Tesla - the most overvalued stock out there

As a theme driven value investor I currently have a approximate 20 % public portfolio exposure (10 % overall) invested in German car manufacturers post the "dieselgate" VW scandal/ disaster. Thus far it has been a successful theme, yielding more than a 20 % return in a couple of months. Furthermore it has peaked my interest in the automotive industry which for the most part seems reasonably priced. The one exception is Tesla, the most overvalued company/ stock out there.

This is why I believe Tesla is overvalued:

• Let us start with the obvious, the numbers. 
• Tesla will sell approximately 50 thousand cars this year, GM sells 10 million cars a year. Still Tesla´s market cap is more than half of GM´s market cap. Furthermore Tesla currently has approximately the same market cap as the high-end car maker Audi (30B USD vs. 30B EUR). Audi delivers more than 1.3 million cars a year. This just does not add up... no matter what promises have been made by Elon Musk.
• Tesla´s current price/ sales ratio is 6x, vs. 0.5x for the automotive industry as a whole
• As Tesla is not making any money this year it is hard to evaluate comparable P/E ratios, however the company´s 2016E P/E ratio is currently 115x (according to Financial Times data analyst earnings forecast consensus).
• The current book value of the company is USD 1.3B vs. a market cap of USD 30B.
• Tesla seems to be appreciated and priced in the same manner as some Internet companies were in 2000 before the dot-com-bubble crash. Yes the company delivers a superb promise of electrical cars to the masses, however it does not hold the scale, muscles nor experience to compete in an already mature industry in the long-run. As a high-end manufacturer the company may have a shot, however that is not the company´s objective.
• The promised amazing growth will come at an amazing cost. The mega factory currently under construction in the US will only have an annual output of 500k units a year by 2020 (this is hardly enough to sell cars to the masses in a profitable manner). Scaling further in order to produce 2 or 5 or 10 million cars a year, Tesla will have to raise an amazing amount of capital (the cost of the mega factory is USD 5B).
• Tesla holds a first mover disadvantage in that they have moved into a immature segment of the automotive industry (electrical cars) too early and before the basic technology is in place. Tesla´s competitors can milk cash from their ongoing businesses while slowly developing their electrical car platforms while Tesla needs cash injections from the market in order to afford R&D (Tesla just recently raised USD 750 million in cash in order to handle its cash-burn). Electrical cars just can not compete with combustion engined cars before, 1) the drive range of the cars increase significantly, 2) the time to charge the car batteries decrease tenfold, 3) stations for charging becomes more available. The day electrical cars will take over is the day I hear a Rome, Georgia based baseball fan stating: "let´s take my electrical Ford F-150 pickup truck down to the lake and down some bud".
• Tesla can not compete with experienced high-end manufacturers such as BMW, Mercedes and Audi on driver experience. I used to own a Tesla Model S and my experience as a driver was not the best. The ride could have been better due to, 1) the heavy batteries had adverse effects on the handling, 2) the car did not feel like a luxury sedan, 3) the size of the car made it difficult to drive in European cities as it was just too large and clumsy. 

Disclosure: I hold no positions in Tesla Motors Inc.

I wrote this article myself, and it expresses my own opinions. I am not receiving any compensation for it. I have no business relationship with any company whose stock is mentioned in this article.