Statements over the last month by Ford, GM and other competitors have increased our conviction that Tesla has a 4-5 year lead in terms of manufacturing and perhaps an unstoppable lead in software.
Although Full Self Driving is still speculative, we believe TSLA has a good shot at a very large software/platform derived profit pool. We think this is a free option.
EV adoption should give TSLA >19% volume CAGR.
If we assume Tesla gets to 6m units in 2030 without any FSD or software revenue above today's levels, then we think it is worth between $260 (+0%), and $180(-30%). $180 assumes the price war is permanent.
We want to be long term holders because of the reward potential from the Tesla platform, but accept that in the short term it will be highly volatile due to uncertainties on the margin structure of the company.
Upside: $260 (+0%) assuming Tesla is an auto company
Sensible Downside: $180(-30%) assuming Tesla is an auto company
Option value +$200: If the platform side of the equation pans out
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