So, I understand that Tesla is a company that has a possibility of shaping personal transportation in the future, but how can people think it is worth the insane amount it is currently valued at? They do not have much in the way of production facilities compared to established automakers, their competition is advancing rapidly and their market share is decreasing. I’m just baffled by their valuation as a company.
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Valuations are based on expectations of future profits. People think they could grow into an auto giant — the GM or Ford of electric vehicles. And they control so much battery manufacturing capacity, they can also make money selling batteries to other electric car makers. But they also have some major business benefits compared to legacy car makers, like not having hundreds of thousands of retired workers’ pensions to pay, direct sales model means bypassing dealers’ share of sales revenue. That all means even when selling fewer cars, they might make more profits than carmakers with more sales.
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