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Tesla shares fall after Elon Musk's Twitter poll. Elon Musk says Tesla is building a humanoid robot. Elon Musk says Tesla price hikes are due to supply chain issues. Watch Consumer Reports trick Tesla's Autopilot system. In , Elon Musk had big plans for Tesla.
Listen to his predictions. Elon Musk has a lot to say about Covid Some of it isn't true. Watch the Tesla Cybertruck's unbreakable windows break. Elon Musk busts a move in Shanghai. See Tesla's new Model Y. Ark has changed its price target so drastically from last year, Kenney wrote, because the firm increased its assumptions for Tesla's ability to efficiently use its capital to finance its ambitious growth plans.
Ark is now also factoring in gains it expects Tesla to reap from selling car insurance to its customers in some states. Read More. But other analysts who are critics of Tesla were quick to criticize Ark's analysis, saying it didn't take into account the cost of the growth that it is projecting for Tesla.
While the company reported better-than-expected earnings and top line, its stock price rallied down on April The expectations from the company are sky-high. After trading up by more than percent in , Tesla stock is currently trading flat on a YTD basis. However, that has been the case with most of the growth stocks, especially EV plays.
The rotation in the markets from growth to value amid expectations of higher interest rates and inflation is driving this shift. Tesla sold nearly half a million EVs in and aims to sell 1 million cars by There's a high likelihood that Tesla would be able to achieve this number. There were many skeptics who thought it wouldn't be able to do half a million vehicles in Tesla missed that target by just vehicles.
Applying this growth rate to deliveries, we arrive at estimate deliveries of nearly 3. How much Tesla stock will be worth in has become a major talking point with some major talking heads on Wall Street offering their forecasts. ARK also increased the probability of Tesla achieving fully autonomous driving within five years. It should be seen more like a tech company.
Only very long-term forecasts and growth would start to make sense of its current valuation. This revenue should almost entirely flow to its gross profit. Along with this, its automotive business should continue to grow at a very fast clip, as we saw in its EV sales projections. Musk expects the energy segment, which includes solar and the energy storage business, to become as large as the automotive business.
The allure of having Tesla as the top or one of the major holdings of an ETF is irresistible. This brings us to a potential party spoiler. As the share price of Tesla climbs, market players get more enamored with the brand and its story, enticing more investors to get on board. Likewise, the associated ETFs see heightened interest and appreciation.
In turn, the fund managers would have to buy more Tesla shares with the inflows. This results in a virtuous cycle. Unfortunately, it's not a one-way street. If the halo starts to unravel, TSLA could suffer, and the share price begins its decline. The bevy of related funds would experience withdrawals correspondingly, and a downward spiral ensues in a race to the bottom. This undesirable scenario could come true if Tesla's autonomous fleet failed to materialize, and it has to rely on the sale of EVs for an extended period.
Don't get me wrong. I am not a Tesla-basher. However, to be a responsible writer, it's imperative to share my thoughts on the adverse scenario as well. With government policies and environmentally aware consumers supporting the shift to electric vehicles, industry analysts are projecting strong growth in EV sales at the expense of conventional ones.
The share of new car sales of EVs could jump from a low single-digits percentage presently to around 15 percent by That corresponds to around 20 million new sales of EVs in How much of this pie would belong to Elon Musk's Tesla? According to Mario Herger, a prominent technology analyst based in Silicon Valley, Tesla could be selling as many as 5. This represents around one-quarter of the 20 million new sales of EVs in as estimated by Canalys.
A projection posted on EV blog CleanTechnica has a slightly higher forecast of 5. That would bump the supposed Tesla market share to 28 percent. Note that this projection should be viewed as a rather generous one considering the Model 2 is expected to form the bulk of the sales at 3 million units, followed by 1 million units each for Model Y and the Cybertruck. Model 2 is only a hypothetical future model and recent reports noted the company has been quiet on this entry-level Tesla.
The forecast for the sales to start with vehicles in , quadrupling to in , and then doubling in , and a near doubling in would hinge on the demand truly matching expectations and the production being able to ramp up that quickly. Similarly, Cybertruck has not been released. Yet, either estimate would only fall near "a plausible case" in which ARK Invest deemed to be on the pessimistic side out of 40, simulations.
That "Example Bear Case " estimated that Tesla would sell 5 million cars. At the other end, Tesla could see a doubling in sales, selling as many as 10 million cars based on the "Example Bull Case". That would bring its share of EV sales to half the global total. This level of sales would mean Tesla increase its sales by 20 times in five years.
Taking half the world's EV market justifies Tesla's rich valuation multiples and outstanding market cap against the other EV players, even neglecting the contribution from its touted potential autonomous ride-hailing business. However, is that sales forecast realistic? A large premise for the substantial rise in EV sales is the big shift in China thanks to policy support. The share of EV sales in China of the total car sales has been higher than other regions, and its lead would become more pronounced in the next few years.
It should be noted that, in China, the Tesla brand and the aura of Elon Musk are very strong. Hence, it's not surprising to know that it's the dream of many Chinese to own a Tesla car. Nonetheless, dreams can be very different from reality, and car buyers generally end up with other brands either due to affordability issues or features that its rivals provide. Tesla cars are no doubt experiencing robust sales currently. However, a large driver has been the eagerness of early adopters and the appeal of scarcity.
It would be erroneous to assume that Tesla can simply ride the growth in the EV market in the same proportion as it started. The buyers coming in subsequently would comprise those who are attracted by the low price points offered by Tesla competitors or features relevant to their needs such as NIO, Inc.
Expanding on this point, it's worthy to highlight there are several types of electric vehicles. They also come with a larger battery and electric motor. Mild Hybrid cars are like a lite-version of PHEVs - their electric motors are employed to support the engine only during acceleration and cruising and the electric motor cannot power the car on its own.
According to estimates from Boston Consulting Group [BCG], the share of MHEVs could even surpass that of diesel-powered cars by to become the second most popular powertrain type after gasoline-powered ones. Since Tesla has no stated ambitions to compete in the other EV categories, it follows that it will fight with the other BEV-makers for that 7 percent share of the total global car sales of around million in That calculates to be around 7.
In other words, taking the bull case of 10 million car sales by Tesla in , the company would be responsible for more BEVs than the entire projected BEV market. Taking the bear case of 5 million cars, Tesla would account for around two-thirds of the total BEV sales in the world. This sounds rather improbable, considering the bevy of EV-maker wannabes sprouting up in recent years, with more to come.
It's tempting to shout out the names of the large car manufacturers today e. XPEV are in a sweet spot. They have the advantage of an attractive home base where the largest demand growth is and an abundance of generous government incentives to spur the take-up of electric vehicles. For instance, Chinese Premier Li Keqiang said during an address in March to the National People's Congress that the government will help multiply the number of EV charging stations and battery-swapping facilities.
The former will diminish a key benefit of owning a Tesla versus other BEVs - the privilege of access to Tesla Superchargers. A key advantage of Tesla Superchargers is that car batteries get recharged significantly more quickly than a typical charger. There were many skeptics who thought it wouldn't be able to do half a million vehicles in Tesla missed that target by just vehicles. Applying this growth rate to deliveries, we arrive at estimate deliveries of nearly 3.
How much Tesla stock will be worth in has become a major talking point with some major talking heads on Wall Street offering their forecasts. ARK also increased the probability of Tesla achieving fully autonomous driving within five years. It should be seen more like a tech company. Only very long-term forecasts and growth would start to make sense of its current valuation.
This revenue should almost entirely flow to its gross profit. Along with this, its automotive business should continue to grow at a very fast clip, as we saw in its EV sales projections. Musk expects the energy segment, which includes solar and the energy storage business, to become as large as the automotive business.
The company is an EV pioneer and has a lot that would maintain its EV lead over peers. In , Tesla sold more EV battery capacity than its next four biggest peers combined. Even in the long term, its battery capacity ambitions outdo its major competitors. Therefore, it's expected that in the long term, Tesla might still be calling the shots when it comes to battery technology and cost leadership, which is one of the key things to establish EV supremacy.
As EV penetration continues to rise, Tesla should keep on taking increased market share. Unlike many new EV companies and legacy players that are getting started on their EV journey, Tesla is generating profits and free cash flows. It has a clear growth path over the next few years and its sales should continue to rise on new model launches and new market entries.