In general, the figures for the other carmakers haven’t changed much since last month, with each company offering its own unique selling points. General Motors Company (NYSE:GM) is in the process of introducing its new line-up of redesigned trucks (the Sierra and the Silverado) in the U.S. for 2014; Ford is focused on pushing its fuel-efficient small cars and EcoBoost-powered vehicles in China and domestically; and Toyota Motor Corporation (ADR) (NYSE:TM) and Honda are both targeting a push that’ll help them reclaim lost market share in the U.S. by focusing on fuel-efficiency and value.
Then there’s Tesla Motors Inc (NASDAQ:TSLA), which I thought was grossly overpriced at $600,000 per car three weeks ago. Based on last night’s after-hours price, Tesla is commanding close to $843,000 per car – in other words, about 12 times the actual cost of the vehicle with the assumption that it’s free to produce! With real operating gross margins of 13% on its $70,000 Model S, Tesla is reaping about a $9,000 gross profit from each car produced, yet we’re willing to place a valuation of $842,857 on each car! Based on the above calculations, Tesla would have to boost its production by a factor of 20 just to be twice as expensive on a value-to-car basis as the next highest big automaker in the table above, Honda. By this context Tesla’s valuation could be up to 10 years ahead of itself.
Is this the craziest valuation ever?
Given Tesla Motors Inc (NASDAQ:TSLA)’s numerous production gaffes leading up to the debut of the Model S, I have a strong suspicion that its Model X SUV will suffer numerous delays next year. Let’s face it, production was already pushed back a full year to 2014. Tack on the fact that the infrastructure to support EV battery replacement and recharging isn’t there for a good chunk of the public, and pricing on the Model S is well beyond the scope of most budgets, and you have even more reasons to avoid this stock.
I remember seeing some pretty frothy valuations in the heyday of the tech bubble, but I can’t recall any company in recent history that has commanded as lofty a bounty as Tesla Motors Inc (NASDAQ:TSLA). I very recently initiated a short position in Tesla and, when the Fool’s disclosure policy allows, I will almost assuredly be adding to that position.
The article Tesla’s Valuation: From Ridiculous to Gary Busey in 5.8 Seconds originally appeared on Fool.com.
Fool contributor Sean Williams is short shares of Tesla Motors, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Coach, Ford, Intuitive Surgical, and Tesla Motors. It also recommends General Motors.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
