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Posted on EVANNEX on May 25, 2023, by Peter McGuthrie
Many Tesla investors think that the automaker’s future of autonomy could generate significant revenue. One analyst recently predicted that Tesla’s stock will surge in the coming years through the company’s monetization of robotaxis, and the take even got the thumbs up from CEO Elon Musk in recent weeks.
Above: A Tesla Model 3 (Image: Casey Murphy / EVANNEX).
Ark Invest head Cathie Wood says she expects Tesla’s stock to jump 1,030 percent to $2,000 by 2027, much of which she attributes to the automaker’s future robotaxi business, according to The Motley Fool. During Tesla’s recent shareholder meeting, Musk also said that Wood’s valuation model was the best analysis of robotaxis yet.
Musk says the valuation of robotaxis would let Tesla sell cars at software margins, instead of the vehicles selling at the automaker’s already-high margins for the auto industry. Since all of Tesla’s vehicles are equipped with the hardware to use the company’s Full Self-Driving, the thought is that both vehicle owners and the company itself will be able to let the cars drive others and generate revenue while not in use.
In time, Musk predicts FSD to generate “two or three times the original value, or sale value of the car, in robotaxi revenue.”
Currently, Tesla’s market capitalization sits at almost $570 billion, making the company worth as much as the next five most-valuable automakers combined. The automaker dominates the electric vehicle market, having held around a 24-percent market share of all battery-electric vehicle sales in March. Behind Tesla, the next closest competitor holds just 15 percent of the BEV market share.
Tesla is also preparing to build a new Gigafactory in Mexico, which is set to build a mass-market vehicle that’s more affordable than its current cars and will also include the capacity for FSD. In the field of autonomy, Tesla is far ahead of competitors with significantly more Autopilot- and FSD-equipped vehicles than any other company. FSD beta testers also provide a significant amount of data to help teach the automaker’s AI, and its move toward a mass-market vehicle could only continue to increase the number of cars using these systems.
Three different potential outcomes have been detailed by Ark Invest with its 2027 valuation model. In a bear case, the firm expects Tesla to reach $1,400 per share by the same year, while it expects the stock to reach $2,500 in a bull case. Its intermediate outcome predicts Tesla to reach $2,000 per share, bringing in as much as $1.02 trillion in revenue by 2027, with about 44 percent of that coming from its robotaxi business.
It’s not yet clear when Tesla will launch a ride-hailing program for its vehicles, and to be sure, the FSD beta still has a long way to go before reaching higher levels of autonomy. Still, Wood thinks Tesla could generate $4 trillion in revenue from robotaxis and a ride-hailing service by 2027, and as much as $9 trillion by 2030.
At the time of writing, Tesla’s stock is trading for $179.99 (-$0.15), down 0.08 percent in after-hours trading.
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