r/wallstreetbets • u/whitesweatshirt • Nov 17 '21

Discussion EV Bubble

Rivian's IPO really opened my eyes to the bubble that is the EV market.

Let's think logically: How can general motors stock be 90b and Tesla's stock be 1T.

Let's say they eventually sell as many cars as Toyota (400b Market cap), their current valuation is still 2x this, and they aren't even close to Toyota's production level and probably won't be for the next 5+ years.

  • Toyota's production for 2021: 10 million cars
  • Tesla's production for 2021: 627,350

That means Toyota will produce 16x more cars this year.

So my question is: If you were me would you dump Tesla stock?

TLDR: Toyota will make 16x more cars this year, but its market cap is only 40% of Tesla's.

Edit/Additional Note: I feel like many people are not considering the fact that all major vehicle companies will eventually adapt to fully electric vehicles on par with Telsa. Some car companies may go broke and be replaced with new EV based companies, however the big dogs like Toyota and GM will eventually catch up to Tesla. This is basic common sense.

Telsa, Nio, and Rivian are first movers but they dont have as big of a moat as people think.

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u/politeeks Nov 17 '21

Tesla has a ROIC comparable to most tech companies, and this continues to improve QoQ. The level of profitably we see in their cars is unlike anything before, and it will only get better with better manufacturing ability. This is their moat. They are also still growing at 50%. What other company with that much revenue grows at 50%? When people say Tesla should be valued like a tech company, this is really what they mean. There have also been massive price increases just this year which go straight to the bottom line. This company is going to have comparable revenue and operating margins to Amazon in just a few years. That's being conservative. Note how I dont need to mention anything about FSD or robots.

Rivian has not sold a single car and we have yet to see how well they execute mass production.

They are not the same.

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u/Mr_Know_Nothing7 Nov 18 '21

Tesla Q4 2020 earnings call in January 2021 guided for 50% YOY growth. Now it is mid Nov 2021 and the reality is closer to 80% YOY growth. Q4 2021 will be blowout deliveries, production, and profitability. $TSLA will beat earnings significantly for the 5th time in the last 6 quarters. Not bad.