Tesla could easily TRIPLE its price in the next decades 🚗
By: Paulo Sá
Tags: Tesla, Stocks, Electric Vehicles, Electric Car, Stock Market

Tesla is my favorite stock as it might be for many of the investors. If you had bought Tesla at its IPO you would get Tesla at $17 ($3,4 stock split adjusted), which means that by today you would have profited more than 16.000%. 𝗔𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗼𝗳 $𝟭𝟬𝟬𝟬 𝘄𝗼𝘂𝗹𝗱 𝗯𝗲 𝘄𝗼𝗿𝘁𝗵 $𝟭𝟲𝟭.𝟬𝟬𝟬 by today 💸 These are some pretty crazy numbers for a 𝟭𝟬-𝘆𝗲𝗮𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 but also teaches us the importance of patience when investing.

𝐓𝐋:𝐃𝐑

◾ We’re facing a world rotation from ICE to EV and the journey is just beginning as the EV market share represents only 3% of the passenger vehicle market.

◾ Most countries are making plans to ban ICE vehicles by 2030–2040 which will lead to a surge in EV demand and increased market share.

◾ Tesla is building a global manufacturing infrastructure in the 3 continents (North America, Europa and Asia), expecting a production capacity of 2 million vehicles p/ year by 2022 / 2023.

◾ In the Battery Day event, Tesla unveiled its new 4680 battery cell developed in-house which will reduce the cost of their batteries by more than 50%, five times more energy capacity and an increase of 16% range for Tesla’s vehicles. All that in just 3 years.

Now, let’s analyze why Tesla has so much room to grow and why the price can easily double in the next decade.

🥧 𝐓𝐀𝐌 (𝐓𝐨𝐭𝐚𝐥 𝐀𝐝𝐝𝐫𝐞𝐬𝐬𝐚𝐛𝐥𝐞 𝐌𝐚𝐫𝐤𝐞𝐭)

Tesla is not only a car manufacturer, it’s way more than that. We can say that Tesla operates under the Transportation and Energy sector. Tesla doesn’t only sell cars. It sells electrical trucks, solar panels, solar roof tiles, batteries, car charging service at supercharger stations, insurances, and services in general.

According to the analyst Adam Jonas from Morgan Stanley, Tesla’s addressable market could potentially be $10 trillion for the light vehicle market, $1 trillion for the logistics market (courier, truck, farm, warehouse vehicles), up to $3 trillion for the energy market and lastly he added “a potential multi-trillion market captured in the 600 billion hours of consumer time spent in cars in the form of content delivery and data monetization”.

In 2020, its expected sales of around 2.3 million units of PEV (plug-in electric light vehicle), representing an increase of 5% from 2019 Seems to be a low growth rate, yet, we should consider that during the first six months of 2020, the PEV sales have declined by 40 percent on China (world leader in EV sales) YoY. caused by the spread of the Coronavirus pandemic.

According to Electrek’s estimations, Tesla accounts 18% of the global EV market, considering that the EV market represents about 3% of the global passenger vehicle market (as of October 2020). Deloitte forecasts a CAGR of 29% over the next ten years for EV sales.

The projections for the EV market share continue to get higher as the transition starts being made. Find out why in the next point. 👇

🔋 𝐈𝐂𝐄 𝐭𝐨 𝐄𝐕 𝐬𝐡𝐢𝐟𝐭

Incentives for EVs have been established around the world to support and incentivize the adoption of electric vehicles. These incentives can be: purchase rebates, tax exemptions and tax credits, access to bus lanes, fee exemptions (charging, parking, tolls), etc. Tesla even has a whole page with all the incentives in the US: www.tesla.com/support/incentives

𝗜𝗻 𝘁𝗵𝗲 𝗨𝗦, in September, California Governor — Gavin Newsom — signed an executive order that will ban the sale of new combustion-engine vehicles in the state by 2035. “By moving aggressively and boldly now, we can help save Americans from the dire health and economic impacts of the climate crisis” — said Mike Levin — California Representative.

𝐈𝐧 𝐭𝐡𝐞 𝐔𝐊, Minister Boris Johnson announced on November 17, that the ban of ICE cars will begin by 2030 (previously planned to ban by 2035 and 2040 as the deadline was now moved up).

𝐈𝐧 𝐅𝐫𝐚𝐧𝐜𝐞, in the climate change, plan its stated “Take greenhouse gas-emitting vehicles off the market by 2040: stopping sales of petrol or diesel cars will encourage car manufacturers to innovate and take the lead on this market.”

𝐈𝐧 𝐂𝐡𝐢𝐧𝐚, the announcement of the future road map for new energy vehicles plans to require that all new cars sold after 2035 be eco-friendly according to Nikkei Asia. The plan state that as of 2035, 50% of new cars sold in the country will be either electric, plug-in hybrid, or fuel cell vehicles, and 50% of new cars will be conventional hybrids.

𝐈𝐧 𝐆𝐞𝐫𝐦𝐚𝐧𝐲, Angela Merkel, despite not having defined a timeline, said in 2017 that the country must eventually join other European countries in banning new diesel cars as she mentioned that the plans by UK and France to phase out fossil-fuel powered cars by 2040 as “the right approach”.

𝐈𝐧 𝐍𝐨𝐫𝐰𝐚𝐲, the sale of all fossil fuel-based cars will be banned by 2025. Politicians have reportedly reached some conclusions about 100 per cent of Norwegian cars running on green energy by 2025.

Among these countries, we also have 𝐍𝐞𝐭𝐡𝐞𝐫𝐥𝐚𝐧𝐝𝐬, 𝐁𝐞𝐥𝐠𝐢𝐮𝐦, 𝐈𝐫𝐞𝐥𝐚𝐧𝐝, 𝐈𝐧𝐝𝐢𝐚 𝐚𝐧𝐝 𝐃𝐞𝐧𝐦𝐚𝐫𝐤, making plans for an EV transition in the next decades. It’s crystal clear that the world is making a transition to EV over the next generations so that only proves that EV is here to stay.

🏭 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐂𝐚𝐩𝐚𝐜𝐢𝐭𝐲

Tesla is building a global manufacturing and delivery capability by constructing infrastructures all around the world. Currently, Tesla is either under construction or already producing in the following Gigafactories:

Gigafactory Fremont (in production)

Gigafactory Shanghai (in production)

Gigafactory Berlin (under construction)

Gigafactory Texas (under construction)

Gigafactory Nevada (production — batteries)

Gigafactory New York (production — solar roof tiles)

Elon Musk is very clear about this, he explained in February 2020 that a Gigafactory on each continent would mean that cars would reach consumers faster. “The biggest problem we have to solve right now is having production on each continent, because it’s insane to be making cars in California [and] shipping them to Europe and Asia,” Musk said.

Although, the main and obvious reason is to increase production capacity, with 3 Gigafactories (Fremont, Shanghai, Berlin) Tesla could be producing more than 1.5 / 2 million vehicles by 2022 / 2023 at full potential. This production capacity it’s like the same as the EV sales in the US and China combined in 2019. This will play a huge role in meeting demand but also the faster Tesla can scale, the far away it will be from its competitors.

💼 𝐏𝐫𝐨𝐯𝐞𝐧 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐌𝐨𝐝𝐞𝐥

Elon Musk started Tesla with the mission to “accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” That’s a bold mission for a new company under all the big sharks of the automotive industry but the disruption it’s proven to be the catalyst for the companies surge.

𝐓𝐞𝐬𝐥𝐚’𝐬 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐦𝐨𝐝𝐞𝐥 𝐝𝐢𝐟𝐟𝐞𝐫𝐬 𝐟𝐫𝐨𝐦 𝐢𝐭𝐬 𝐜𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐨𝐫𝐬. Traditional car manufacturers, sell through franchised dealerships, Tesla instead, uses direct sales by creating an international network of company-owned showrooms in urban centers all around the world. Tesla believes that this way, they can create a better customer buying experience, branding coherence and have an advantage in the product development process. Tesla has already more than 400 locations around the world . Tesla generates a lot of awareness to drive sales through the Internet (Social Media), word of mouth, referral programs,Elon Musk, etc. Tesla also allows customers to place orders directly on the website. Customers can build their own car, add features, choose different color combinations, choose financing options, enabling a unique customer buying experience.

𝐓𝐞𝐬𝐥𝐚 𝐡𝐚𝐬 𝐦𝐚𝐧𝐲 𝐬𝐚𝐥𝐞𝐬 𝐜𝐞𝐧𝐭𝐞𝐫𝐬 𝐰𝐢𝐭𝐡 𝐬𝐞𝐫𝐯𝐢𝐜𝐞 𝐜𝐞𝐧𝐭𝐞𝐫𝐬 𝐢𝐧𝐭𝐞𝐠𝐫𝐚𝐭𝐞𝐝. Customers can charge or service their vehicles at these service centers, also known as “Service Plus”. Tesla invests heavily in executing its own sales and marketing efforts locally to not only provide a unique experience but also to learn from customers, know what they are saying, their problems, making the learning and innovation process much faster. In certain areas, Tesla mobile technicians who can service vehicles from your house, also known as “Tesla Rangers”, can sometimes, through wireless upload data from your car so these technicians can fix some problems online.

𝐓𝐞𝐬𝐥𝐚 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠 𝐚𝐧 𝐞𝐱𝐭𝐞𝐧𝐬𝐢𝐯𝐞 𝐧𝐞𝐭𝐰𝐨𝐫𝐤 𝐨𝐟 𝐒𝐮𝐩𝐞𝐫𝐜𝐡𝐚𝐫𝐠𝐞𝐫 𝐬𝐭𝐚𝐭𝐢𝐨𝐧𝐬 to widespread the adoption of its electric vehicles. This stations is where drivers can charge their cars in about 30 minutes for free. If you can’t charge your car (like you would put gasoline in your car at a fuel station), why would you buy an EV? Tesla is playing a huge role in creating a massive network of these chargers with already +2,000 Supercharger stations with +20,000 superchargers worldwide.

💡 𝐁𝐚𝐭𝐭𝐞𝐫𝐲 𝐃𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭

When consumers complained that Tesla cars were too expensive for the middle class and that their driving range between charges was too short, Elon promised to work with battery manufacturers to cut costs and improve efficiency. Guess what, they are doing it!

Currently, Tesla uses its cylindrical battery cells (supplied from Panasonic, LG Chem and CATL) while other automakers are using pouch cells. In 2019 Tesla bought companies like Maxwell and Hibar, enabling not only the in-house producing capacity but also increasing their margins, making disruption / innovation faster and new patented technology, like a tabless battery cell and a cell to pack design.At the last Battery Day event (Sep 22, 2020), Tesla unveiled its new 4680 battery cell developed in-house which will reduce the cost of their batteries more than 50%, five times more energy capacity and a increase of 16% range for Tesla’s vehicles. All that in just 3 years.

Batteries are a big competitive advantage for Tesla but it also could turn out to be a huge mass market for Tesla as legacy automakers are finally shifting toward EV now that climate change has become one of the priorities for leading countries. “Tesla is open to licensing software and supplying powertrains & batteries. We’re just trying to accelerate sustainable energy, not crush competitors!” — Elon Musk tweeted.

🧐 My take on Tesla

The global EV shifting is just starting and the more the pie grows, the more Tesla will grow. Some might think that Tesla at $1T market cap will never happen, others think it will be the biggest company in the world. It’s impossible to determine forward numbers but one thing I’m assured is that Tesla is only starting and it has plenty of future ahead. On the run, expect volatility, but expect them to rock in the future, just be patient.

PS.: There is much more to speak about Tesla, like FSD beta, Robotaxis, on the air updates, battery mass-market production, etc. Maybe gonna let that for another post :)