>A tiny enterprise that took on the old Detroit giants and is winning
In what way are they "winning" against Detroit? Certainly not in revenues, profits, miles driven or cars produced.
Yes, they "own" one segment": high end electric vehicles. No one there is close. But Detroit owns many others. Why does the one that Tesla dominates carry so much weight?
Tesla's market cap is $30bn, more than Renault, Mazda, Chrystler or Subaru (https://news.ycombinator.com/item?id=9055885). If they execute well on the Gigafactory, they may apply a multiplier on this market cap, reaching above Toyota ($200bn), even with a tenth or a hundredth of their production. Why would it be more valued, per car produced? Because of its future potential.
> Why does the segment that Tesla dominates carry so much weight?
The stock market is adjusting for a <10% market share of ICE cars in 2050. It's a Schroedinger situation: If the <10% hypothesis is wrong, then we're all dead (more precisely: Half of us are living under giant cataclisms, the Gulf Stream has stopped, the costal cities are flooded, and our economy is so disorganized that we can't plan where the money will be), so markets don't need to account for this situation. So all Detroit/Toyota industries are slowly shrinking in comparison to Tesla, unless they adapt. It may be hard to imagine if you live in USA because they rely so much on cars for their lifestyle, but our civilization will get rid of petrol cars within our lifespan. This is also the genius of Musk: He saw a version of the future that is obvious but that no other American citizen could understand, and he executed on it. Hence the importance of travelling the world or meeting many people when we want to innovate.
By the way, maybe a sweeping change is preparing that the petrol generations can't foresee. We could imagine things like an international agreement on global warming suddenly reducing the worldwide production of cars. It's impossible today, but educated people may have good reasons to believe something like this will happen, in which case Tesla wins all.
I'm not sure how having a disproportionately high market cap indicates "beating" anyone. It's the whim of the markets.
>If they execute well on the Gigafactory, they may apply a multiplier on this market cap, reaching above Toyota ($200bn)
Based on what, exactly? This is Silicon Valley math. Who on earth is going to pay Toyota prices for a company that you yourself say might only have a fraction of the production? What sort of investment would that be?
I know this is taboo around here, but one day high-growth slows and companies become "established" and it's about how much money they make and return to shareholders. If Tesla is making as many cars as Toyota and as much profit is Toyota, then they'll be priced like Toyota. Why would it be any other way?
>So all Detroit/Toyota industries are slowly shrinking in comparison to Tesla
There were over 70 millions cars sold in 2015. Tesla delivered about 50 thousand, for about a 0.07% market share. Are you surprised that they are able to grow relative to specific players in a massive industry?
> If Tesla is making as many cars as Toyota and as much profit is Toyota, then they'll be priced like Toyota
But maybe Toyota will return fewer profit per car? Ah, you've already accounted for that. There are other variables: If production is equal today, but if Toyota is expected to halve its production in 2040, the Toyota share will get lower and lower until it's half of Tesla. Other variables can be the health of their distribution system (a vendor with no cardealer lock-in will save a lot on sales), customer trust, innovation methods (e.g. Toyota's methods only led to the invention of Prius, whereas Tesla's methods led to the invention of a fully-electric car with a lot of autonomy, so it's a predictor that Tesla's innovation scheme will produce better things than Toyota in the future), marketing methods (They spend little in advertising and are able to have thousands of viewers watch their keynotes without pushing ads in the newspapers), a legacy of employees that might be hard to re-train, or a forecast that huge R&D expenses will be necessary to keep being relevant in the market of 2040. It's not "a whim of the market", it's that Toyota is shrunk by default in 2050 whereas Tesla is alive by default in 2050.
> Tesla delivered about 50,000, for about a 0.07% market share. Are you surprised that they are able to grow relative to specific players in a massive industry?
..and Tesla plans to deliver 500,000 in 2018, for about 0.7% of the market share. Then I personally think they'll become even more popular (because of law advances, both against pollution and in favor of self-driving cars, and because of social status, geeks, comfort and market-specific innovations like the air filter that will be appealing in China, etc) and that means 7% market share in 2022, etc. So I'd buy Tesla shares for a higher price than Toyota's because I'd trust them more for delivering good dividends in the long term.
Note: I'm neither a financial advisor nor an owner of Tesla shares.
Not high end EV — EV period. Why so much weight? Because it's literally the only direction left for land based vehicles to go (the puns write themselves!) in the next century at least?
In what way are they "winning" against Detroit? Certainly not in revenues, profits, miles driven or cars produced.
Yes, they "own" one segment": high end electric vehicles. No one there is close. But Detroit owns many others. Why does the one that Tesla dominates carry so much weight?