Alright some of you are hurting a little, well actually to be honest, you all seem to
be in good spirits, bullish, still buying Tesla every chance you get.
But either way, I hope this video might still boost your confidence anyway.
I feel that I have reached my analysis of Tesla enough to think I have a fairly good
prediction of how I see the next few years unfolding.
I thought therefore I am now ready to give my prediction for a 2025 Tesla stock price
estimate.
I have been waiting a long time to do this, and I feel like I have gathered enough information
to be able to make my prediction of the future of Tesla.
Now this is more of a valuation of Tesla, rather than a 2025 price target.
This is where I see the value of Tesla at the end of 2025.
Therefore, I am going to try and calculate an estimate of Tesla's earnings for the last
quarter of 2025.
Once we have worked that out, we will then try and assign an appropriate p/e ratio to
give us a valuation.
I will first explain how I will treat each side of the business, and how I envision it
about this time.
The energy side of the business, is of course,
like the auto side, constrained by batteries.
Any cells used in energy, had an opportunity cost of being in a car, and generating more
profit.
Energy is not going to take off until Tesla have their own in-house LFP batteries in high
enough production to meet a lot of their cars too.
Energy isn't going to be noticed in the earnings until Tesla the second half of the decade.
FSD I mean basically we are trying to paint the
most likely scenario and put a value on it here.
And when it comes to Robotaxis, then we need to decide.
Even by 2025, if everything went to plan, Tesla might only have about 1/4m dedicated
Robotaxis, so it still wouldn't be huge.
The scenario I am going to play though is, FSD is 10 times safer than a human driver.
Robotaxis we will leave out for now, but talk about more when it comes down to the p/e ratio.
We will raise FSD prices to $15,000, adjusted for inflation.
So this model will just be based on real prices all around, not nominal, as we have no idea
what inflation might do.
Due to the fact is FSD actually working, we will also increase the adoption rate.
I still can't see it being a massive earner relative to autos, but we will see.
I think of Robotaxis as more binary anyway.
Either Tesla gets them working and the stock price adds a zero, or they dont.
There isn't much in-between.
Elon did say though, dedicated Robotaxi in volume production next year.
So for valuation purposes, I am just going to assign a market value of a typical Tesla
instead of a Robotaxi.
What I am saying is this is a valuation without Robotaxis, and I am doing my best to value
it in that way.
Otherwise, like I am trying to point out, Robotaxis will just be about 80% of the value
or something, and we may as well just do a Robotaxi valuation.
I think the solar side of the business is
still waiting for energy, which is still waiting for batteries, which is still waiting for
Tesla's in-house LFP.
So I think anything solar produces will be inconsequential, again, compared to autos.
There may be working prototypes of bots at
this stage, but this area of the business is such an anomaly, as it can somewhat re-invent
economics itself, I am going to leave it out of my 2025 estimate.
Now we should expect some more factories to
be up and running by 2025.
We expect Berlin, Shanghai and Texas to have expanded, and I think we could expect 2 new
locations.
Elon said 10 new factories over the next 10 years, which he may have actually meant by
2030, due to him also saying 20 million deliveries a year by then too, and in Tesla's recent
impact report, they are once again saying 20 million vehicles by 2030, a huge deal if
true.
Anyway, I think we say 2 new factories locations is likely.
Look Tesla just built 2 huge factories within the space of about 1.5 years, and another
Chinese fab starting soon.
We are talking about 3 and half years time.
Surely Berlin and Texas each have one additional fab each by then too.
I don't know if we can expect any new models
to be in production in 2025, the only other one announced to be in production was the
robotaxi.
I mean I am including semi, roadster, and cybertruck of course.
There may be some other new model out by then, but it's not going to be a compact, or budget
EV, so look we don't know, I don't know, you don't know, simple as that.
So instead we will just increase the production of the other models instead, even if the supply
ends up being higher than the the demand.
If that is the case then there would be another model, with similar profits, and would thus
unlikely affect the valuation of the company.
We are trying to work out a valuation of the company remember, not estimate when and what
new model Tesla are launching.
And remember we aren't concerned about Robotaxis.
Alright, so let's calculate how many types
of model from each factory.
Starting with Fremont, now given this in over 3 years time, I think we reach a run rate
of one million a year for Fremont.
Shanghai could be doing about 2.5 million.
Berlin could be doing 2 million.
Texas 2 million too.
Remember I am including any necessary expansions in those locations.
Then 2 new locations, perhaps each at one million a year.
Now remember, these are not the numbers I am predicting for 2025, these are the run
rates I am estimating by the end of 2025.
2025 is a long time, a year long even, a lot can happen.
I am just working out a valuation for the end of the year.
Alright, well that comes in at 9.5 million vehicles a year.
Wow!
That's a lot cars.
And bound to be a lot of profit.
But that almost sounds unbelievable.
Well let's see just what it will take, using Elon's estimate of this year of 1.5 million
deliveries.
Well it's actually only about 60 to 70% growth required to hit these figures.
That is in line with the growth we expect.
Are there any other numbers there that look that extreme?
To be honest I would hope Texas possibly had almost twice as many vehicles, closer to 4
million rather than 2 million.
We are talking 3 and half more years of ramping and expansion.
3.5 years ago from today we only had one factory, now we have 4.
And this is exponential remember.
So we might expect more than 4 times as many factories in that 3.5 years.
But no, we are just going with 50% more factories.
Tesla can only ramp up like this though, if they are getting great results with the 4680
cell.
Therefore in this scenario we will assume that the 4680 cell is going well.
Alright, we to be honest, we are keeping this
model relatively simple.
We could go into a lot of effort for energy, and other products potentially.
This is going to be a valuation pretty much based on auto sales.
I have allocated a reasonable idea of how I see each model from each factory broken
down.
And remember, we are somewhat consolidating any new models that may have been launched.
I have used average prices from about where we have today, and have guesstimated the average
price of the semi, roadster and cybertruck for 2025, in today's prices.
This spreadsheet is also available to download in Patreon, if you wanted to play around with
it using your own figures.
Alright, when we add all of those in, we get almost 2 and a half a million deliveries for
the quarter, wow!
Seems like so many, almost impossible, yet Toyota and Volkswagen have managed these kinds
of numbers, it's a thing, it can happen.
Except Toyota's don't have an average ASP close to $60,000, and they don't have the
same sort of profit margins.
So let's see what all this comes to.
Total revenue of $137 billion, and almost another $5 billion from FSD.
Wow, FSD still only adding that little in revenue.
That's still pretty decent, but like I have been saying, everything gets dwarfed by auto
sales, which is why it's not worth us going into too much detail on the other sides of
the business.
Anyway total revenue comes to $142 billion, we could add in regulatory credits, but I
think they would be minimally felt at this stage.
Now as for profit margin, again I still see no threat from any competition that mean Tesla
need to reduce prices are thus reduce margin.
You might think that by this stage there will not be enough people to afford to spend this
much on a car, but this not a car, this is a 2025 Tesla, which will do a lot more than
a 2022 Tesla.
In other words, I am going to place margins at 38%, and remember again, that excludes
regulatory credits.
Leaving a gross auto profit of $54 billion.
I have entered some figures I expect for energy and services, I expect them to have grown
from where they are today, but my point is, they wont have any major effect on profits
when compared to auto sales, so we don't need to go too deep in there, let alone their actual
profit.
When we do all the figures, we end up with $42 billion in earnings or $170 billion annualized.
What p/e ratio do we assign to this figure.
Well it could be argued that it is entirely based on Tesla's progress with Robotaxis.
As Robotaxis will tower over auto revenue, like auto revenue towers over energy revenue.
It is a bit of a mixed bag we have here, so let's say around 30.
Remember this is how the market values Tesla, not us.
The market will not be expecting too much more vehicle growth, as they are already half
way to the 20 million figure, and will potentially still be dubious about Robotaxis.
That is a valuation then of over 5 trillion dollars, or a stock price of about $5,000.
There you go, my Tesla 2025 price estimate without Robotaxis.
I will do a Robotaxi price target too, as like I said, there is little point doing it
mixed in with auto sales.
Robotaxis are binary, either they take off and add a 0 to the stock price, or they don't.
Just a quick estimate but these vehicles come
to a total cell supply of around 700 GWh a year.
Does it really sound likely Tesla will have that many batteries at their disposal.
Well remember 3 and a half more years, that's a lot of time to set up 4680 lines.
Berlin and Texas should be doing 200 GWh/yr each.
CATL will likely be supplying Tesla in the order of 250 GWh/yr.
Plus what Panasonic and LG are supplying by that stage.
Along with some new Tesla factories we should see with new battery factories.
All in all, sounding certainly possible that Tesla will have enough batteries for around
10 million cars a year by the end of 2025.
Alright I think that is somewhat of an indication
of what Tesla's stock price could be around the end of 2025, if they have not yet cracked
Robotaxis.
I think 2025 is an important year, it's enough time for Tesla to really make up on these
exponentials.
Therefore I would appreciate all your feedback on how you see things going, and how differently
you might choose what I did.
Remember this is meant to be my base case without Robotaxis.
But I think this can serve as a base, and we can evolve it.
We don't know what the future will bring, but the more scenarios we run, the closer
we can encompass the range as to which it might unfold.
Of course it just takes a black swan event to change everything.
This is meant to be indicative, if you want to scale it back, and drop it down to about
6 million vehicles, or about 1/3 as many cars, then the stock is still around $3,500.
Also I can understand if you might find the ASPs a little bit high, and they may be slightly
lower.
This is still basically just the auto company valuation.
As I say, Robotaxis are a lottery ticket, but the auto company alone appears to be capable
of reaching a valuation in excess of 5 trillion dollars.
I would say it likely energy can too.
Then of course bots another insane lottery special too.
Really though, Tesla as an auto company alone, appears to have quite a future.