Seems like Germany is having this problem for the past 20 years... but here we are. Maybe accept the fact that they are a manufacturing powerhouse and will remain so in the foreseeable future?
Isn't this a strange way to put Toyota to be "closer" to Tesla by "enterprise value"? I mean, if toyota had 1T USD debt, it's enterprise value would have been 1.25T, and it would have been more "valuable" than Tesla. But, how is that "better", if you want to invest in a company?
I'm surprised TSLA is in such a good shape, debt-wise.
A way to look at it is that "even though it has x debt, it's still worth y". For instance, imagine you have a choice between two sports players. One is currently sick and scores at one goal a game. The other is in great health and scores at one goal a game. Which player do you pick?
Though of course he mentions it differently: how much would you have to pay to acquire all of the surplus from the company? You'd have to buy the company and it's debt.
Somewhere towards the bottom, the post explains that "the price to buy the business and gain all its economic value is the enterprise value." So if you want to buy Toyota, and reap all of the profits, you buy all of the stock and all of its debt. Toyota and GM become much more expensive this way.
> I'm surprised TSLA is in such a good shape, debt-wise.
As the post also notes, "a high share price relative to your true value constitutes the ability to finance cheaply."
If Toyota had 1T debt and kept its its current market value then it would have to be doing much better then it is. If it could not afford the debt it would be priced in.
Companies with enterprise values higher then thier market values are not better investments.
I think what you're missing is that lenders don't lend blindly. They expect to be paid back. Just as an investor expects to recoup their investment. Buying a bond (i.e. a loan to a company) is as much of an investment strategy as buying a share. Bonds come with less risk and limited reward, shares the opposite.
From the company's perspective, it has a queue of claimants who expect to be paid and the company will pay them with its profits. The queue order is roughly determined by whether the claimant holds a bond or a share (and further determined by legalities and complications within those two broad classifications. It's complicated™).
If you could walk up to anyone in the queue and ask to take their place in line, in exchange for cash, "enterprise value" is an estimate of how much it would cost to buy everyone's place in line. Or, the sum of how much everyone in line values their place in that line.
Thus, in this metaphor, Toyota could decide to sell new places in line to finance the construction of a $1T factory. But, only if people believe the factory will actually produce > $1T in new value.
Exactly, I argue here (https://news.ycombinator.com/item?id=39754171) that "market cap" is probably better than this strange "enterprise value" for the stated goals of the formula, which is to compare how valuable companies are in an intuitive way for your average person.
My point being that the market cap already includes (partially) the debt and cash priced in, while this whole debt is positive, cash is negative is "if you wanted to buy the company". We do not use "country debt" to measure how "valuable" a country is, we use GDP for a reason.
> But, how is that "better", if you want to invest in a company?
This is exactly out of the scope of the article. So if the question is what you should invest in this is probably not a good metric.
The question the article answers is how to most efficiently finance your own company. It would seem like Tesla has financed selling its own stock, indicating that they think they are overvalued, where Toyota has financed selling their own bonds, indicating that they think they are undervalued.
If you trust their own assessments and want a good deal, then you should probably invest in Toyota over Tesla.
Sanctions by countries who developed a certain technology, appear to always result in the country which was sanctioned to develop that technology in some timeframe, depending on the complexity.
Was there any case of a "successful" sanction in history? Or is holding back a country for a few years (or decades depending on the tech) considered a success?
There are a fair few books ("Chip War") on this topic that make the case the US was relatively successful at keeping some critical advanced semi-conductor tech out of China and other less agreeable States for decades between the 70s and early 2000s. The commonly cited examples are America's "smart" weapons/bombs etc having a significant edge for a long time, see the ease with which US warplanes took out huge swaths of Iraqi infrastructure in Gulf War 1 in the early 90s, again largely thanks to superior precision weapons and stealth etc, which in many cases were the products of superior semi-conductor technologies.
"Chip War" to some extent makes the argument it's in the more recent times we've seen US legislators lack of maintaining as much interest in export controls that has lead to the erosion of this advantage, not that controls don't work at all per se.
The export controls work in some cases not because the facts or design of the tech is unknown; the issue is that many cutting edge technologies need an entire complex ecosystem of businesses, people, production and supply lines to be present to work too - it's often this part that becomes very hard to simply replicate - see Taiwan's huge lead in chip manufacturing despite being in a hugely politically unstable geographic location. It's taking the USA decades to try and bring that kind of manufacturing capability at the cutting edge back to the US, and the US still can't compete with the scale Taiwan can produce the latest chips at.
I have a theory: If a country has an IQ of 95 or above, sanctions would likely prove ineffective in halting the acquisition of specific technologies within such a society.
The general consensus seems to be that low income and low skill workers will be affected real soon.
I don't know where we currently are in the hockey stick curve in ML/AI development, but if it keeps developing at this pace it will soon start hitting high-skill and high-income workers, and then we're going to have a huge economic problem.
Most low-paid workers are safe for the time being, since they do jobs that cannot be done by LLMs, for example, cooking, cleaning, caring for children, driving, etc. The current AI wave threatens only mid- and higher-income workers, for example, junior analysts in finance.
I'd be interested to know how many are former Boeing customers. The implication is that people are switching from Boeing to Airbus but it's quite possible a lot of these airlines have always been Airbus customers.
Avalon doesn't have fleet information on Wikipedia (I'm not in the industry and have no idea what a reputable place to go to get this information would be)
India is going through an economic boom period of which not that many people talk about. The cheap energy inputs as a result of Western sanctions on Russia also help with that, of course.
What is happening is that for decades, Indian govts have not focussed much on infra development. Current govt, which is in power for past 9 years, has put infra development on a rocket sled, with special focus on highways, railway stations, freight and airports.
Also, air travel is just within the reach of middle-middle class and above. Cirporate bookings are also on the rise.
On the whole, a huge boom is in the works. But dampners include eventual high prices and inefficiencies of logistics and poor management.
Indian are cheap travellers, and cutting 5 USD on a ticket that has no snacks means people will throng to it.
Market is astronomically competitive and consumers are very high price sensitive.
India's economy in general is strong but the recent expansion in air travel has been epic.
I'd also point out that US airlines are notorious for holding on to old planes. Delta in particular has an ancient fleet but they are excellent in maintenance so it's OK, it's not like the 737 has done anything to improve the passenger experience in the past 30 years.
Well old planes I travelled in India were more spacious. And new planes from US to India were so congested to the point of being claustrophobic. There is no way one can put meal tray on to that tiny front seat pullout.
Needless to say I am just a cattle class passenger. Upper classes would have better experience. Sure, old planes will last forever and everything in next decades will be replaced by same tight seating planes.
Seat configuration is up to the airline to decide to some degree. Some newer 737s have the ability for airlines to pack them dense if they decide to. A lot of airlines use 737s for short haul flights that do not have meal service, so not being able to fit a meal is not a concern for these customers. What they care about more is being able to split the costs between more passengers and offer cheaper tickets.
Packing in more people definitely improves the economics of the plane and gets the ticket price down and makes it available to more people. In the US we stopped giving out free meals on flights about 10 years ago, at best you can buy a $20 yucky cardboard lunch box, so the problem of the front pullout never comes up.
I think the most luxurious experience in US domestic travel I had was circa 2013 on a 767 widebody from NYC to LA but there were times circa 1990 when it was common to get on a 737 from Philadelphia or Pittsburgh to Albuquerque that was 1/3 full which feels spacious but that couldn't have been economic.
The industry here is competitive on price but not competitive on quality. New entrants in the industry have focused on price, but I can certainly imagine a start-up airline that builds a fleet of entirely A220 or E2-Jets around a hub in, say, Texas, could serve almost all of North America and advertise a futurist plane you'll like much better.
I've read all the comments and looks like no one has mentioned this, but as someone who worked a total of ~25 years, on both continents (10+15 years), I have the following observation, and it really is a simple one:
American hardware/software engineers work really, really hard, compared to their European counterparts.
Given identical goals, same level of funding, same underlying tech, and similar market size, a US startup will almost always be more successful then its European counterpart, simply because of the difference of total amount of work done in a given month/year.
I've worked with outstanding people in both continents. Top-notch, impressive engineers. I can easily say, the output of my US colleagues were significantly higher.
Less experience overall (5+5 years), but I strongly agree. I think the main reason for this are the incentives, which halvarflake mentioned briefly in his post.. if you can directly affect valuation of your company (which in turn directly drives your own net worth through ISOs/RSUs etc), working hard actually becomes fun and rewarding. Take that away and a 10-3, 4 weekdays, 60+ days vacation, work life balance kind-of-job starts looking a whole lot more appealing in comparison.
Yes and now compare to Asia... one of TSMC's complaints about how hard it is to run a top-tier fab in the USA is that Americans don't work as hard as Taiwanese people do. So compare Taiwan to Europe and imagine the gap!
What's fascinating about airplane design for me is not the huge technical complexity, but rather, the way it is designed such that a lot of its subsystems are serviceable by technicians so quickly and reliably, not just in a fully controlled environment like a maintenance hangar, but right on the tarmac, waiting for takeoff.
Designing the airplane to minimize required maintenance and to make maintenance and inspections easier and faster is a huge issue for the engineering department. Also make it very difficult for the mechanics to do things wrongly.
As it was pointed out to me, airplanes sitting on the ground are a black hole sucking up money. Airplanes in the air carrying payload (note the "pay" in payload) are making money. Boeing understands this very well, and is very focused on getting that airplane in the air making money as much as possible.
