ARK Invest is confident that the current situation with coronavirus will not affect the long-term value of Tesla, and by 2024 the market capitalization of the automaker will be more than a trillion dollars.
Today, Tesla is the most valuable, breakthrough and innovative car manufacturer in the world. The company has a unique approach to doing business and produces high-tech products that revolutionize certain areas.
Vala Afshar, the Chief Digital Evangelist for Salesforce, and Ray Wang, CEO of Constellation Research, invited Tasha Keeney, an independent analyst for vehicle investment from ARK Invest, to their weekly DisrupTV show. Keeney is engaged in autonomous cars, additive manufacturing, infrastructure development and innovative materials.
Keeney said Tesla has a strong competitive edge. While some traditional automakers are trying to establish production of their EVs, Tesla has been successfully producing them for a long time. Therefore, the COVID-19 outbreak is simply not able to hurt more than to other automakers. In addition, Keeney noted that Tesla is the only automaker in the world that produces cars equipped with bio-defense mode.
ARK Invest recently released its thoughts on Tesla's potential trajectory for the next five years in a report penned by analysts Tasha Keeney, Sam Korus, and Brett Winton. ARK Invest's expected value per share for TSLA is $7,000 by 2024, based on bear and bull estimates within the same timespan.
Source: Ark Invest
- Tesla shares expected value in 2024: $7,000.
- Tesla's stock price and market capitalization - bear case 2024: $1,500 and $300 billion, respectively.
- Tesla's stock price and market cap - bull case 2024: $15,000 and $3 trillion, respectively.
Keeney has said ARK forecasts for the next 5 years are based on an estimate of 37,000,000 electric cars sold worldwide by 2024. Their analysis is based on Wright's Law and lowering the cost of batteries.
A sharp decrease in the cost of batteries will make electric cars cheaper than gasoline powered cars, causing a major inflection point for demand, Keeney explained. Tesla, according to ARK, is the best position to take advantage of this inflection point. Tesla is also more cost effective. An autonomous taxi platform is a massive opportunity for Tesla - a market worth trillions of dollars.
"Wright's Law has forecast cost declines successfully in more than 60 technologies ranging from solar power to televisions, and from semiconductors to ovens. Tesla's Model 3 already has demonstrated cost declines in line with Wright's Law," Keeney. Based on Wright's Law in ARK's model, Tesla's auto gross margins could approach 40% in 2024.
Source: ARK Invest
ARK estimates that Tesla is at least 3 years ahead of all its competitors. The biggest advantage for Tesla is the software advantage. "An autonomous taxi network should provide Tesla with capital to invest in factories to produce more vehicles, which should lower production costs and expand Tesla's autonomous fleet," said Keeney.
Tesla’s success will be in demand for electric cars, the company's factories form a network that will lead to the emergence of new business models and revenue opportunities. More cars on the road, with more data and better systems, and lower total cost of ownership creates a growth snowball effect for Tesla.
"ARK assumes that Tesla will invest any incremental cash in additional factories to scale EV production capacity and "accelerate the world's transition to sustainable energy," consistent with its mission statement," Keeney said.
Tesla poses a great threat to companies such as Uber and Lyft, it would be cheaper for autonomous cars to deliver ride-hailing. The same applies to the transport of goods, autonomous electric vehicles will do it cheaper than the railway. The bullish case scenario of $15,000 per share for Tesla is based on these autonomous options for driving an electric car.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.