add another 65 billion USD to income:
35 billion USD net income from “making cars”
+ 65 billion USD income from “everything else”
= 100 billion USD net income to shareholders
2 billion shares outstanding
= 50 USD earnings per share
* 10 P/E ratio, longer-term for car manufacturers (seems to hover around that)
= 500 USD/share price target for 2030
I’d consider that an optimistic scenario though (the only slightly “conservative” about it might be P/E ratio and the assumption that they aren’t going to be high-growth by then anymore).
On the flip side, there are enough competitors which might upend Tesla’s dominance.
Not the least of which would be AAPL (no, seriously).
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OK, and let’s say in 2030 Tesla can manufacture a car, which can drive passengers unsupervised and can do 1 million km over its lifespan of 10 years. The car would cost $25’000 of capital to produce, and then would deliver $0.10 profit per every kilometer driven (after deducting electricity, maintenance, repairs, road tolls) (1). How much would you value such a car? You pay 25k up front, and then you pocket 10k annually for the next 10 years.
(1) the profit could be higher if you factor in an app store with games & movies that passengers could consume during their ride
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Not going to watch or comment on any more videos by this Tesla shill.
He literally advertises his Patreon subscriptions with pictures of Elon Musk.
I watched a lot of his videos and was not even aware of his Patreon… where did you see ads?
Btw, @San_Francisco your views backed by alternative numbers are much appreciated
Just open the description below the video.
It‘s above the comments: lots of ref links and one to his Patreon channel.
PS: he is right on that first video in one thing though: you should do the numbers yourself, when investing in single stocks/companies. Though that should mean more than plugging one number pulled put of thin air (which he himself acknowledged in the first video linked above) into a calculator and multiply.
Notwithstanding the regulatory safety requirements that need to be fulfilled to even advertise that: You might have a good urban taxi service then (though that environment is even harder for driverless driving).
The average car user drives between 20‘000 and 25‘000 km a year in the US. In other countries such as the UK, Germany or Australia average kilometres driven seem to be between 10‘000 and 15‘000 km per car and year. And seems to be declining.
Could you explain the assumption of 100‘000km usage per year and car and its economic scalability?
I.e., how many cars are going to do that? For the average car, the km per year and car seem overestimated by a factor of 4 to 10.