Elon Musk JUST Respond to Ark Invest's Tesla Prediction & More Analysis!

everyone meet kevin here let's talk

about tesla and kathy wood and arkhan

vest's latest projections for tesla so

i've already done a reaction to these

but right now i want to go into this a

little bit deeper

and show you elon musk's response as

well

as share some commentary with you on

where she's being

really bullish very bullish and and

where she's actually being a little bit

more

conservative and i'm going to compare

some of this to the way that i value

companies so first thing you have to

remember that if you're watching this

video

and you're you're thinking that tesla is

going to stop

growing in even by even in this decade

by 2030

uh i personally want to make it clear

that i think we have a difference of

opinion here

uh and that's not a bad thing but

personally when you hear me talk about

tesla i just want to be clear that for

me

tesla is a company that i believe is

going to be on a growth trajectory of

course different rates of growth this

next decade is going to be pretty rapid

growth

uh with with more rapid growth coming

once we actually scale

the development of manufacturing so

think about that we've got to get the

development of creating factories to

scale that's not at scale right

once we get like the copy and paste

model for factories to scale

oh my gosh then we see the exponential

growth curve right

so that in my opinion could happen in 25

26 27 and then we copy and paste these

factories in different continents and

states around the world

and and now tesla really sees that

exponential growth curve

and for me 2030 is really going to be

part of that exponential growth curve

where maybe

are we midway through that curve you

know where are we in that curve

i personally don't see tesla slowing

that exponential growth curve until at

the very least

2035. now it's very difficult to project

far out

and this is why sometimes there is a

bias towards using closer projections in

fact personally

in the stocks and psychology of money

group i generally recommend

only projecting out four or five years

which is actually what

arc invest has done now i have in my

recent estimates gone a little bit

further on tesla but that's because i do

believe we have this

this delay and when we can really see a

ramp at tesla

because it takes so long to get

manufacturing to that copy and pastable

state

so if if if somebody's watching this

thinking oh we're going to be fully

electrified in 2030 and

and tesla sales are going to decline i

think we have a

pretty fundamental difference of opinion

there because this electrification

process is going to be very very slow i

mean biden is like oh we're going to

electrify the entire u.s fleet

bro you just let the u.s government give

a deal

for the usps vehicles to oshkosh who's

probably going to do like 90

gas vehicles and those vehicles are

going to be good for another 15 years

like you got to be kidding me right and

this is not to be political it's just

like

this it shows you the practical

implications versus the vision

right it goes slower than people expect

i'm going to show you elon musk's

response here as well but first

i really want to dive into uh the

projections here so what i've done

is i've uh taken this this uh you know

the kathy wood projections here

and uh thrown them onto a very simple a

spreadsheet here so what we've got

is her base case here on the left her

bowl case here on the right

uh and then what i did is i actually

added i did i took

kathy wood's uh base case scenario four

i should put 20 25 here for 2025.

i'm taking your base case scenario and

i'm adding energy and

services uh to her base case scenario

uh which she does use a higher average

selling price than i do i use 42 000

but i'm going to go ahead and go with

her 45 000

average selling price per vehicle and

personally i assume that includes

autonomous revenue which given that she

has zero for autonomous here

that's fair that's why i'm using this

i'm not going with her bowl case

scenario which

she thinks is very likely she thinks

there's a 50 likelihood that we're gonna

have this robo taxi network

killing it in 2025 which is really

really incredible

and and it explains why they're bullish

here but a few

couple issues that i have uh the first

issue that i really want to hit

uh and what we're gonna do is we're just

gonna erase this really quick here

because this is all my scribble from

last time here

so let's go ahead and quickly just erase

this a couple issues

that i have uh initially or like

reactionally here

after i put some more thinking into it

well which i guess in that case it

wouldn't really be reactional

oh and quick note this is her uh 25

chance of having a bear case scenario

expectation

uh i'm calling this bass which is a

little confusing so i'm gonna i'm gonna

on the spreadsheet update this to uh

bass

slash bear okay so anyway bass slash

bear here

uh one of the concerns that i have is

right here this electric vehicle gross

margin of 40

honestly i think that is it is way way

way way way way too high

uh auto manufacturing is not exactly

really really high profit

now i know she does have some human

driven ride hailing in here so maybe she

thinks the margin is going to push up

because of autonomy but 40 for electric

vehicle gross margins

that's nuts that's bringing four dollars

of every uh you know ten dollars to

to ebitda uh or sorry to to uh gross

margin here ebitda a little less that's

when you ebatize when you include

operating expenses like research and

development

uh sales and general administration and

that but uh for for gross profit margin

uh 40 i think this is relatively high

mostly because elon musk's long-term

vision was getting to

30 percent uh and so they're pushing

this up to 40

now maybe that's because they're trying

to include some of that that fsd revenue

which

obviously flicking the switch and

allowing cars to have fsd

uh is is like an you know 95

profit margin business but uh she does

also have a bullish average

selling price here right so when you

combine these two

these two numbers here are huge like if

i go into my

uh spreadsheets and and i just change

the average selling price or the margin

the end result of the price is vastly

different uh like it's it goes crazy and

let me just show you that to prove that

to you

so when i go into my bowl case for

example

and i go to uh expense margin i'm at 28

for for sales uh so in other words

revenues on vehicles

i take 72 percent off for expenses which

is a profit margin of 28

she's at 40 on this if i take so my 20

30 bowl case scenario where i think the

share price would be 6 000

if i put kathy's margin in here of

uh you know 40 profit which would mean

the expense is only 60 percent

which is way way lower and we go up here

and change this to 45 000

per vehicle we literally double we

more than double the potential share

price here to 12

700. that's insane uh like 12 000 700 it

might i mean it could happen it could

happen it just

it sounds insane right now and don't get

me wrong i'm not calling kathy insane

i'm just saying like because i i love

arc invest right i want to make that

very clear

i'm just saying this like what you're

i'm going to show you something that's

very conservative in a moment

but i just want you to be very clear

like i might be very very conservative

in my opinion on my base case scenario

i think i'm very conservative which i

know some people are going to roll their

eyes at like kevin there's no way you

were even conservative on that fine i'm

a tesla bull okay

so i think my estimate or my

conservative estimate for tesla

keeps them at around 28 margin and keeps

that average selling price per vehicle

including autonomy down at 42.

that's my version of being conservative

but i use

a much more bullish price to earnings

multiple right

i use 70 in 2030 because i think there's

still going to be so much growth

i'm not including all of the potential

other verticals that still exist for

tesla

so i'm not even including all the

revenue sources but i'm being very

conservative

in my opinion again my opinion on margin

and the other items but giving a higher

multiple

look if you go to my uh for example my

base case scenario for 2030 which is 3

000 and you cut my p e ratio

uh from 70 to 35 the price cuts in half

right

but i cannot fix that by just going up

here basically

and saying well i want to use kathy's

margin and

uh kathy's revenue per vehicle here oops

there we go

uh let's go to revenue per vehicle 45

000. and look at that i get right back

to 3 000.

so in other words where kathy is

conservative on p

e ratio which i'll show you in a moment

i'm conservative on margin

and where she's bullish on margin i'm uh

uh i'm bullish on pe right so we've kind

of flip-flopped

but we're kind of arriving at the same

spot

which is funny because it's it's two

totally

independent analyses like i doubt

they're looking at my analysis

right i mean who knows maybe maybe they

look at social media which

if arc is watching this please come on

my channel let's have a conversation

about this

about tesla in the future i would love

to host any analyst from arc

uh but anyway let's let's so this is

important to know

about uh where kathy is is very bullish

and where she's uh

you know maybe more conservative uh and

to show you that conservativeness

with her numbers her baseball uh

sorry base slash bear scenario here of

revenues of around 257

billion dollars in 2025 with her

anticipated margins which

very very again she's aggressive here

she gets to

some big net revenue numbers 82 billion

dollars in her base pair

156 almost that's almost double in her

bowl case scenario

this is such massive revenue that it

lets her use a small multiple

of just 20 times future earnings in her

base

bear case scenario or 28 times future

earnings for her bowl case scenario

and get to these price targets but

that's again i showed you the difference

of where she's conservative where she's

bullish

where i'm conservative where i'm bullish

ultimately we kind of come to a similar

price

except she's also much earlier than i am

and this is where we have to bring up

elon

musk's concern uh so and this is

collaborative here right this is not

kevin versus kathy i think we're both on

the same page here

but take a look at this so let's let's

look at elon musk's response so right

here

you've got kathy wood saying here the

equity market does not seem to have ever

discounted

half percent one percent two percent or

three percent yields on the 10-year

bonds

okay so let me explain that what she's

basically saying

is when we have p e ratios

of 20 to 25 on the s

p 500 she associates this number

with a yield of 4 to 5

on the 10-year treasury and the way she

accomplishes that is she takes just

basically a dollar divided by the

multiple of of 25

okay that's 4 or by 20 that's 5

so in other words when you hear uh s

p 500 p e ratio 25 she says well that's

similar to four percent expected

yields in in the market does not exactly

have to be tied to the 10 but that's

what she's talking about here

and she says look we've been stuck at 25

even since the 10-year treasury yields

have declined from six percent to like

zero

so kathy's making this argument that hey

it's time

to maybe have a higher valuation on the

s p

now one of the things kathy doesn't tell

you here is that half of the companies

in the s p five

maybe not half somewhere between a

quarter to half of the companies in the

s p 500

are not tech companies there there are

cigarette companies in here there are

oil companies in here there are

recovery stocks in here right so those

can certainly anchor your pes down

but maybe she's just basically saying

look broadly

not necessarily just the s p 500 but

broadly

p e ratios or multiples could be higher

right this 20 to 25 x could be higher

uh or could correspond to a higher yield

uh

so in other words if yields are two or

three percent

well then in that case wait a minute if

we go

one divided by two we could see p e

ratios of up to 50.

uh we could go uh one divided by three

we could see p e ratios of up to

33 essentially is is the way she's

referring to this

now and i don't know i'm speeding up

this explanation a little bit

so let me just bottom line this

basically kathy wood is saying hey

i think the market is still undervaluing

the fact

that interest rates are so low and

earnings multipliers could be a lot

higher

than people think that they they should

be long-term

uh and and then she says oh yes i forgot

to mention how scarce exponential growth

opportunities

are likely to become as artificial

intelligence creates more winner take

most opportunities in autonomous taxi

networks

all right there's actually like so

educated in this

there's a lot to unpackage there i'm

going to simplify this and keep it short

and concise

basically once tesla figures out how to

copy and paste these factories around

the world

there aren't going to be many teslas who

are copy and pasting factories like that

and so whoever can master copy and

pasting the manufacturing systems

which is one thing that i like about

lucid is that they've they've got to

plant up

they've already got their second

location and their expansion plans

uh you know we want to see that actually

come to fruition we want to see these

vehicles come off the line obviously i

know there are a lot of potential people

like kevin don't even get me started on

lucid i hate lucid but look there are a

lot of tesla people are like i'll give

lucid a chance too right

proof will be in the pudding but the

point is who whatever companies i don't

care what it is it could be abz

you see company in the future abc what

who cares maybe some other rando company

the point is whoever can scale that

manufacturing

uh is going to be able to take advantage

of in my opinion

and possibly if i could stretch it here

to kathy woods opinion these exponential

growth opportunities not just from

manufacturing but

in a i and that's where you win because

the more your vehicles you get out there

the more you get to take advantage of

the exponential growth

of a i enabling full self-driving

and taxi networks and she's so bullish

on on this

and that's why she shows her numbers are

really really excited about tesla

because she thinks hey this is a winner

take most

now elon musk actually replied to this

and he kind of threw a little bit of

cold water on this

he said when vast amounts of

manufacturing are needed like i said

when you and when you need all this copy

and pasting

which you do need remember robo taxis

are not software they are actual

vehicles right

this slows down rate of introduction

so maybe more like winner takes a

quarter still great

uh yeah actually even though elon kind

of just threw a little bit of cold water

on kathy's statement

what he said actually aligns with

cassidy kathy

and it's insanely bullish because look

at my 20 30 bowl case scenario

look at this i wrote of the world orders

toyota has a 14.3 market share and

in my bull case scenario here my bullish

thesis with that 6 000

price in 2030 i said what if tesla takes

20 okay elon just said

let's do let's take

25 potentially of

the market share so 25

of 80 would be about 20 million vehicles

per year that would bring my bull case

to about 7 600

up from my bull case of about 6 100.

so elon's actually throwing a little bit

of cold water there

but in the end arriving at the same

bullish thesis as kathy so look what

you've got you've got

elon's opinions you've got kevin's

opinions and you've got kathy's opinions

we're all pointing the arrow in the same

freaking direction

so this is not like oh kevin thinks

kathy's wrong or whatever no no

no no we are all pointing the arrow in

the same direction

we're all just trying to make guesses as

to what the future is going to look like

and we're going down different paths to

get there

and i think everybody can can learn from

everybody else's input probably me more

from them

than for me i'm not going to pat myself

on the back and say that

one dude has the researching capacity of

of you know an organization with 40 bill

under assets

i'm just a youtuber right but

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