Tesla's sales are expected to reach 1 million car in 2021. The company's valuation is $1 trillion. That's $1 million for each car that it produces this year. Is that too high, or not high enough?
More like 900.000 cars in 2021 I believe. But close enough for this.
Rivian will make around 1000 cars in 2021 and is valued at 127 billions. Which would be $127 million for each car.
Which is ridiculous when the Rivian upstart is valued so much compared to the experienced Tesla which even the boss of VW says is much better at volume production than they are. Rivian hasn't started on volume production yet.
But looking back when valuing growth companies does not give me much. I would much rather look forward.
With their valuation Rivian should have enough money to fight many obstacles.
Their cars are expensive - like the first Teslas Models S and X. It was first when Tesla introduced the much lower priced Models 3 and Y that their revenue and profit started to soar. Rivian seems to be priced like their expensive pickup and SUV models will sell much better than Teslas much lower priced cars.
To me this sounds like investors did not even to the most basic napkin maths on Rivian. Perhaps they missed out on Tesla and now jump in without looking hoping that this EV company will be as successful as Tesla.
Tesla's sales are definitely growing, and the company deserves a higher valuation than traditional car makers. The question one ponders is how high it should be.
Tesla said years ago that they planned to increase the car production by 40% per year until 2030. So far they have exceeded their yearly goals. Which is to make 20 mill cars per year in ca. 2030. And recently they guided a 50% yearly growt from here on. With fixed (?) costs not growing by much this make for interesting graphs when projecting revenue and profit in the years to come.
Then you have Tesla Energy and their very big batteries like the one in Hornsdale. The energy sector has a much larger TAM than the car industry. Other companies make large battery packs too. But how many can they make.
Just like batteries in cars - batteries in megapacks for Energy balancing need to come from somewhere. And this is where Tesla shine in my book. Not only are they building battery cell factory capacity greater than anyone else. They are also building a factory making the machinery needed to build battery cell factories. Without tons of batteries available how will the competition beat Tesla in production capacity?
And then you have the software part of Tesla. Monthly subscriptions is the holy grail for the valuation of many tech companies. Tesla already have some income here from premium multimedia and autopilot functions in their cars.
The autopilot in my car is pretty shitty compared to the closed beta of the new generation autopilot being tested by a closed beta test group. But I'm already there that I would not consider a car without this function. So I will gladly pay a monthly fee or a large upfront amount. The amount of potential customers grow faster and faster.
And when they get the autopilot complete enough to drive on it's own they plan to launch a robot taxi service. I haven't included this in my valuation of Tesla but I'm sure it's coming. I just don't know when. And it will be big.
The competition from other EV companies like Rivian and the traditional car makers will come. And from other megapack battery makers. But since almost none of them - with Ford as possibly the best exception here - think much about where they will get their battery supply from I think they will grow slower than many expect.
My last point here is that I wonder how GM, Ford, VW and the rest will manage the cost of becoming EV companies. In addition to the Teslas the only other EV I know that is selling at a profit today is the very high priced Porsche Taycan.
While fossil car sales and profits dwindle they must shut down their fossil engine production lines and let people with the wrong knowledge go so that their pension commitments grow. And at the same time they must invest in research and development into electric motors, modern connected cars and they really should look into battery production too.
It will be interesting to watch.
