Ron Baron says perhaps $1500/share in 2030. That’s a $5T market cap. I just want to know what earnings he is estimating to support that market cap? The car part of the company will have almost no growth at that point.
The industry is investing heavily and clearly plans to have EVs available. Whether buyers will buy them is still the big unknown. More recharging infrastructure will help. Costs of fuel and batteries rebates subsidies all matter.
If 50% of vehicles sold in 2030 are EVs, the program is a success. And significant growth is required. And California may refuse to license new ICE vehicles. We will see if that all happens.
I think you’re right. Since 2013, Tesla’s vehicle delivery CAGR has been about double that (22,400 → 1,313,851, ~57%). I’m leaving out 2012 since the number of deliveries was so low it distorts the CAGR high.
No way it will be only 30%.
Plus, of course, Tesla’s energy business will grow much faster.
And that’s ignoring the Inflation Reduction Act, which will shower more money on Tesla than anybody else, by far.
Damodaran is a smart guy who has been consistently wrong about Tesla. He has updated his model multiple times to correct his errors, but he gets it way wrong over and over. Ron Baron is a smart guy who has been consistently right. But he’s sandbagging big time.
Now whether the stock price will reflect the actual business is unknown, as we have seen all too well over the past year or so.
I watched a video of Damodaran giving a lecture to his students, he is a wonderful teacher! The problem with his value analysis is that it’s basically 1934 Security Analysis and the world has moved on from cigar butts to complex systems.
BTW, On March 1 Tesla is having their Investor Day and will be announcing Master Plan 3. I don’t want to speculate on specifics but I think it will be quite revolutionary mostly on the manufacturing side, The Machine that builds The Machine.
About growth, the 50% growth target was for the numbers of cars sold and earnings per share should easily outpace that.
Because cost of raw materials is not the only cost, because competition is meaningless when Tesla can sell all it makes. On the other side of the cost equation there is lower unit cost with increasing volume and most important, Tesla’s fanatical search for cost efficiencies. Tune in March 1 for the Platform 3 unweiling. Tesla is aiming to cut manufacturing costs by 50% and that can only be done with radical innovation.
Redwood Materials is aiming to reduce the cost of battery materials through recycling.
The Nevada factory will produce anode copper foil and cathode active materials, two key ingredients of lithium-ion batteries, from a combination of raw materials, scrap from sources including the nearby Tesla battery Gigafactory in Reno, and end-of-life batteries shipped in from across the country. At full capacity, Redwood plans to produce enough of these materials to supply battery production for more than 1 million EVs per year.
Of course Moore’s Law and Wright’s Law are still in effect.
Did you know that Moore’s Law was in effect before he was even born? Before they invented transistors? In his book, The Age of Spiritual Machines, Ray Kurzweil traces the evolution of computing machines from the earliest by Charles Babbage and shows their increasing computing power in line with Moore’s Law. But just as computing machines evolved from mechanical to electrical to electronic, maybe we are not at the end of the computer’s increasing efficiency shifting from transistor performance to coding performance with AI or something…