Hi everyone my name is Lee, and welcome to the Tesla economist. In this video I wanted
to continue on from our production forecasts, and work out some profit forecasts.
So this is just for the vehicles side of the business. In fact we wont even factor in the
potential of FSD in it. Although we will include the FSD and enhance autopilot that we have
today, i.e. keep a similar FSD profit per vehicle included. This is also not my 2030
price target, this is just going through the annual production for each year until 2030,
and estimating the financials. This model is available for download on Patreon.
Also like I say, I read all your comments, and lot of people struggling with my 2023
new location, producing 50,000 units in the first year. Some of you even suggesting it
might take as long as 2 years to build. Now bear in mind, Berlin took as long as it did
due to all the red tape, and environmental issues. And as for Texas, well this was not
just a factory, for starters it was 2 factories, the world's largest battery factory and Tesla's
headquarters. The Shanghai Model Y factory was constructed in just 10 months, and that
was well over 3 years ago.
Tesla learned a lot from their last factory builds, these new factories should take less
time to build, and will ramp up much faster, they are not messing around, they are not
going to choose a site that will take forever to construct. We are going to get the new
location announcement later this year, which likely means they already have purchased the
land and secured permits, and about to break ground. Therefore the new factory should be
operational next year, and I estimated it could produce 50,000 units next year. It should
in theory ramp faster than any factory prior.
On the other hand I had a lot of numbers to estimate, so perhaps 50k was a bit of a stretch,
so I’m glad you’re checking my work. But in the overall picture, it doesn’t make
much difference.
ASPs This should be a fairly simply exercise, we
just need to calculate the ASPs of the vehicles for each year, and then margins. The rest
from there is fairly straightforward. So let's begin. Once again these numbers will be indicative,
I can't put too much time into forecasting each and every year, as there are so many
moving parts anyway, but I think we will get a good enough idea. We are not going to adjust
the prices for inflation, as it would be impossible to know, and we want to compare with todays
prices anyway.
In the latest Q2 Tesla's had an average selling price of $56,000. However, we know the prices
have risen significantly since then, although they won't all kick in immediately. On top
of that it's the more expensive Model Y that is ramping up the most too. However, we need
an average for the year, so let's use 59,000. For 2023, there will be a lot more Model Ys
for sale, and the price rises will be in effect, not only that we will also have the Cybertruck
which is going to be at least $80,000 especially if it's the quad motor. So I am going to raise
ASPs as high as $63,000. There will be more RWD Model Y expansion, which will bring down
the ASPs somewhat too. Although there is a chance ASPs will be even higher, if Tesla
have to raise their prices due to the tax credit too.
In 2024 I am raising ASPs even higher due to more expansion of the Cybertruck, and possibly
even more semi trucks being ramped up, to $65,000.
Alright now to 2025, possibly we are at the level where Tesla are starting to expand in
more standard range vehicles, possibly with new battery technology as well perhaps LMFP,
with manganese. So I am going to start lowering the ASP, even though the Cybertruck is still
probably ramping up something insane by this stage, and we may even still have the tax
credit. Down to $62,000. In 2026, I think Tesla may launch a new model
for consumers that may actually be lower cost, it may even be the compact Tesla. Well demand
would go crazy, and perhaps it even starts at $35,000 present day value. No, not $25,000,
Tesla don't need to make a $25,000 vehicle, it's simply too much value for such little
price, just about anyone in a developed nation can afford a Tesla at that price if they really
want it, and would be the lowest cost of ownership car possible. I think a $35,000 Tesla seems
like a low enough cost these days, it will however still have a great margin. I will
lower the ASP to $58,000, along with further expansion of standard range Model 3s and Ys.
Remember, even if there is a low cost compact Tesla, it is not designed to be the biggest
selling Tesla, like we once might have thought, before we saw Model Y demand go through the
roof.
In 2027, there may even be some more Tesla's available, perhaps a coupe, a van, or minivan,
large SUV, yes I know there is meant to be the Robotaxi, but this was a non-FSD model.
But these new vehicles that Tesla are launching, well these won't be that low a cost either.
Also by this time consumers would have had a paradigm shift on spending when it comes
to electric vehicles, and understand the value of them better, well at least a Tesla. The
amount it saves in fuel, depreciation, insurance, servicing, etc. Therefore they can justify
spending more as they realize a Tesla is actually an asset not a liability, it will just take
them sometime to catch on. But I am going to lower the ASP to $55,000.
Alright, by 2028 perhaps there really does need be more affordability for more consumers,
and there may need to be more affordability to reach these numbers. On the other hand,
Tesla's are cheaper than Mercedes, Audi, BMW, Lexus, Cadillac, etc they likely sell 10 million
collectively. However, we also know that the most common trade-ins are the likes of Toyotas
and Hondas, not BMWs. So there is clearly a market there for that many sales at these
prices, especially when legacy are no longer. There will also possibly still be this tax
credit in the US, and perhaps 1/3 of all Teslas are sold in the US. I will lower the ASP to
$53,000.
And just lower it slightly for the next two years too. On top of that Tesla may have ramped
up the semi truck to something crazy, and they could be costing around $200,000.
I know I am probably doing the opposite of most forecasts by raising the ASPs, and a
lot of others have to lower their ASPs, in order to justify the demand. They haven't
gotten their heads around it, nor have I heard any of them explain how they even got to their
ASPs. They just think supply and demand, well if Tesla wants to sell that many vehicles,
they will need a lot of demand, and in order to get that much demand, then Tesla will need
to lower their prices. Except the extra demand is coming for more expensive vehicles like
the Cybertruck. It is also coming from more additional value these cars bring like lower
insurance cost. Or what if they offered vehicle to grid, and could also save you on your power
bills. There is so much real value Tesla is capable of offering. That consumers will pay
more for.
Also I am not even factoring in the additional demand from FSD, this is just the demand for
electric vehicles, not autonomous vehicles. If Tesla has FSD in all these vehicles, then
the prices for the cars will be a lot higher, ASP would probably be $10 to 15,000 higher
at least, or possibly more if you factor in lifetime subscription models.
I think there will also be a lot of extra demand for the 4680 Model Y as it is, with
faster charging speeds and software upgrades, and all the other extra features we have still
not yet been told.
REVENUE
Ok, we have ASP and we have units sold, we are going to leave out regulatory credits,
so that would mean we have enough information to calculate revenue. As you can see by 2026
we break 1/2 a trillion dollars in revenue. Which is about 1/3 more than Apple. And by
the end of the year we manage to reach 1 trillion dollars in revenue, again, just from car sales
alone. No robotaxis, or FSD.
MARGIN
This year margin won't be as high as the others, due to the higher prices having a delay until
realized, not to mention the 2 new factories and the down times we faced in Shanghai. But
next year should see a good jump, although Cybertruck ramping may have a slight affect
too. But 2024, should see some real impact, even with new factories ramping, which there
always will be somewhere, there should be a large enough base of vehicles to support
a solid margin. Also all new factories will likely carry a better margin too. So by 2024
we will hit 39%, but we did say we will build 2 new factories in 2025, so I will wind it
down to 37% that year, then back to 39%, and around that for the rest of the decade. Perhaps
dropping slightly, due to lower cost vehicles, but at the same time, we have technological
break-throughs, and battery advancements, and more software, and lots of other things
that could improve margin. So I am happy to not have to drop it drastically.
GROSS PROFIT
With that, we can calculate the gross profits. And around sometime in 2026 again, Tesla have
matched Apple's gross profit. Apple currently at a valuation of $2.7 trillion, with very
little left in the pipeline. Compared to Tesla, only about 1/3 the way to their production
target. Oh right yea, and just for vehicles, no energy, robots or even FSD. Therefore you
could justify a $5 trillion valuation just for the auto business, if Apple was anything
to go by. And by the end of the decade we are at 400
billion dollars gross profit. That is so much money.
OPEX
Opex is really going to start looking negligible, we will increase it a reasonable rate. But
remember this only for the auto business and Tesla only need one headquarters. On top of
that the biggest R & D expense is FSD, and we aren't including it. When we subtract that
we are left with our operating income.
TAX
Now the tax rates will get higher as the sales increase. Why? Well because Tesla get an insane
return on capital when it comes to their buildings. Without FSD probably something like 10 times
return. As in, when the factory is ramped up, it earns about 10 times as much as it
cost to build, yes earns as in net profit. You can only depreciate the factory once,
which would be about one months tax free income. Anyway, there will simply be less to depreciate
against tax relatively as profits rise.
EARNINGS
That then leaves us with earnings, well sometime in 2025 Tesla will have broken past the equivalent
of $100 billion a year in net profit mark. Which is about what Apple make in profit.
So Tesla should reach Apple's current trailing twelve months of profit by around 2025. Again
Apple is nearly 3 trillion dollars. Then surely Tesla's vehicle business alone should be worth
a lot more than that by 2025.
ANALYSIS Wow! We have just done something awesome.
I felt really good about that ramp rate, assuming everything happens how it is meant to. I think
those margins are very possible, even if Tesla are selling lower cost vehicles.
SUMMARY Alright, this is probably a good prelude into
our actual 2030 targets. There is still a lot more to figure out there first, and then
we can compile it all together. But even if you gave the company a p/e ratio of 20, this
is a 6 trillion dollar valuation by 2030. To get about 6 times return on your money
over 8 years is still exceptional. But what will the rest of the company do on top of
that? Well that's what I'm here to find out.