The Economist February 1st, 2020 pp55 Electric Vehicles “Car Stock Racing”. “Tesla is proving itself as a carmaker, is its tech-like valuation justified?”
While leapfrogging others in designing electric vehicles, Tesla has struggled with scaling up manufacturing. Having been through "Production Hell", Tesla is now hitting production goals and has realized a profit two quarters running-most recently $359M on $20B/year in revenue. This combination has helped raise Tesla's market capitalization to a tech-like $100B exceeding that of VW, BMW ($47B) and Daimler ($51.2B). Adding to the momentum are a pipeline of new products like the Cybertruck, Model Y-a smaller SUV and a pricey sports car and new manufacturing plants in-Shanghai China (making Model 3s now) and Germany (breaking ground). Tesla projects making 2M cars/year with an 8.3% operating margin by 2030. The stock is further driven up because Tesla appears far ahead of rivals that are greatly encumbered by old ideas, systems and the internal combustion technology. If their balance sheet improves, Tesla will be better able to fund projects beyond vehicles including the “million mile” battery. Read the article for more detail.