...Elon has said many times that Tesla is more than just an EV company.
...Given how competitive that EV has become, EV is not going to make Tesla enough money to justify its existing valuation.
...and so he is ditching his pure EV play for FSD Robotaxi. This will have massive implications for EV growth in US - because Tesla won't need to produce as many EVs to sell as it makes a play to be the new Uber.
...and fewer EVs mean less need for EV batteries and lithium!
...oh, IEA sure has not factored this into their calculation, nor has all the previous lithium demand projections too.
After a solid month of deep-diving into Tesla, I've come to two important investing conclusions...
1) Tesla as "a car company" is only worth $104 per share.
https://7investing.com/articles/tesla-the-car-company-is-worth-104-per-share-heres-why-fsd-really-matters/… That's not very much.
Especially considering that
$TSLA is trading hands at $180 per share today. The reason is because the traditional auto manufacturing industry just isn't all that attractive.
My DCF model also isn't overly-conservative. I assume Tesla will be dominant and will achieve massive economies of scale from its Gigafactories. I expect its Cybertruck will eventually sell 250 thousand units per year and its new Model 2 (introduced in 2026) will reach 3 million per year. I predict Tesla as a whole will employ more than 400,000 people, will sell more than 9 million vehicles, and will generate more than $300 billion in automotive revenue by the year 2040.
Yet even this global dominance of the EV industry isn't enough to justify its $600 billion current market capitalization. Elon is a smart guy and he already knows this. There needs to be something more.
Which leads to me conclusion #2...
2) Tesla as "an AI company" is worth $645 per share.
https://7investing.com/articles/tesla-the-ai-company-is-worth-645-per-share-heres-what-makes-the-stock-a-buy-today/…This is where Tesla steps on the accelerator and speeds past the other carmakers. Its cars won't just bring in cash from their upfront sale. They'll continue to generate recurring revenue from full self driving software subscriptions ($99/month). And many will belong to its Robotaxi Network, charging only $1 per mile for riders and providing Tesla with a 20% take rate of the fare.
Autonomous vehicles will vastly expand Tesla's addressable market. No longer just going up against Ford
$F and
$GM, it will now compete in the "transportation" industry against
$UBER,
$LYFT, and taxi services. The economies are much more compelling here as well. Full self driving is very difficult and Tesla is miles ahead of its competitors. This rewards them with greater future cash flows, which surpass those generated by selling the cars.
Altogether, here's my overall takeaway for investors: If you're investing in Tesla, do so because you believe Elon will succeed in his AI ambitions of Full Self-Driving and the Robotaxi Network.
At $180 per share, the market is pricing in only around a 16% chance of Tesla succeeding in getting these new ventures to scale. The race is challenging and it's a long way to the AI finish line. But the prize for the ultimate winner will be quite significant.
https://x.com/7Innovator/status/1795124779147472941
