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Hey this is tom nash, and you got to take a look at this thing. This was posted earlier this morning and went completely viral. This is a chart that basically compares tesla to the rest of the auto industry, showing how ridiculous tesla evaluation is visualizing. The insanity, as it says, basically showing you that the market cap of all these auto manufacturer is under 1 trillion dollars and tesla is over 1 trillion dollars with a fraction of the gross revenue of all these manufacturers, while they're bringing more than 1.6 trillion dollars in Revenue tesla only brings in 53 billion, that's supposed to show you how this is how the insanity of the valuation is driving the stock market into this really horrible trade, etc, etc, etc.
Now this is an old narrative, and this is going to be a layup. For me, i don't want you to see me. I just want you to look at this screen. So look there's a reason why you have this huge difference.
You know. There's one thing you kind of learn when you start investing is that the market isn't stupid. The market is really good at pricing, risks, opportunities and valuations over the long term. It's very hard to stay afloat if you're a complete garbage company.
Now what this presumes to show you is how insane the valuation of tesla is and how it's completely. You know unfounded in the revenue structure of the company now what they neglect to show you is kind of. What's going on under the hood so and yes, the pond was intentional - think about it. This way, all these beautiful revenues on the right - toyota, 202 billion volkswagen, 101 billion byd, mercedes 4g and bmw et cetera, et cetera.
Oh, that's a really nice looking car, but if you look under the hood you're going to find out there's a lot of problems now, let me show you what i mean now. The first thing i want you to pay attention to is the profitability, and i'm going to highlight two things here: gross profit margin of tesla at 27 and even the margin of tesla at 20, and let's just round it down. So it's easier to remember so, 27 and 20.. If you take a look at general motors which is on that list, you just saw earlier.
Let's compare so general motors is looking at a gross profit of 13 and a half percent half of tesla. Even the margin is 11.3 percent, almost half of tesla, so general motors, despite making way more cars than tesla way, more revenue is at one half of the margins of tesla, which is not even fully ramped up. Yet. Imagine that it's not a general motors kind of problem.
If you go to ford you're going to get the same result, let me show you, let's go to ford and you see it gross profit margin. 11.3. You remember how much tesla had 27.. This is even worse.
11.3 percent ebitda almost 11, that's half of tesla, so these companies were making way more revenue and way more cars are at the half of the margins of tesla, which is only producing one million vehicles and they're already doubling the margins of these auto manufacturers. Now i want you to take a look at this thing. Also, look at the revenue growth for tesla, so revenue growth for tesla last year was 73 next year is anticipated to grow by 53 percent and let's compare it with gm again. So gm is looking at a nice six percent, almost seven percent last year and ten and a half percent next year ford, it's not much better 4.3 percent over the past 12 months and anticipated 11.7 percent next year. That's compared to a 53 by tesla tesla is growing at five times faster than these guys double the margins, and this is the most interesting part. Look at the balance sheet of tesla tesla is sitting on seventeen and a half billion dollars of cash. With about seven billion of debt, which means its net debt is 10.9, almost 11 billion. When you see a negative here, that's 10.9 negative.
It means that the total net debt is more on the cash side than on the debt side. Basically, it means that tesla has 11 billion dollars more in cash than it owes in total debt. Now this isn't going to look like that. If we go to ford in the case of ford they're sitting on cash of much less than tesla 10.4 billion, but look at their debt, because this is about to blow the sucks out of you - total debt - 135 billion dollars you're getting this right.
So total net debt is 106.9, so 107 billion dollars negative. They have 107 billion dollars less cash than that explain to me how this company is supposed to win now, things are not really much better for gm as well. If you look at gm, look they're sitting on 12 billion dollars again less than tesla in cash and look at their debt, total debt again you're going to be blown away, 110 billion dollars so again, negative or rather in this case positive 90 billion. So they have 90 billion less in cash than they have debt, so these companies are dragging a massive massive debt and don't think that things are different for toyota and vw they're, also operating with massive debt.
So massive debt and the margins on vw toyota is again half of tesla's they're, not as good. So all these companies are operating at less margins with in the case of toyota, for example, a company that makes 10 times more cars than tesla, so not as good margins, not as good growth, and obviously the financial structure is in the toilet. These guys owe a lot of money, and now you understand why the market is pricing tesla as good as all of these guys, combined because in about five to ten years, all of this list, you're seeing on the right for the most part, is going to be Either out of business consolidated some sort of restructuring, something is going to happen. So most of these guys on the right, with the exception probably of byd, is the only one that will probably survive all the other ones will have to figure out a way to survive and pivot, because, as an auto manufacturer, there is a number and the market Knows that now you can call it insane, but i call it smart see you next video. .
The margins of tsla are high primarily because they aren't a volume producer
For them to grow to a volume producer they will need to produce smaller cheaper cars with lower margin
Again, Tesla is playing chess while others players are expert on playing checker.
Half of those companies will be gone in 20 years! The future is electric and scaling up production is the problem. Batteries, solar, AI, autonomous vehicles, profit margins, software, etc. are the reason why Tesla is so valuable. We are repeating the 1920's economy and things are moving fast. As a math teacher I understand exponential growth and Elon understand math better than most people. He is hiring the most intelligent people on the planet and with SpaceX's engineers this company is the future. Big auto is the horse industry of the 1920's the supply chain will not let them catch up. I hope I am wrong because a lot of people will need to be retrained into jobs of the future sooner that later. The universe rewards efficiency and punishes inefficiency. The stock market like the company on the right and dislikes the companies on the right. Put your money in BYD like Wareen Buffett.
short Tesla man, you'll make a fortune!
The legacy automakers in the right column are significantly over-valued since at least half of them are worth zero. No one knows which half, so all are carrying 50% risk of bankruptcy. How can anyone invest with such risk?
Tesla’s margins are 32% now not 27% those numbers are old. Even without credits they are at 30% not 27%. Also what this video fails to mention is Tesla’s money is coming from a blossoming business. All the other companies they are coming from a dying industry. Also they are all losing like 40-50% on every EV they sell right now furthering their losses on top of their ICE business going away.
Tesla is a sleeping giant who is just waking up…🤑
What’s their margin on cars of the same price range. If tesla wants to have more of the market they need lower prices and their margins will get lower just like the rest of them
This is the same tactic china did with their tech crackdown. Biden is pissed that he can't perform
Tom, you nailed this one like a Boss. I like that you only should current fundamentals and didn't even dwell on the other projects Tsla has a future catalysts
Data is so easy to manipulate. This is a clear illustration of that.
One column is EVs, the other ICE. Apples and oranges. Or more accurately, Apple and Nokia.
…and that explains to me why the establishment, the established order, that's the military/industrial complex, government shills & media shills have it in for Tesla & Mr. Musk. They project their weaknesses onto him & his companies rather than stepping up to the plate and addressing those weaknesses. Denial is strong with these Obi Wan!
This is like sowing a picture of a supersonic jet flying behind a 20 years old Ford Focus, and claiming that it makes no sense to pay millions for the jet, as it's obviously slower.
Will governments bail them all out AGAIN?
Love the way how you dismantle the argument Tom
Tesla's margins are higher because their average selling price is higher too. It's a luxury car (thus higher margins) and a less mature company (thus more current growth)
Alot of those companies may be out of business or greatly shrunk in size by 2030. Tesla will be selling more cars then any of them.
In 1 more year: 10X! Not insanity, our reality.
How did Elon become part of Tesla from the begineninninging?
Completely agree Tom! People just don't understand Tesla and their future opportunity. Everyone looks at trailing metrics, which is wrong for such an innovative & quickly growing company.
All the haters need to remember, if he announces any combining of just a piece of internet satellites, recycled batteries or even some part of spaceX and the stock will triple in a day.
I don’t know why people are so obsessed with share price. Everyone knows it does not reflect current income. It reflects what people think it will do in the future and it is obvious some people think Tesla will make a lot of money on the future. It is a gamble . It might work out or it might not . No one knows ..yet
Curious to know what is total revenue by bev’s only by the combined auto companies vs Tesla?
Should try to make a graph comparing the combined ebitda vs market cap
How about you compare tesla to there ev revenue? 😂 would be interesting
Liked. Can you ADD up all the auto companies you clumped together and get their: Total sales, Average margin in proportion to their sales, and the total debt or assets? That way we can compare a total number to Tesla's total number. Hope this makes sense.
Didn't Tesla just pay off some debt? I think I saw 0.1 bil in their latest report, am I wrong? Did I see something like short term debt?
Great points, Tom. Great video! (because we did not have to see you) Kidding!🤣
They’ll be out of business. Thanks Tom for your analysis and comparison.
Be interesting to know how much govt bailouts over the years
Dont worry Biden Admin will bail them out to save union votes…
I’m currently in a position to figure out which new car I have to buy. Tesla has the tech to keep me safe via autopilot, energy efficiency, and it stays relevant through out the years with software upgrades. I think they absolutely deserve the valuation: their product is just that much superior against all the others out there.