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
- Completes Austin factory: first Cybertruck delivered in Q4
- Dojo comes online
- Tesla perfects 4680 battery production
- 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. In 2022, I predicted that Tesla would launch a robotaxi service. 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.
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)
At least one variant of the Model 2 ($25,000 vehicle) launches, probably the Chinese one.
- Vehicles sold: 1,372,000 (40% increase)
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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