Tesla’s share price surge over the past few days, and the past year, has stunned the financial markets and the automotive industry.
But some analysts believe that we’ve seen nothing yet, and if Tesla can land its “full self driving” technology, and lead the switch to autonomous vehicles, the stock could be worth up to $A6 trillion by 2024.
The stock’s recent gyrations have been attributed mostly to the actions of short-sellers trying to cover their positions. But to focus on that only ignores the optimism and enthusiasm for Tesla products, and its prime position in what now seems to be the inevitable, and rapid, transition to electric vehicles.
As we have reported, the recent surge has attracted some big forecasts from major investors and analysts. Investor Ron Baron predicts the company could draw in revenues of more than $US1 trillion,and Ark Invest predicts the shares – currently around $US720 – could jump another ten-fold to around $US7,000 within five years.
But there is more to that analysis. The $US7,000 prediction is just the Ark Invest “base case”.
Its “bull case” puts the stock at $US15,000 a share, but it actually sees a potential share price of $US22,000 by 2024 if Tesla can deliver autonomous driving at a fraction of the current cost per mile of the likes of Uber and Lyft.
That translates into a market capitalisation of $US4 trillion, or $A6 trillion, compared to just $US131 billion at the close of trade on Wednesday in the US.
Ark Invest’s reasoning is published in a blog on its website. It makes fascinating reading and gives some insight into why so many big companies, Google’s Waymo, GM’s Cruise, and the Mike Cannon-Brookes backed Zoox included – are spending hundreds of millions of dollars trying to land autonomous driving technology
That is not as easy task, and it should be noted that even Ark Invest is not convinced that Tesla can get it right, or win that race. In fact, it only gives it a 30 per cent chance. But it says if Tesla does get it right, and can launch an autonomous taxi services (what Elon Musk calls robo-taxis) then the value add could be huge.
“A fully autonomous taxi network could break the mold of a traditional automotive manufacturer’s business model completely,” Ark Invest writes.
For the full story, and graphs, please go to our EV-focused sister site, The Driven.