Hey, I’m Steven and this is Solving The Money Problem. If you’re new, welcome. If
you’re not, welcome back.
I’m a long term investor, not a short term gambler. My first major investment was a rental
property in 2010. I still own it and have no plans of selling. After all, it’s cashflow
positive and produces passive income. Plus it’s doubled in value. Why sell an appreciating,
cashflow positive investment? Exactly.
My long term investment view applies not only to real estate, but also to stocks.
And as a Tesla shareholder (for those who don’t know, Tesla stock makes up over 90%
of my stock portfolio), I didn’t begin buying Tesla stock in 2016 with plans to sell it
a few years later.
I’m not interested in what happens next week or next year but in the following decades.
So in this video, I’m distilling my thinking and sharing what I believe Tesla will look
like in 2030, 10 years from now.
I’ll talk about future products, revenues, profits, market share, possible dividends,
future market capitalization and stock price.
Of course, I don’t have a crystal ball so this is at best, informed back of the napkin
speculation but if you’re a long term Tesla stock investor or curious observer, stick
around. It’ll be fun.
Hey guys. If you’d like to get up to 2 free stocks and help out the channel, check out
the links in the description to Webull and Stake. Let’s get back to it.
First, let me lay the foundation. I’ve gone deep on all of these points in other videos
so I’ll make this quick, but it matters.
Tesla Today
Tesla has become self-sustaining. They’re now producing MOUNTAINS of free cashflow every
quarter. They’re profitable and the more products they sell, the more cash they have
which creates a feedback loop of epic proportions. The more they grow, the more they can grow.
Tesla does what they say they will do. One look at Tesla’s 2006 Secret Master Plan
shows clearly that Tesla delivered on all of its key objectives. They literally said
“He’s what we’re going to do” and then, they DID IT. This, despite the odds
being heavily stacked against them, the world laughing, intense opposition and pretty much
everyone expecting failure.
Now who’s laughing?
Tesla makes the safest vehicles ever tested. Tesla has maintained from the outset, vehicle
safety is its number one priority. And whaddaya know. The Model S, 3 and X are the 3 safest
vehicles ever tested. Tesla is all about being best in class, in EVERY WAY.
Tesla has ridiculous leads on technology and experience, and their lead is GROWING. Tesla
truly has an embarrassing lead over everyone not just on one critical piece of the puzzle,
but ALL of them.
In 2014, Tesla had the balls to invest billions and build a Gigafactory, knowing that batteries
were key to the future of electric vehicles. Everyone laughed. After all, Tesla’s proposed
Gigafactory would output more gWh of lithium ion batteries than the rest of the world’s
factories COMBINED.
Today, Tesla’s battery technology puts others to shame. Their industry-leading range, acceleration
and vehicle profit margins are direct proof. They’re literally years ahead.
Software matters as much as battery technology in electric vehicles and again, Tesla is running
circles around everyone. VW recently announced they’re going to spend about as much as
Tesla’s LIFETIME CUMULATIVE LOSSES, JUST to build a VW operating system and cloud integration.
For those keeping score, this is something Tesla mastered years ago. For a fraction of
the cost. When I say embarrassing, I mean it.
Then there’s manufacturing experience. We’re seeing Tesla’s rate of manufacturing expertise
grow astonishingly fast. Their China factory cost 65% less per unit of capacity than did
their US facilities and was built in world record time and ramped to volume production
in a flash -- a far cry from Model 3 production hell a few years earlier.
And the improvements, learnings and optimization from Model 3 to Model Y resulted in Model
Y having an almost identical range despite being 10% larger, and having higher profit
margins to boot! This is insane, but true -- and it speaks volumes of Tesla’s endless
optimization.
And don’t get me started on their full self-driving data lead.
The point is, today, Tesla is in a truly DOMINANT position. They lead in battery, software,
manufacturing experience AND full self driving data.
And what’s more, this lead is ACCELERATING.
So with the foundation laid, it’s time to step into our time machine, peer into the
future and discover what Tesla will -- well, MIGHT -- look like in 2030.
Spoiler alert. Tesla already told us their plans for the next decade or so in their Masterplan
Part Duex. If you haven’t see my video, I’ll link below. In short, Tesla will:
* Create stunning solar roofs with seamlessly integrated battery storage
* Expand the electric vehicle product line to address all major segments
* Develop a self-driving capability that is 10X safer than manual via massive fleet learning
* Enable your car to make money for you when you aren't using it
It’s also worth noting that Elon Musk recently affirmed he is confident Tesla will maintain
an annual growth rate of around 50% for the foreseeable future. So, let’s see where
that leads us.
New Gigafactories
Tesla is now producing free cash flow at will, and has over $8 billion in the bank. Enough
to build a handful of Gigafactories. And each new Gigafactory Tesla builds will produce
more products and more profits to build more factories.
Tesla currently has 3 Gigafactories. Two for vehicles (one each in the US and China) and
one Solar factory in the US. These are the machine that builds the machine. They’re
Tesla’s most important product!
Another is under construction in Germany.
With Gigafactory Shanghai, Tesla showed us how quickly they adapt and learn, constructing
the facility in world record time, and for 65% less capex for unit of capacity than the
US facilities, meaning much higher profit margins and a total construction cost of around
$2 billion.
The Berlin Gigafactory is moving forward at a similar pace. Both built with future expansion
in mind.
As I’ve covered elsewhere, one of the waste products of Tesla’s manufacturing process
is ZEV credits--awarded to automakers to meet Zero Emissions Vehicle targets.
They’re useless to Tesla as the ONLY vehicles they make are zero emission, but most other
automakers globally are scrambling to keep up with tougher targets and face colossal
fines should they fall short.
Enter Tesla, who will happily sell you their unwanted ZEV credits for a small fortune.
Fiat-Chrysler alone committed to buying more than $2 billion in ZEV credits from Tesla
by the end of next year.
And Tesla promised to invest every cent of that toward building new factories.
In other words, OTHER AUTOMAKERS are PAYING TESLA to build Gigafactories. And the more
vehicles Tesla sells, the more free cashflow they have to invest in more factories. This
is a snowball effect.
With two Gigafactories currently under construction/expansion and rumors of a third in Texas soon to be
announced, the trend here suggests something truly absurd: Exponential growth in the number
of Gigafactories. It sounds MAD, but the numbers check out and Elon has publicly stated that
at Battery Investor Day, Tesla will share their plans for increasing annual capacity
from around 50 gWh today to multiple terawatt hours. This means increasing annual output
by about 50x, give or take.
Let’s keep it simple and assume Tesla builds 1 gigafactory this year. 2 next year. 3 the
following year. And so on.
We end up a total of 55 new gigafactories THIS deace. Let’s round down to 50 to be
conervative.
I know, I know. It sounds insane. And with a total cost approaching $100 billion, it
won’t be cheap. But Tesla is producing massive free cashflow today with ever-growing margins
and has an abundance of ZEV credits to sell along the way. The feedback loop is real.
This matters.
Vehicle Business
Today, Tesla has four best-in-class vehicles. The S, 3, X & Y and soon, the Cybertruck,
Semi and Roadster. I suspect a secret van is underway -- check out my video if you haven’t
seen it -- and we also know a China-designed compact car is in the works which I’ve also
discussed. This will cover most forms of terrestrial transport.
If Tesla has 50 gigafactories in operation by the end of this decade, each producing
250,000 vehicles per year, their total annual vehicle output will be over 10 million vehicles.
That would account for a little over 10% of the annual global vehicle market which sits
around 90 million. This is very reasonable given Tesla today has not only maintained,
but GROWN its market share to around 17% of new electric vehicle sales globally and EVs
will inevitably become 100% of the new vehicle market sooner than most realise.
If each vehicle has an average selling price of $40,000, which I believe is SUPER conservative,
but whatever, we’re looking at annual revenues of $500 BILLION dollars. HALF A TRILLION DOLLARS
OF REVENUE
That’s twice the size of Apple today. JUST from vehicle sales.
Holy smokes.
Robotaxis
The big unknown is Robotaxis. When autonomous driving is solved--and I have little doubt
Tesla will be first given their unassailable full self-driving data lead--private vehicle
ownership is likely to become a thing of the past as economically minded consumers opt
instead to pay a fraction of the cost to ride hail on demand. This could shrink the new
vehicle market dramatically, but on the flip side, it will print billions in high margin
revenue for Tesla whose entire fleet has been equipped with the necessary hardware for full
self-driving for years.
When Tesla “awakens” its fleet of robotaxis, already a million strong, the cashflow floodgates
open and I dare say the stock price will go vertical as a direct result.
Tesla will take a slice of every Robotaxi fare across the Tesla network. Profit margins
and revenue will explode! And prior to that, Tesla will compete directly with Uber and
Lyft, launching ride hailing with human drivers from which they’ll also capture revenue.
The timing around solving full self-driving and regulatory approval are unknown, but I
have no doubt by 2030, Tesla’s network will be operable almost everywhere and producing
billions in annual profits -- not revenue, profits. Great for building even more factories.
And perhaps, if there’s money left over, paying stock investors juicy dividends!
Infotainment
The more Tesla’s on roads, the larger their software opportunity. When autonomy is solved
and drivers no longer need to pay attention to the road, software will explode as the
screen becomes everything. Whether it’s gaming, video conferencing, netflix and chill,
or watching your favourite YouTube channel, infotainment will become the focal point of
a Tesla. The sky’s the limit and as we know, Tesla’s software skills, creativity and
innovation are world class.
Tesla’s app store will also give Tesla a slice of third party subscriptions (think
Spotify) and purchases, much like the App stores of today.
Imagine a fleet of 10 million Teslas, each doing $500/year in infotainment sales. That’s
a cool $5 billion in annual, high margin revenue. This definitely won't hurt the stock price.
Energy: Solar & Batteries
Tesla’s solar panels and solar glass roof cover pretty much everything solar - budget
and high end. Elon Musk expects Tesla’s energy business to grow to at least the same
size as its vehicle business over time.
With solar riding declining cost curves, solar + battery solutions saving consumers money
over the long term, virtual power plants monetizing battery assets and the world transitioning
away from fossil fuels, exponential growth is all but inevitable.
Tesla is already producing over 1,000 solar glass roofs per week, with an average price
approaching that of a Model 3! In the US alone there are 5 million new roofs per year. Tesla
could easily capture 10% of this market just with ONE of its solar products.
This is serious business.
The opportunity to cross-sell Tesla energy products and vehicles creates a great ecosystem
for future growth. Today, 40% of Tesla solar customers also buy at least one powerwall.
And then there’s the grid-scale megapack which is driving the growth of Tesla’s storage
business. It’s no longer economically viable to build new fossil fuel power plants. They’re
closing down at increasingly faster rates, replaced with the superior, cheaper combination
of renewables plus battery storage.
Oh, and then there’s Tesla’s money-printing autobidder software which itself could bring
in staggering profits as penetrates energy markets globally, making Tesla a distributed
utility while killing peaker plants, enabling companies to monetize storage assets and helping
retail consumers save and make money by participating in virtual power plants and maybe even vehicle
to grid.
New Products
A decade is a long time and anything could happen but in my opinion, the two most likely
unannounced Tesla products are a Heating, Ventilation And Cooling (HVAC) systems for
homes and offices -- after all, Elon has mentioned he’s interested in doing this -- and a Vertical
Takeoff And Landing Jet -- once battery energy density makes this viable. I’m not implying
either of these WILL eventuate but the point is, they might. And who knows what other innovations
Tesla will introduce in the coming decade.
In 2005, nobody suspected Apple would drop the iPhone, iPad, App store, apple watch or
airpods, did they?
Product Licencing
Given Tesla’s undisputable lead in battery technology, electric vehicle powertrains,
software and autonomy, it’s likely Tesla will licence its products and technology in
the future. After all, it aligns with their mission of accelerating the world’s transition
to sustainable energy and honestly, many companies will either need to license technology from
Tesla or they will not survive the decade.
By 2030 it’s hard to imagine Tesla not making billions in annual profits from licencing
its battery, powertrain and full self-driving software.
The Numbers
By 2030, Tesla will be powering much of the world and unquestionably, one of its most
valuable companies -- not just by market cap or stock price but by IMPACT which is what
really matters.
But I am an investor, so let’s do some ballpark numbers.
What will Tesla’s stock price and market capitalization look like? How much annual
profit will they be making?
My earlier estimate for vehicle revenue was $500 billion per year. Assume Tesla energy
grows to this size per Elon’s plans and that adds another $500 billion in annual revenue.
We’re at $1 TRILLION in annual revenue by 2030. $1 TRILLION with a “T”.
JUST from vehicles and energy.
What the actual ****?
This includes NO robotaxi revenue, no software and infotainment revenue, no licencing revenue
and no new products or services.
I expect gross margins comparable to Apple -- around 40%, perhaps more -- given the declining
cost curves of battery technology and solar, plus economies of scale, PLUS the ever-growing
software component.
Let’s keep it simple. If Apple today is worth $1.5 trillion on annual revenues of
$260 billion with a gross margin of about 40%, the math is pretty easy.
Quadruple that. Tesla will be doing over $1 trillion in revenue with similar margins.
That gets us to a market capitalization of around $6 trillion dollars. Sure, let’s
discount it a little to $5 trillion. Pick your own number, this is an art, not a science.
If we extrapolate from today’s $200 billion dollar market cap (with Tesla stock at just
over $1,000 per share), it implies Tesla’s market capitalization would increase to 25
times its current level.
If the stock is $1,000 today and the company is worth 25 times as much in a decade, it’s
reasonable to assume the stock price will be a tad higher than $1,000 by 2030. You know,
just a tad.
Of course, anything could happen but Tesla’s track record of setting and achieving ambitious
goals, and by doing so, disrupting entrenched technology and industry, has now become routine.
It’s easy to get caught up in the quarterly dramas but if we take the long term view,
it’s pretty clear: Tesla has won the decade.
Besides, it’s 2040 where things get really interesting.
That, however, will have to wait for another video.
There’s a reason Tesla stock makes up almost my entire stock portfolio. Speaking of, don’t
forget your free stocks with Webull and Stake.
I’m Steven Mark Ryan, this is Solving The Money Problem and I love you all.
Thanks so much for watching. Let me know your thoughts in the comments below. Do you agree
or disagree? Where do you see Tesla in 2030? What new products will they bring to market?
How much annual revenue will they do? How many vehicle sales? What will the stock be
worth? Will they be licensing technology to other companies? And of course, if you have
any ideas for future videos, let me know. I read ALL your comments.
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