You can't trust Analysts when it comes to making a Judgement on Tesla. Analysts are Looking at Tesla to Fail to Make a Profit. They are Not Looking at Some Specifics.

Tesla: The Moment Of Truth Is Approaching

Tesla ( TSLA) is an extraordinarily innovative company that has achieved amazing results in several sectors in a relatively short time frame. Let's face it, if it weren't for Tesla, EVs would still be limited to the likes of the Leaf and the Prius.

Me, "There have been numerous analysts who say Tesla is doomed. If Tesla can continue to produce Model 3s in ever larger numbers per week, analysts views will be squashed. (Remember, a lot of these analysts are betting against Tesla. So, it is in their best interests to find any faults that will devalue Tesla stock.) Ford, which can produce millions of ICE cars, and Tesla, that sells hundred thousands of electric cars, are different because its not totally about production rates its about profit margin."

From article, (Ford's average selling price for a car was just $22,000 in 2017. The company had a gross margin of 10%, and a profit margin of about 5%, indicating the company nets about $1,100 per vehicle.

We know that in the intermediate term, Tesla is shooting for a gross margin of 25% on the Model 3. With an average selling price of about $47,500 per vehicle, Tesla would have a gross profit of about $11,875 per vehicle to Ford's $2,200. Moreover, if we assume Tesla can earn a net income of about 12.5%, (half of its gross margin per vehicle) Tesla would earn about $6,000 per a Model 3, or more than 5 times what Ford makes per a vehicle. This means Tesla could earn nearly as much as Ford by just selling 1 million Model 3s per year. This is not considering Model S/X sales, energy generation/storage, Tesla Semi, or any other future products.

Granted Tesla is a direct retailer, and traditional automakers like Ford are wholesalers. So, their business models differ somewhat. Also, Tesla computes its gross margins differently from traditional automakers by excluding R&D spending and other administrative costs. Therefore, even by achieving higher gross margins than Ford and others Tesla would have additional costs to consider before a net income is delivered.

Nevertheless, by looking at the situation from this perspective, and by assuming that Tesla will be able to achieve its margin goals, it becomes very clear that Tesla has the potential to become enormously profitable within the next few years. Whether this actually happens remains to be seen, but this should give people an idea why the market is currently valuing Tesla at $50 billion. It is on the assumption that the company will become profitable and will be able to achieve target margin goals at some point in the next few years. Based on the underlying statistics, ultimately (within the next 3-5 years), Tesla could be valued at much more than $50 billion.)

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