Reader note: I published this page in October of 2020 and plan on leaving it up through 2030. This page was a way for me to gather my thoughts. I also think it will be fun to revisit occasionally to see if my thinking was correct.
If I add any content, I’ll note it with a timestamp.
I don’t buy many individual stocks these days. Index funds are simple, effective, and the right choice for the overwhelming majority.
However, sometimes I see a company that has such incredible potential, I can’t help but buy the stock. Tesla is one of these companies. As I type this in October of 2020:
- Tesla is on pace to sell close to 500,000 cars this year
- Tesla is the clear leader in battery technology
- Tesla’s lead in manufacturing technology is significant
Traditional automakers are struggling to pivot to a future where transportation will be fueled by electrons instead of hydrocarbons.
Writing down my thoughts helps me think about them on a deeper level and that is what I’m doing here. I’ll update this page annually to see how accurate my predictions were.
Tesla In Ten Years
Tesla completes the initial phase of its China factory expansion and starts selling Model Ys in China. Other notable developments:
- 500,000 vehicles sold
- FSD launched
- 11/16: Tesla is added to the S&P 500
This is a building year. There will be many developments for Tesla nerds to get excited about like factory expansions, Dojo, and Full Self Driving improvements. However, Wall Street likes to see shiny new things and there will be none, so the stock may not move much.
- Completes Berlin factory: first Euro Model Ys delivered in Q2 (7/27 update: Wrong! Q4? Wrong again! Will this happen in the first half of 2022?)
- Completes Austin factory: first Cybertruck delivered in Q4 (7/27 update: Wrong on Cybertruck and wrong on the factory! Q1 of 2022 and 2023 are my best guesses now for the truck. Maybe Tesla will still get the Y out this year.)
- Dojo comes online (8/23 update: Wrong! At AI day, Musk said “next year”)
- Tesla perfects 4680 battery production (8/23 update: Wrong! The Austin and Berlin Model Y will launch with 2170s. The test Kato Road place is producing 0 volume. Yet another delay.)
- At least one new Gigafactory announced
- Vehicles sold: 700,000 (40% increase)
- 4/12: Rumor has it that Tesla may open its charging network to other vehicles. This could be another large source of profit.
- 4/20: Lately, I’ve been second-guessing Tesla. Tesla will probably sell 1,000,000 cars this year. At its current market cap of 687b, Tesla stock costs $687,000 per car in potential 2021 sales. This is quite ridiculous, but easily justifiable if you think that Tesla will be the first to achieve autonomy. However, FSD has been delayed for years and keeps getting pushed back. While I think Tesla makes great cars, not many will buy them if Waymo figures out FSD first and rolls out a cheap robotaxi service. I predicted that Tesla would launch a robotaxi service in 2022,. I’d be surprised if this comes to pass.
- 4/26: I just listened to the earnings call and it didn’t help with my recent negative feelings towards Tesla. I’m not selling my shares, but:
- There was no mention of Cybertruck. I’m pretty sure that Tesla will produce no more than 0 Cybertrucks this year. I wonder if it will take until 2023 now to achieve volume production?
- Elon mentioned that volume production of 4680 batteries is 12-18 months away. That’s ElonTime. Reality is probably 24-36 months. I hope that I’m wrong.
- 6/28: The charging network rumors are true.
- 7/6: Meh. Half of the year is over and FSD is continually pushed back. Berlin is also delayed and I’d be surprised if we see the Cybertruck this year. I’m still holding all of my shares, but remain skeptical.
- 7/26: While the 2Q earnings were very good, there were two pieces of information that are related and signal more delays:
- Cybertruck: On the call, a Tesla executive stated that the Cybertruck will follow Y production in Austin. Since Tesla will have to move fast to get the Y out this year, there is no way we’ll see the Cybertruck in 2021. If I had to guess, I’d predict that we won’t see a Cybertruck until the second half of 2022 and won’t see volume production until 2023. Rivian and the F-150 Lightning and will both beat Tesla to market.
- 4680 batteries: Perhaps the most important thing that Musk said on the call was the Tesla ‘has a backup to make the Model Y in Austin even if 4680 batteries aren’t ready.” Translation: “We know that the batteries won’t be ready in time, so we’re doing something else.”
- What the above points mean: Batteries are the key to bringing down the price of cars. They’re also the key to making the Cybertruck since it requires a LOT of them. A delay in 4680 isn’t good. I’m still holding on for the long-term, but it looks like 2022 will be mostly a building year similar to 2021. I was hoping Tesla would be farther along. I’m not expecting much stock price movement in the next 6 months.
- 8/11: Per the Tesla Daily podcast, the earliest we’ll see a Cybertruck is the second half of 2022, but perhaps not even until 2023. Bummer.
- 8/22: More delays. At AI Day, Elon states that Cybertruck is a year away. And that’s Elon time. So, I’m thinking early 2023 is the actual date. On a personal note, Elon also stated that CT will be the first vehicle with Hardware 4.0. I want to buy a Tesla, but am holding out for Hardware 4.0 and also the 4680s (I want more range) which are also delayed, so my Tesla purchase will most likely be punted until 2023. Bummer. Also, Dojo is delayed until next year too.
The $25,000 Model 2 is announced and will initially be produced in China and Berlin. Tesla starts producing 4680 batteries in large quantities.
- More Gigafactories announced
- Some form of a robotaxi service launches
- The Tesla Semi launches
- Vehicles sold: 980,000 (40% increase)
1/27 (2021 Q4 earnings): Q1 results, meh. The Cybertruck delays are hard to stomach. I’m also disturbed by Musk’s enthusiastic predictions for FSD (does anyone really think they conquer this in 2022 as Musk predicts?). But, Tesla seems to be executing well.
2/7: My kids are almost as obsessed with Tesla as I am: “Daaaad, when are we going to get a Tesla?!” I told them that when the share price hits $1,500 ($500 after the 8/25 split), I’ll place an order that day. I think that the odds of this happening in 2022 are about 25%. I’ll update this number after the Q2 earnings call. Note: The current stock price is $933.
4/26 (2022 Q1 earnings): This earnings call was a mixed bag:
- Tesla executed very well in a difficult environment of supply shortages and inflation. It is in a better position than any other manufacturer to profit as the world moves to electric vehicles.
- Tesla’s backlog is huge. Most of its vehicles are sold out for 2022.
- The Cybertruck has tremendous hype and over 1,000,000 orders.
- 4680 batteries: For the first time, Musk mentioned that the Model Y from Austin would be produced with 2170 batteries. I can see no other explanation other than 4680 production is lagging.
- Austin Model Y: Tesla isn’t selling this yet. Why not?
- FSD: When asked on the conference call about the status of FSD, Musk said that ‘we should all participate in the FSD beta program and see for ourselves. Weak.
- Twitter: Just what Elon Musk needs, more stuff to do.
- 1500 Tesla Indicator: My kids are obsessed with Tesla and I told them I’d buy a Model Y when the stock hit $1,500 ($500 after the 8/25 split) and a Roadster when it hit $3,000 ($1,000 after the 8/25 split). I’d guess that the chance of these happening in 2022 is 5% and .1% respectively. Sorry kids. Note: The current stock price is $889 a decrease of $44 since I last wrote about this on 2/1.
7/23 (2022 Q2 earnings): Meh. Tesla is mostly executing well, but the 4680 ramp-up is incredibly behind.
- Per Elon Musk, the Cybertruck is delayed until mid-2023, so this probably means 2024.
- Andrej Karpathy quit: Did he quit because FSD is almost done or hopelessly behind? I have no idea.
- In happier news, if COVID stays under control in China, Tesla is going to have an incredible second half.
- 1500 Tesla Indicator: My kids are obsessed with Tesla and I told them I’d buy a Model Y when the stock hit $1,500 ($500 after the 8/25 split) and a Roadster when it hit $3,000 ($1,000 after the 8/25 split). My prediction from the last update has not changed; the chance of these happening in 2022 is 5% and .1% respectively. No Tesla for you kids! Note: The current stock price is $816 a decrease of $73 since I last wrote about this on 4/26.
8/12: Hey look, the tax credit is back for 2023! Our cars are getting old and we do a lot of driving, so I gave up on my $500 price target rule and ordered a Y. I’m not sure I’ll carry through with the order, but it’s nice to have in my back pocket.
12/17: The fall of Tesla’s share price has been breathtaking, especially in light of how the company is doing:
But then, I see smart people say things like this:
What does Brad not understand?
The transition to EVs: If you think that the world is transitioning to EVs, comparing an old school car company to one that specializes in EVs is like comparing apples to frogs. Or, like comparing the Model T to a horse in 1908.
Ford can’t just buy batteries and start producing EVs at scale with competitive prices. Batteries are difficult. Also, the best EVs are ones that are specifically designed from the ground up. Ford has promised to make 2,000,000 EVs in 2026. Tesla will do it in 2023.
The cultural impact of the transition to EVs to a legacy car company is underappreciated. EVs are far simpler than fossil fuel burners, so what do you do with dealers that make most of their money from repairs? There isn’t much to repair on an EV. What do you do about auto unions when much of the workforce is no longer needed to assemble EVs?
In the case of Tesla, what about the Supercharger network? It’s like owning the car and the gas station.
I wonder if Brad is aware that Tesla is also an energy player? I think what Tesla is doing in Texas is pretty neat.
To summarize, the price of a stock isn’t a Now Game, it’s an Expectations Game. Legacy auto is going to have a hard time. It is years behind where Tesla is now. Where will Tesla be in 5 years?
And while Tesla is doing well, the Chinese are coming on strong. Perhaps an upstart EV player from China will destroy Tesla.
No matter who you think will win, comparing an EV manufacturer to Ford isn’t correct.
Finally, I don’t wish to argue with Brad or anyone else. Time will decide. Come back in 3 years at the end of 2025. The markets will tell us all if I was right of full of shit!
12/31/2022: The fall of Tesla stock was stunning, but so was the run up. It may be a very long time before Tesla sees new highs, but Tesla still has a lot going for it.
At least one variant of the Model 2 ($25,000 vehicle) launches, probably the Chinese one.
- Vehicles sold: 1,372,000 (40% increase)
- 8/22/2021: I’ll probably buy my first Tesla in the first half of 2023. I’m waiting for a Model Y with Hardware 4.0 and 4680 batteries (I want more range). Because of continual delays, I don’t see this vehicle being produced before the end of 2022 at the very earliest. Bummer.
- 1/4/2023: I did order a Model Y LR, but canceled it. The price was just too steep for me to swallow,. That combined with a crummy stock market in 2022 is causing me to act more conservative.
The Model 2 expands into Europe.
- Vehicles sold: 1,920,800 (40% increase)
2025 and beyond
At this point, it gets difficult to predict what Tesla will do. I do think that Tesla’s market capitalization has a chance to reach 1 trillion before the end of 2025. I also expect Tesla to be selling 2-3 million consumer vehicles annually. Other products and services that will contribute to profits include:
- Tesla’s market capitalization reaches 2 trillion
- Tesla records sales of 10,000,000 vehicles annually
- About half of new vehicles sold in the United States are electric (not all will be Teslas, even though Tesla will lead)
- Car ownership is drastically reduced as humans rely on super cheap, automated Robotaxi services to get around
- At least a couple of traditional auto manufacturers go bankrupt
- Batteries reach a point where cheap, VTOL air transportation becomes reality
Tesla has a chance of becoming the biggest company in the world. This would imply a market cap of considerably more than 2 trillion since as I write this in 2020, Apple is already near the mark. By 2030, I expect that Apple will be worth considerably more.
Much has to go right for Tesla to achieve these goals:
- Tesla will have to stay ahead of the competition. This will require constant innovation.
- Tesla’s energy business will have to grow considerably. This includes solar panels, solar roofs, and storage.
- Tesla’s services business will have to grow considerably. This includes software-based products like Full Self Driving and infotainment. It also includes support services like supercharging and insurance.
- Much of Tesla’s ambitions depend on China. China and the United States have a tense relationship now and it could further deteriorate.
As the years go by, I’ll fill in the following:
This chart is silly. Businesses don’t grow in a linear fashion. Even if they did, the stock price is not a direct reflection of the business. Stock prices behave more like the evolutionary biology concept of Punctuated Equilibrium. They may do nothing for years and then blow up suddenly, just like Tesla did in 2020. But, over the long term, everything evens out, so I’ll keep my silly chart.
1/2/2021: I totally blew the market cap prediction but in a good way. Yay for horrible guesses! 2020 was a massive year for Tesla the company and an even bigger one for Tesla the stock. Stocks are a forward-looking game, but the stock price is very exuberant at the moment. If I divide the market cap by the vehicles sold in 2020, I come out with about $1,338,000. That’s a lot of profit per car. But, I still hold on to the stock because Tesla is quickly becoming much more than a car company. If you don’t believe it, check back in with me around 2025.
I don’t plan on selling any shares before 2030. If my 2 trillion dollar dreams come true, that would mean my 1015 Tesla shares would be worth over $2,000,000. I can dream, can’t I? But, if there is one thing I know, it’s that you shouldn’t bet against Musk.
And if I had to guess, I’d say that my estimates are on the conservative side. What if Tesla:
- sells an SUV version of the Cybertruck
- sells batteries to other companies
- develops crazy new battery technology beyond what’s already been announced (hybrid batteries?)
- develops a VTOL aircraft
Watch out ahead. And above.
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