Tesla to $10T then $100T then?

Hi everyone - I just put together a short podcast about the path for Tesla to $10T, then $100T, then ____

Steps are as follows:

Step 1: cars + energy + insurance. $2T in revenue, $400B per year in profit. At a 25x PE ratio, that’s $10T market cap.

Step 2: is Full Self Driving. $1T per year in profit to the bottom line. At a 25x PE ratio, that’s worth $25T in market cap or more. Add that with the value of step 1, you get to roughly $35T in market cap.

Step 3: :exploding_head::exploding_head::exploding_head::exploding_head:

Would love to hear what everyone else thinks?

I think you’ve lost it - putting it politely.

35 trillion is about half the entire world GDP.

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I’d agree. Given its growth over the years, I think the potential upside is now relatively limited.

I wonder if you are related with @CuttingThroughTheBS ?? :thinking:

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Yes that was my old channel in 2020, those old posts all aged very well. Hopefully this time I can stay consistent. Lots of thoughts to share. Up around 4x from then.

Sorry what… lol. How exactly are all those figures being calculated :rofl:

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Come on. You know the answer to this :smile:

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Magic 8 ball, obviously.

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I’m surprised that you identified him so quickly. Impressive!

Me and Vedran chatted a lot of threads here on Trading212 forums at the time.

cars = $50,000 ASP x 20,000,000 cars = $1T in revenue, 20M is Tesla’s plan for 2030
energy = roughly 1x the value of the car business - direct guidance from Tesla board, Warren Redlich did some videos on this
insurance = 30%-40% of value of car business, again direct guidance from Tesla board

cars+energy+insurance > $2T in revenue but anyway

20% operating margin figure, Tesla are already at 17% up from about 5% a year ago, this will soon be over 20%.

So that’s step 1.

Step 2, requires quite a bit to breakdown here but roughly an (estimate on x number of cars in the robo taxi fleet x time utilized x avg price per mile) - costs. FSD could be multiple $Ts in PROFIT per year. Just sit down and do the analysis, it’s mind blowing. This is probably the most unestimated part of the business. Luckily for me I understand neural nets so I already know they are going to achieve it with current architecture.

Step 2 will have a profound change on society at scale, it will basically make an Uber 5x+ cheaper and owning a car expensive AF, as such we will all likely just use Tesla Robotaxis.

Can I ask what the 20m car sales is based on? As global is seemingly about 60-70m a year for ALL cars (so Tesla needs over 30% market share):

And if the robo taxis are that effective studies have shown it would likely reduce car ownership as you say in your last sentence, so the real play on Tesla is as a future robo taxi company everything else is irrelevant for long term investors? So the big risks is really that other car manufacturers produce better or cheaper (or both) cars, and that someone like Intels mobileye beats Tesla to the tech race?

I am likely to be wrong on Tesla I just find too many ifs and buts for a boring investor like myself, but keen to learn the figures if I am missing something.

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In addition, let’s not dismiss the fact that much of Tesla’s current valuation was mega fueled by the FED policies/money printing and retail hype during the covid crisis.

As inflation turns ever hotter and global debt burden getting ever larger it is pretty safe that a 10x jump let alone a 100x rise from this 1T base is in fact not grounded in reality, completely surreal imo. But ‘serious’ discussions like this are a prove of over the top sentiment (for me at least an indication). We all know how that ends up …

20M is based on their actual plans. Whether they achieve this is another question. But my money is them executing the plan.

Your disruption point is correct, those 20M cars being bought will be by companies and people buying the cars to generate them cashflow, (think a house you rent out), not to drive for themselves. Tesla covered this in the past but roughly I think the car will produce $10,000+ in cashflow per year to the owner. In this case the ASP likely be a lot more.

With regards to other manufacturers producing cars better & cheaper, I doubt this very much. For many many reasons, but the core reason is engineering speed. They iterating too fast to catch TBH, costs are reducing fast. Look at the gross margins (excluding credits) overtime, it’s almost 30%, this will soon be 40%.

With regards to FSD competition, this is big subject, but in short, MobileEye is closest competitor, but multi-modal models i.e. multiple sensors is actually a flawed architecture. Makes for amazing demos but once you scale up the use its pretty unreliable.

Vision is the holy grail but no-one actually done it yet, Tesla are very close. The new updates to the neural nets over the coming 2-3 months will make FSD almost close to complete, architecture wise not data-wise. It will just be a case of covering the edge cases. It’s a really tough long tail problem. Up until now Tesla have been slowly increasing NNs and deleting lines of code, once NNs fill the majority of the stack the rate of improvement will be quite fast.

A few months back a few 1,000 cars were running FSD, it’s around 60,000 cars now. You can think of this similar to Google PageRank, once you crack the improvement process + traffic = monopoly.

I expect others will crack it too but you need the fleet to get the edge cases, who else has millions of cars with 6 cameras + data running in the world today?

Smart thing to do for autos would be to integrate mobile eye into all cars and follow the same process. But due to poor margins I doubt they will, it’s really innovator dilemma all over again.

Completely agree on FED but simply go through the gross profits, growth in deliveries, remove op ex, and do this going out 5 years. The company will be producing over $100B in profit per year.

For a company growing at 50% per annum I think a 50x PE is very cheap, that’s over $5T market cap. At a 15% discount rate back today that’s a present value of $2.2T.

Don’t let the outside factors be a mental trap. Here’s the last 4 quarters. Deliveries are roughly compounding at 15% per quarter.

Page 4 here: https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Update_O7MYNE.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D"tsla-q4-and-fy-2021-update.pdf"

You heard it here first, Tesla will be the first Trillion Trillion company, happy?

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First $100T company for sure. If they can crack the robot, then $1Q is possible

First 100T Turkish lira for sure.

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Probably there if we’re thinking Italian Lira

SpaceX builds the transport, Tesla build the batteries to fuel them, Tesla builds the staff (robots).

Before you know it we have materials being mined on Mars and fully stocked shipments coming back to Earth to use in production of batteries and whatever else.

Rinse and repeat…Thoughts?

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