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ARK has released an updated Tesla share price model. The firm expects a per-share value of $2,000 in 2027. ARK believes autonomy will represent a significant portion of Tesla's future enterprise value.

ARK has updated its Tesla share price expectations. The firm's new forecast for 2027 is $2,000 per share. For forecasting, the team relies on Monte Carlo analysis. The bear case suggests a price of $1,400 per share, which is also pretty impressive. In the bull case, the expected value per share is $2,500. This research update presents ARK’s new open-source Tesla model, which incorporates distributions for 41 independent inputs to simulate a range of potential outcomes for the company.

Tesla’s prospective robotaxi business line is a key driver, contributing 58% of expected enterprise value and 45% of expected EBITDA in 2027. Across ARK’s simulation set, electric vehicles account for 62% of revenues in 2027, at substantially lower margins than robotaxi revenue.

ARK has grown increasingly confident that Tesla will launch a robotaxi service soon. Its updated Monte Carlo model includes a range of launch dates, with late 2024 as the weighted average of all cases.

The firm believes the recent flurry of AI progress should accelerate innovation in the autonomous driving industry. Tesla, for example, already uses transformers popularized by large language models for lane and intersection prediction. In ARK’s view, Tesla’s vertical integration strategy and Dojo training supercomputer are key competitive advantages. Training currently runs at 100% capacity, suggesting that Tesla’s plan to expand Dojo by two orders of magnitude next year will help the company shorten the time between model updates. Recent videos of its latest full self-driving (FSD) software update, including one of a driver who nearly completes a full ride-hail ride without touching the wheel, suggest that Tesla is close to launch in some geographies.

Tesla’s data library should help prove statistically the safety of its vehicles, giving it significant advantage over peers in the regulatory approval process. Tesla’s customer-owned fleet drives more than 120 million miles per day, and over one million miles per day in FSD. In contrast, in their multi-year lifetimes, Cruise and Waymo have reached just one million miles each driven on public roads with no one behind the wheel. Moreover, accident statistics suggest that Tesla already has achieved performance superior to human drivers. According to ARK’s research, adjusting for its use on surface streets only, Tesla’s FSD is 5X safer than a manually driven Tesla.

The firm believes energy storage should contribute $6.6 billion, or 3%, to Tesla’s expected enterprise value in 2027. In ARK’s expected value, ~16% of all battery capacity goes into stationary energy storage and ~84% goes toward vehicles, resulting in ~200 GWh of stationary energy storage deployed in 2027. According to the analysis, the stationary energy business should yield margins of ~20-25%.

© 2023, Eva Fox | Tesmanian. All rights reserved.

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