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Review of Motor Manufacturers
28 Dec 2022 (289 views)  

The table below shows the key financial figures for motor manufacturers, ranked by market capitalization (US$)

Tesla has a market cap of $344 billion. It dropped by 70% from over $1 trillion a year ago.

The forecast PE ratio for the stocks are - BYD 33.3 times, Tesla 24.2 times, Toyota 7.9 times. The other 3 manufacturers have a PE ratio below 6.2 times.

It appears that the traditional manufacturer offer good value, with PE ratio below 10 times. Some of the stocks offer good dividend yields.

The key challenge for these manufacturers is the likely transformation of the industry towards electric vehicles over the next five years. It depends on their ability to make this big change and to introduce electric vehicles that are competitive.

Another big challenge for these manufacturers is the high debt to equity ratio. The ratio is over 100% for Toyota, Volkswagon, General Motor and Ford. It is exceptionally high for Ford (above 300%). 

This high debt ratio can be a financial burden in a recession, when sales and profits come down and interest rate is high.

The traditional manufacturers have an operating margin of around 8%. Tesla has an operating margin of 16%, and BYD 3%.

The market is likely to move rapidly towards electric vehicles over the next 5 years. This will put pressure on the legacy manufacturers, i.e. Toyota, WV, GM and Ford, but they are now introducing electric vehicles quickly.

The market was optimistic for Tesla due to its high operating margin, ability to scale its production and the big demand for electric vehicle. The climate has change in 2022 due to the recession that is expected in 2023. 

Tesla has a special problem due to Elon Musk purchase of the social media platform Twitter. 

Tan Kin Lian


 


Review of Motor Manufacturers
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The table below shows the key financial figures for motor manufacturers, ranked by market capitalization (US$)

Tesla has a market cap of $344 billion. It dropped by 70% from over $1 trillion a year ago.

The forecast PE ratio for the stocks are - BYD 33.3 times, Tesla 24.2 times, Toyota 7.9 times. The other 3 manufacturers have a PE ratio below 6.2 times.

It appears that the traditional manufacturer offer good value, with PE ratio below 10 times. Some of the stocks offer good dividend yields.

The key challenge for these manufacturers is the likely transformation of the industry towards electric vehicles over the next five years. It depends on their ability to make this big change and to introduce electric vehicles that are competitive.

Another big challenge for these manufacturers is the high debt to equity ratio. The ratio is over 100% for Toyota, Volkswagon, General Motor and Ford. It is exceptionally high for Ford (above 300%). 

This high debt ratio can be a financial burden in a recession, when sales and profits come down and interest rate is high.

The traditional manufacturers have an operating margin of around 8%. Tesla has an operating margin of 16%, and BYD 3%.

The market is likely to move rapidly towards electric vehicles over the next 5 years. This will put pressure on the legacy manufacturers, i.e. Toyota, WV, GM and Ford, but they are now introducing electric vehicles quickly.

The market was optimistic for Tesla due to its high operating margin, ability to scale its production and the big demand for electric vehicle. The climate has change in 2022 due to the recession that is expected in 2023. 

Tesla has a special problem due to Elon Musk purchase of the social media platform Twitter. 

Tan Kin Lian