Tesla Stock Still a Bargian Over $1,000 and Trillion Dollar Market Cap
$TSLA catalysts - 10/26
1/ FY’22 vol/eps increases Oct
2/ Austin/Berlin open Nov
3/ Biden $8K EV credit Dec
4/ Inv Grade Upgrade F’22 1Q
5/ FSD L3+ autonomy F’22 2H
6/ 4680 scale product’n F’22 2H
7/ CyTruck launch F’22 2H
8/ TSLA Compact launch F’23
$1,200 PT 6-12 mo
— Gary Black (@garyblack00) October 26, 2021
One of Tesla's top analysts is Gary Black, who has a very grounded and thorough approach to his research on Tesla. He is a Tesla bull, but not a hyper bull. He sees the positive catalysts for Tesla, but places no value on autonomy for Tesla vehicles.
Others in the Tesla community place a lot of value on autonomous software and the eventual uses of Tesla Bot, seeing Tesla reaching a 20 trillion dollar or more market cap in the future decades.
Regardless of which "camp" you are in, Tesla shares are still relatively cheap today. You're likely going to beat the S&P 500 index with Tesla as Tesla has many advantages and I believe even without autonomy, energy, and Tesla Bot, Tesla will reach many multiples higher than it is today in this decade alone.
Tesla Has Many Advantages and is Far Ahead
Tesla is in a situation very similar to what happened to smart phones in 2007. During that time, Apple released the first iPhone and it was a very clean phone with no extra buttons to type like all the other phones had. The other phone companies were not able to catch up and eventually, Apple and iPhone (along with Android), ended up taking most of the market. The same will be true for Tesla. Legacy auto makers are now talking about moving to electric vehicles, but they are too late to the game, just like the original phone makers.
Tesla is far ahead in battery manufacturing and battery deals with suppliers as well.
Here are the advantages that Tesla has that make the stock a bargain today and for the many coming years ahead. Tesla is in the early innings of its growth and I believe will get to 20 million vehicles sold by the end of the decade, per year, along with revenue from autonomous driving and Tesla Bot.
Tesla Is First Mover to Electric Vehicles
Tesla has been working on electric vehicles, with Elon Musk, since 2004, with the original Roadster being released in 2008, 2012 for the Model S, 2017 for the Model 3, and 2020 for the Model Y. We may see the first CyberTrucks in China and the U.S. in late 2022, along with Tesla Semi and the new Roadster shortly thereafter. We'll then see the "Model 2" soon after that, and likely, Tesla will start to make a van, a bus, and any other vehicles they deem to be needed to meet the market demand for each vehicle segment.
this first mover advantage is impressive, even with Rivian already starting to deliver electric trucks. Even with Rivian having a head start now, I believe Tesla will quickly surpass them in volume production with the CyberTruck once it starts production in late 2022.
Tesla Has a Huge Manufacturing Advantage
Elon Musk has stated many times that Tesla's key advantage is its ability to do manufacturing. Elon Musk reiterates over and over that prototypes are easy and that volume production is very difficult. He has the experience to make this claim and even says it to warn other companies starting to make electric vehicles, like Rivian, Lucid Motors, and others to help them with expectations and to see what it takes to succeed. Elon Musk wants the world to transition to sustainable energy and doesn't want other electric vehicle makers to fail. It will just take a lot of work for them to reach volume production AND be profitable.
Tesla is already at a production rate of over 1 million vehicles per year. For example, Lucid Motors wants to reach 250,000 vehicles per year in 5 years. Tesla is already going to be doing this in 1 quarter TODAY.
Tesla Will Have 4 HUGE Giga Factories Operating Soon
Giga Berlin and Giga Austin (TX) are about to start production and deliveries to customers. Early next year, we should see the first vehicles being delivered to customers. With so much demand for Tesla vehicles and Tesla being production constrained, it would be great if Tesla could open up another giga factory.
I'm not sure I see this happening as Tesla has its hands full with everything that needs to be done at the existing giga factories and there many not be enough qualified talent around to make another giga factory run efficiently. We do know that from Tesla's latest shareholder meeting, that Tesla will likely start scoping out areas for a new giga factory in 2022, and announce a location and starting building it in 2023. I think India makes a lot of sense if Tesla can make it work and bring the cost down of the vehicle significantly.
Tesla Will Eventually Capture Every Vehicle Segment
There are a number of vehicle segments yet to be captured by Tesla. These include:
* Releasing the CyberTruck for the pickup truck segment
* Releasing the new Roadster for the expensive sports car segment.
* Releasing the semi
* Releasing a van
* Releasing a bus
* Releasing the compact "Model 2" vehicle
* Releasing an even cheaper version than the compact Model 2 to compete with the Toyota Corolla.
Are there vehicle segments beyond these that make sense? I don't see any. By the time Tesla is producing vehicles for all of these major segments, it's possible that batteries get to a point that producing a vertical take off and landing flying vehicle starts to make sense.
Regardless, once Tesla is addressing all of these major segments, they will be producing over 20 million vehicles per year and the revenue is going to be staggering.
Tesla Robotaxi and Autonomous Driving Will happen
Gary Black places no value on robotaxi for Tesla and believes that everyone is going to have Level 5 autonomy by 2025. I see this a little differently. Solving autonomy is no simple problem and even if Lidar and Radar become less expensive, you still have the problem of having to make a decision about which one is right as opposed to the vision with cameras.
Tesla has done the right thing and removed Lidar from its vehicles. With only cameras and vision now, Tesla can create autonomous vehicles very inexpensively. All that is needed now is for Tesla to keep getting more and more real world data from its FSD beta testers and to create a system that can easily handle all the scenarios of the world's roads, including construction and any dynamic and edge cases that occur.
I believe Tesla will get there first, before anyone else and they will greatly reduce the transport cost per mile, putting Uber and Lyft out of business if those companies don't adapt. Hertz, which bought 100,000 Tesla Model 3 vehicles has adapted and I believe they will be successful for the long term.
Tesla Bot has Huge Potential If It Works
The big wild card in all of this is Tesla Bot. Nobody knows exactly what Tesla Bot will do, except that Elon Musk has stated it will be used for mundane, boring, and dangerous tasks. How many people and companies will benefit from this remains to be seen. But, if Tesla can use the same principles that autonomous driving and the neural net for that are using, it stands to reason that Tesla will be able to train a neural net for a robot to walk around and interact in the real world.
If Tesla Bot becomes widespread, it's only going to increase Tesla's revenue and market cap by further trillions. After all, Elon Musk has asked, "What is the limit of the global economy?"
What do you think about Tesla stock at its current price and price earnings ratio? Is it still a bargain today? Will it continue to go up in value or come back down a little?
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter, Facebook, LinkedIn and Instagram to stay in touch and follow his Tesla news coverage on Torque News.