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PaperclipPerfector  1mo ago (text post)   2621 thread views

Small-Scale Question Sunday for February 2, 2025

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Why isn’t Tesla stock crashing? The intersection between the set of people who care enough about the environment to buy an electric car, and the set of people who don’t hate Elon’s guts doesn’t provide much room for growth.

Hype about self driving, hype about robots, and a call option on Elon.

As Peter Thiel said, never bet against Elon.

In other news, yesterday it was revealed that X is making a healthy profit now.

Do you need to care about the environment to get an electric car? My brother is big into EVs because he's... I'm not even sure what to call it, mechanical tech nerd? Like he's obsessed with electric cars, electric unicycles, fancy powerful flashlights, and stuff like that, rather than computers and programming.

You don't have to pay for gas, you can use regenerative braking and stuff, it runs really smooth and quiet. The only reason to buy a gas car is because they're cheaper up front. For now. If Teslas can continue to improve technologically and get cheaper then they have a real future among normal people buying them for practical reasons, completely divorced from ideology.

You definitely don't. My wife got an electric car for her latest car, and she's not really that concerned about the environment. She just wanted electric.

I live in pretty red area and I see quite a number of Teslas and recently some Cybertrucks around. I don't think it's only hardcore wokes who buy them. Tbh, if Tesla changed some of its approaches to control design (like relying on complex screen-driven interactions instead of large simple tactile physical controls) I'd be open to getting one myself (a Tesla, Cybertruck is too ugly for me). Electricity is not that expensive here, and for short commutes (which are like 80% of car usage for me) it makes total sense.

It's been 15 years and we still don't have an electric car that's focused on driving, and perhaps emblematic of this, there are no electric convertibles.

I just want a Roadster 2 (with the same level of tech and type of controls the original had) but with 4 seats and 1000 km of highway range: basically, I'm waiting for someone to build an electric Mustang (and not that stupid Mach-E crap). I'd feel much better having Coyote performance for the price of an Ecoboost and could accept a 30-minute charge time if my car performed that way, and I also want the paddle regen that some of the Hyundais have where you can choose how much engine braking -> weight transfer you want. At that point I might accept a screen for configuring those features only.

This isn't a complicated problem. Just offer me a regular car.

Wait, but a convertible is not a regular car. A regular car is Honda Civic.

I mean, they offer Mustangs as coupes, too.
In fact, the Mustang is the only car Ford sells (and the only car any American automaker makes); so if that isn't a "normal" car I'm not sure what is.

(Why anyone would buy the coupe model when a convertible exists is anyone's guess, since the rear seats in a coupe are much less useful than those in a convertible because you hit your head on the roof if you try to use them, but I digress.)

the Mustang is the only car Ford sells (and the only car any American automaker makes)

Are you working off an unusual definition of "car"?

It is not unreasonable to exclude crossovers and SUVs from the word "car". The US government calls them "light-duty trucks" and imposes on them more-lenient fuel-efficiency standards.

For me the reasons to get the coupe over the convertible:

  • I don't want to have to devote a precious garage space to protecting the soft top
  • Not being able to leave anything in the car when out
  • The superior performance from the rigidity of the coupe
  • IRL I'll hardly ever drive with the top down. Your girl will think it's fun for 5 minutes, then be annoyed her hair is all tangled.
  • Generally not having to worry about leaks or a surprise rain storm destroying the interior of my car
  • No Greg, I can't drive us all to lunch again. I have the coupe today. We'll have to put miles on your leased Infinity if you want to go to lunch.

(1) The Honda Civic is a bit bloated nowadays (base price 24 k$). Some people would say that a "regular car" is more like a Mitsubishi Mirage (17 k$) or a Nissan Versa (19 k$ with CVT).

(2) Cheap Civic-ish cars used to be available in convertible form. See, e. g., the Geo Metro.

Some people would say that a "regular car" is more like a Mitsubishi Mirage (17 k$) or a Nissan Versa (19 k$ with CVT).

Surely a "regular car" can't be one of the two cheapest cars on the market? One of which is discontinued due to lack of demand?

Surely a "regular car" can't be one of the two cheapest cars on the market?

I still see a lot of cheap 20-year-old Civics on the roads. And the US market is not the only market in the world.

One of which is discontinued due to lack of demand?

If the government has made all the regular cars unprofitable to sell, and effectively mandated that only bloated, expensive vehicles be sold, do the bloated vehicles become regular cars? I think the answer is "no".

Cheap Civic-ish cars used to be available in convertible form

A wide variety of cars used to be available like that. Now there are only two that sell for less than 50K new, and one of them only seats two.

An electric Honda Del Sol would be pretty fun!

It’s a meme stock. If you’re looking for how research analysts are justifying their hold ratings, it’s by suggesting that the AI and self driving stuff will all pan out perfectly.

  1. Much of their revenue and until recently all of their profit is based off of various government regulatory schemes for selling pollution credits to other automakers. Elon seems... Unlikely... To remove those particular government boondoggles.

  2. They are genuinely amazing, class leading, genre destroying pieces of machinery.

  3. People just think of it as investing in Musk. His stock is up, I'd imagine.

I hate to do this but can you provide a source for claim #1? “Much” of their revenue seems like a stretch. I’ll define much as >20% but I’ll accept 10%.

https://www.axios.com/2025/01/09/tesla-clean-credits-trump

It's less of their revenue than I thought, only around 5% anymore, but still makes up 43% of their profits for 2024, which is much higher than I'd think. We're talking about $2bn in 2024 and ~$10bn to date. It's not a small amount of money.

ETA: Probably the sentence would be more accurate as "derives much revenue" than "derives much of their revenue"

I think this was very much true in the past. Net income rather than revenue circa 2021:

Net profit reached a quarterly record of $438 million on a GAAP basis, and the company recorded $518 million in revenue from sales of regulatory credits during the period.

So in the early part of the 2020's, more than all the net profit was driven by credits.

But with a current TTM PE Ratio over 100, I assume >90% of the "value" of the company is in future expectations.

Edit: The "until recently" is sort of load bearing though. The 2024 annual report gives $2.8B in regulatory credits, $97.7B total revenue, $7.2B net income on a GAAP basis. So single digit portion of revenue but >1/3 of the net profit last year.

My understanding is that Tesla stock has always been at the intersection of memestocks and greater-fool, hype-based speculation. (Something along the lines of Musk running Tesla as a tech company that just happens to make cars and the market analyzing its stock more like that of a tech company than that of a car company.) However, there's also something of a sales floor, in that their head-start on EV design and direct-to-consumer sales model keeps the cars competitive, and EVs are equal or superior for many use cases.

Does Tesla's stock price have much to do with their sales? I thought the P/E ratio was already absurd.
I think most of the value comes from the assumption that libs will follow through with the gas car bans they've already passed, making people's desires irrelevant.

I think it’s unrealistically optimistic to think that those polities care more about global warming or the consumer experience than they do about keeping Elon Must out of their business.

San Francisco deciding we must roll coal to save the planet from evil billionaires would be the last straw for me putting on clown makeup and moving into the sewers

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