In 2019, Ark estimated TSLA would be worth $3000/share (bear case$1500, bull case $4000) by 2025, based on TSLA producing five million vehicles per year.
The estimate was considered conservative, because it did not factor in profits from Tesla’s insurance or energy storage businesses.
https://www.ark-invest.com/articles/valuation-models/tesla-price-target-2
Tesla is the elephant in a barnful of blind investors.
The Captain
Tesla is a low cost producer of EVs with fully paid for plant capacity. They can easily beat the new comers who are still investing in plant capacity. The threat is low cost competition from China that has potential to squeeze margins for a while.
The growth opportunity is side businesses like AI and robotaxis. Musk’s entrepreneurship, creative ideas, and excellent technology management are major assets to Tesla. But in a competitive world not a sure thing.
My post was mostly a tongue-in-cheek swipe at Ark’s Cathie Wood, who has an incredible capacity for self-deception.
You don’t have to be an industry analyst to evaluate this. You can take a common sense look at that prediction. To each those targets, Tesla would have had to almost double sales each year for five years. That means production capacity needs to nearly double each year, all their suppliers need to double their production each year, and so on.
That’s plausible if you are going from say, 75,000 to 150,000 unit in one year. But not 2.5 million to 5 million.
Yeah, until I did a double take and caught ‘ARK’, I thought this was going to be an Onion piece…
Pete
Sorry to rain on your parade. Tesla started making cars, an old fashioned Decreasing Returns business. Tesla is transitioning to selling AI in FSD, CyberCabs, and Optimus robots, the same way as Apple sells iOS in phones and sells apps, and Amazon sells AWS, all Increasing Returns business.
The Captain
| Date | Split | Avg. | Bull | Bear |
|---|---|---|---|---|
| ARK 2019 | 3,000 | 4,000 | 1,500 | |
| Aug 31, 2020 | 5 to 1 | 600 | 800 | 300 |
| Aug 25, 2022 | 3 to 1 | 200 | 267 | 100 |
The Captain
Huh? Ark claimed Tesla would be selling five million vehicles in 2025.
FSD and Optimus are not vehicles. Cybercab is a vehicle. They have not sold any. So not relevant to Ark’s prediction.
So based on what we know, was Ark’s prediction a good one? Or was it silly? If it was a good prediction, then you don’t need to defend it. If it was silly, then trying to defend it by making a strawman doesn’t make it less silly.
On second thought you’re right. It is only May. We still have seven more months to get to go five million vehicles. You’ll be buying, right? Right?
Ark Invest are not innovators, they are investors. They project the present into the future using Wright Law to come up with predictions. Elon Musk is an innovator above all else. You can see the game being played out at Apple. What has Apple innovated since Steve Jobs died? They did milk Apple’s legacy which is what MBAs are trained to do. Focusing on ARK’s five million cars is a waste of time.
Five million cars underestimated what Tesla has achieved.
You know more about me than I do so you answer the question. 
The Captain
You might find some benefit in reading the posts you are responding to. Or not.
I’m responding to YOUR post about FIVE MILION CARS.
The Captain
Captain, are you talking about 5 million total or 5 million per year?
You’ll have to ask ARK Invest who published the number. In any case, today that number is irrelevant, totally irrelevant. It was used by ARK Invest to create a projection to base their investing strategy on. In no way does it or did that number govern how Tesla was run or howTesla developed. More important ARK Invest had no way of knowing the future path that an opportunistic innovator like Elon Musk would take. For example, when Amazon was just a book seller, who could have predicted AWS? When Apple was making Apple computers who could have predicted iStores or iPhones?
The future is quite surprising! Who would have thought…?
The Captain
The 5 million figure has been troubling me. With close to 100 million cars sold per year the 5 million number is ridiculously low. An Elon number would be closer to 50 million. Did someone misplace a zero? If the 50 million were cumulative it would make sense, at least back in 2020. Back then Tesla growth was very high with new Giga Factories coming online. i remember doing a spreadsheet that validated this outlandish growth. The number was not pushed by Ark Invest but by Elon Musk. Two, three years later this meme fizzled out as new ones took root. Optimus optimism!
Does this bring back memories anyone?
The Captain
If the 200 million is total cars and trucks, 50% would be ridiculously wild even for Musk, especially this quick, whereas 5% is actually a possible kind of number. So, 5 million would have to be per year … as all the citations above … not cumulative.
I had a lot of conversations with ItsGoingUp about Tesla’s then-future sales numbers, since he had a lot of confidence that Tesla would meet Musk’s 20 million unit per year sales target in 2030 - and the 50% CAGR that would entail. Needless to say, Tesla has fallen far behind those production aspirations, which would have had sales of about 3.2 million units this year and 4.6 million next year. And, of course, their production growth hasn’t come close to ARK’s earlier projections.
