Porsche And Mercedes Plot Musk Offensive With "Anything Tesla Can Do, We Can Do Better" Strategy

Tesla you have a problem, well several actually.

But, before we get into all the competition that is about to flood your market, lets take a look at some basic math surrounding your valuation.  Ford currently generates roughly $1,800 of EBITDA per vehicle and trades at a total enterprise value of $35 billion, roughly 3x their median EBITDA forecast for 2017.

Now, clearly Tesla is a way better company than Ford could ever dream to be...but, just for fun, lets consider what kind of sales volumes Tesla will eventually have to achieve in order to grow into its current valuation of $66 billion (roughly 2x that of Ford mind you).  If we assume that even a mature Tesla should trade at 2 times the prevailing Ford multiple, or 6x EBITDA, that implies that Tesla needs to generate about $11 billion of annual EBITDA once it hits maturity.  Now, if Ford can generate $1,800 of EBITDA per vehicle then surely Tesla can find a way to do $3,000...which implies that Tesla's current valuation requires 3.7 million of annual auto sales versus the 80,000 it managed to sell in 2016...or just over 45x it's current run-rate.  To put that into perspective, BMW sells roughly 2.4 million cars per year.

And while we don't like to be nitpicky, that doesn't even include the billions of dollars worth of negative cash flow that Tesla would have to incur to reach those sales volumes or the pesky effects of compounding, both of which would make the valuation even more bleak.

Meanwhile, achieving 3.7 million in annual sales would be a daunting task even if every other luxury auto maker in the world weren't looking to viciously attack your market, which, unfortunately for Tesla shareholders, they are.  As Bloomberg notes, Daimler recently announced plans to spend $1 billion to ramp up electric car production at their plant in Alabama.

Daimler AG plans to spend $1 billion to start production of Mercedes-Benz electric vehicles at its Alabama factory, setting the world’s largest luxury-car maker up to battle with battery-car specialist Tesla Inc. on its home turf.

 

The German automaker will build its fifth battery plant globally and create more than 600 jobs in the region, the company said Thursday in a statement. The Alabama factory will assemble electric sport utility vehicles, taking on Tesla’s Model X and making Stuttgart-based Daimler the first European company to assemble plug-in autos in the U.S.

 

“We’re celebrating our 20th anniversary at our production facility in Tuscaloosa, Alabama, and we’re taking this as an opportunity to expand the operation and further fuel growth,” production chief Markus Schaefer said in a Bloomberg TV interview. “We’re very confident for future growth in the U.S. in the long-term. ”

 

Daimler’s investment shows the carmaker’s shift to electric vehicles is taking shape. The German manufacturer is also in talks to expand its Denza joint venture with BYD Co. in China with additional models, Chairman Wang Chuanfu told a group of reporters in the southern Chinese city on Thursday.

As Sanford Bernstein analyst Max Warburton noted, the investment is all part of Mercedes' "anything Tesla can do, we can do better" strategy.

The company is pursuing an "anything Tesla can do, we can do better" strategy, Sanford Bernstein analyst Max Warburton said in a recent note to investors. "Mercedes is convinced it can match Tesla battery costs, beat its manufacturing and procurement costs, ramp up production faster and have better quality. It is also confident its cars will drive better."

Mercedes

 

Meanwhile, Porsche is even closer to launching competitive, all-electric vehicles with the "Mission E" scheduled to hit dealer floors by the end of 2019.

While automakers have been not-so-quietly making promises to catch up to the likes of Tesla when it comes to electric vehicle range, a sports car maker may be the first to beat the startup at its own game. A production version of the 2015 Porsche Mission E electric concept is scheduled to go on sale at the end of 2019, with a price expected to start in the $80,000 - $90,000 range, according to CAR Magazine.

 

That apparently means in performance terms, too. Unlike Porsche’s current range of hybrids the Mission E won’t be offered with any internal combustion engine assistance. And yet the concept promised a 0–60 time of less than 3.5 seconds and a top speed of around 155 mph through a dual-motor setup that also allows for all-wheel drive. While a Tesla Model S P100D may beat it off the the line in its most ludicrous of modes, the Porsche would ultimately keep up on an unrestricted stretch of Autobahn. Yet like Tesla, Blume says Porsche will offer the Mission E with different power levels, so your “basic” $90,000 version may not be quite as powerful.

 

Blume also didn’t rule out expanding the Mission E range to include other styles, which may include a coupe or wagon or SUV. Porsche may be known for sports cars, but its Cayenne SUV has been pretty successful over the years. And being part of the vast Volkswagen Group that has promised to electrify everything by 2030, a slew of electric-only Porsches by then wouldn’t be so surprising.

 

Perhaps Tesla shareholders are starting to realize that the jig is up...or is this just another blip on the way to an inevitable $100 billion valuation?

Comments

Occident Mortal Stuck on Zero Fri, 09/22/2017 - 18:22 Permalink

Porsche isn't "part of the Volkswagen group", Porsche owns Volkswagen lock, stock the fucking lot.

Wolfgang Porsche is alive and kicking and he controls (owns 52% of the voting power of) the production of 10.4 million cars worldwide.

He is the Prince Bin Salman of cars, Musk with his 80,000 sales should start issuing stock at Tesla's stupid market cap because Porsche is gonna eat his lunch before breakfast.

In reply to by Stuck on Zero

Freddie Occident Mortal Fri, 09/22/2017 - 18:26 Permalink

Are you sure?  About 7 years ago or so - Porsche CFO was a former top guy on the Stuttgart options exchange.  He and the CEO hatched a plan to lock up VW shares because VW or VAG was moving on Porsche.  Porsche did a short squeeze and US hedge funds overnight lost $8 billion.Those hedge fund boys were not happy and had friends like Clintons and other US Govt criminals.  POorschemade the $8 billion but then had margin calls and other fake trumped up BS.  the CEO and CFo got fired and I thought the Porsche family lost control to VAG.  Oddly VAG CEO was Ferdinand Piech who started the 917 racing program at Porsche and the Porsche and Piece family were inter married. BMW is still controlled by the Quandt family

In reply to by Occident Mortal

Laowei Gweilo Mr. Universe Sat, 09/23/2017 - 10:03 Permalink

Tesla is American and these are foreigners.... Surprised folks here would would rather see foreign companies do well than an American industrialist just because their cars have an arbitrary 'green' stigma to them. Tesla to Musk is probably less about being 'green' and more about being sci-fi -- guy is a cyberpunk nerd. If Tesla batteries polluted worse than gasoline he'd still make them.

In reply to by Mr. Universe

JRobby Cognitive Dissonance Fri, 09/22/2017 - 18:09 Permalink

They probably can.The near term, already here and advancing, is in hybrids. Most of the supercar designs now being developed are hybrids.I know Tesla's are shit because all of my stuck up, superficial neighbors are getting them, trading in the Range Rover's and MB SUV's which were all over the place.Because what you drive up to golf/tennis/yacht club in is almost as crucial as your anorexic wife's tit job, 3rd pull back, hair implants (yours & hers) etc., etc.

In reply to by Cognitive Dissonance

Killerdiggler JRobby Fri, 09/22/2017 - 21:05 Permalink

That's why Mb, and Porsche are shiting themselves right now.  They are getting killed in the high end market. I traded my 911 for a Tesla. I'm a douchebag too. All my neighbors are doing the same. Piss off stopping at the gas station and I was fed up being raped by the dealership for $500 oil changes. Just because I want an expensive car doesn't mean I am throwing money away.Nobody cares anymore about the Audi A7s or Beamers, it's all Tesla in luxury sedans. It's exactly like the end of the Blackberry era. Nobody cares if you have a push button keyboard. Everyone wants an iPhone. The Auto manufacturers better get in the game or they will be dead in the water. Even higher end companies like Ferrari and Lamborghini need to be careful, a $150k Tesla will out race it in the quarter. It makes no noise and still kicks your ass for hundreds of thousands less!  Porsche  has spent 60 years working on the 911 design and a grocery getting, 7 seat sedan for half the cost is quicker. How would that make you feel as an engineer? Better change your product quickly. Yeah, but the Tesla doesn't sound as cool as my Maserati! Everyone loves the cars that are loud. Really? I find them as annoying as the kid that pumps bass you can hear for miles. Don't you love sitting next to him at the stop light? He probably thinks he's hot shit, maybe in the hood. Same with the Corvette owner, it's really just hey, look at me. My car is loud and I'm a dick.I know everyone here hates Tesla, but they have absolutely forced everyone else to rethink their vehicles. I wouldn't buy the stock, but they've changed the paradigm. Someday soon you'll be hard pressed to fill your ICE because of lack of gas stations.

In reply to by JRobby

yarpos Killerdiggler Sat, 09/23/2017 - 02:44 Permalink

"Someday soon you'll be hard pressed to fill your ICE because of lack of gas stations."   soon? really?   those one and a half billion ICE powered cars plus 90 million a year new ones are going to just dissappear soon?   Lets face it you are in a trading your 911 for Tesla bubble,  and out in the real world that doesnt really amount to much.

In reply to by Killerdiggler

Killerdiggler yarpos Sat, 09/23/2017 - 17:33 Permalink

All China has to do is make gas cars illegal which is in the works, Europe is done with gas in 2045. That's still a ways away, but when gas cars are more expensive to buy than electric counterparts, which happens three or four years from now, what are people going to buy? Fill up for five dollars at home or $60-$100 at the pump? What do the smart people do? It's a no brainier and gas is dead. Granted people replace cars every six years, so I am talking a decade or so. I save $300 a month in fuel, it even makes financial sense to buy a new leaf as cost of ownership makes it free compared to gas.It's also not a bubble when nine of ten of my professional neighbors only buy Teslas. Just like no one wanted a Blackberry after the iPhone. They are taking huge chunks of the high end market and the model 3 will take the lower end. Thanks for your post, I now agree with your thoughts and feel Teslas are crap. I must be dreaming every day when I realize all the other cars I have had are horrible compared to the Model S and why they have the highest customer satisfaction of any car maker. It's all a green conspiracy. Keep telling yourself that!

In reply to by yarpos

twh99 Cognitive Dissonance Fri, 09/22/2017 - 18:19 Permalink

I have my doubts that Mercedes or Porsche can exceed the distance per charge that Tesla has.  So far I have yet to see an all electirc vehicle from a German manufacturer that exceed 200 miles.Tesla has been how long in the market?  Since 2011?Where has Mercedes, Porsche, VW or Audi been during that time?  Sitting with a thumb up their ass, that's what.Until I see a car superior to Tesla, it all vaporware.

In reply to by Cognitive Dissonance

Freddie twh99 Fri, 09/22/2017 - 20:11 Permalink

Merc or BMW should hire this guy.Tesla S 100 D (biggest battery 315 miles)Old clapped out 3 series BMW electrica car converted by this guy 382 miles. Eric LundgrenFuck Tesla.https://www.youtube.com/watch?v=4X9WYc-xRugEric Lundgren again 1204 KM.  BMW or Merc - hire Eric Lundgren.https://www.youtube.com/watch?v=tweyTsIOpY8His buddy in the videos who is either MExican-America or Indian-American has great videos on making a Tesla battery wall for about $200.  There are other videos on DIY Tesla walls by Brits, Aussies and others. 

In reply to by twh99

knukles Village-idiot Fri, 09/22/2017 - 17:33 Permalink

I can see Team Tesla in the pits debating white supremacy opposite the US's international racing colors of White and Blue (Think Shelby, GT40s etc.) while the Kratus slip through the pits with 4 second stops.  It would be the exact opposite of Ford's winning Le Mans 3 years 1,2,3. Then again, maybe not such a good idea because they'd look to DC for propaganda funding

In reply to by Village-idiot

Freddie knukles Fri, 09/22/2017 - 18:46 Permalink

They best was the old days in rally car with Lancia versus Audi during the Quatrro days.They would be in the desert or say Greece or Spain.  The cars would stop and the Italians would have shorts and no shirts for mechanics.  Italianesque chaos.  Drinking cappucinos, etc.The Germans would have white overalls and machine like effeciency.  The problem for Audi was those all wheel drive Lancia's like the Integrale, Delta S4 (800 bhp) or Stratos were damn fast.  And the V6 Dino Ferrari engine in the Statos sounds amazing. https://www.youtube.com/watch?v=mXgWWNJVdYA

In reply to by knukles

Omen IV Village-idiot Fri, 09/22/2017 - 17:52 Permalink

If you ever have the opportunity to go to Stuttgart

Go to the Porsche Museum - while the Mercedes Museum is there as well - and I have been to both - the only one worth seeing is Porsche

Incredible technical presention ! while there are cars there going back 85 years - to me - it is the evolution of various systems designed - suspensions / carbs / injection / electronics etc etc

Great show!

They will destroy --- Musk and the stock!

In reply to by Village-idiot

gregga777 Fri, 09/22/2017 - 17:27 Permalink

I hope that they have plans to retrofit internal combustion engines into their vehicles after the whole electric battery craze collapses after the inevitable clash with reality.

Barney08 Fri, 09/22/2017 - 17:28 Permalink

Don't you get it? TSLA was never about the cars. It is about Musk jacking off and blowing billions. Then getting blown by Wall St.

Cars?

not dead yet forestgump227 Fri, 09/22/2017 - 17:57 Permalink

35 grand for the Model 3 is bunk. You can't get a strippo, and it's a strippo with cheap interior, because currently they are only building the models with longer range batteries or upgrade interior, cost $44,000 for each, or longer range batteries and upgrade interior for $49,000. Want better paint than the cheap stuff pay more. Mercedes is building cars for the rich while the Model 3 is supposed to be for the unwashed masses. Not too many of the masses are buying the 3 it's the rich people who already own an expensive Tesla buying them to fill their driveways with more status. Although Tesla claims they limited buyers to 2 many were bragging they "bought" 4 or more in the initial sales event when they put down their $1000 deposit. One guy bought 12. Not much hits the media of the cancelations of the 3 and the difficulty they have getting their deposits refunded.

In reply to by forestgump227