Cathie Wood-led ARK Invest predicts that Elon Musk-led Tesla Inc.‘s (NASDAQ:TSLA) stock could see nearly a 1,100% increase in its value by 2031, thanks to the company’s Robotaxis and the Optimus humanoid robot.
Cathie Wood’s Bear Case Sees Nearly 800% Upside
According to a report published by ARK on Monday, the investment firm pointed to a base case price target of $4,400/share for Tesla by 2031, a bear case of $3,300 per share and a bull case of $5,000 per share.
With Tesla currently trading at $367.29 during overnight trading on Monday, ARK’s base case scenario for the stock sees a roughly 1096% upside by 2031, while the bull case of $5,000 sees a nearly 1261% upside based on Tesla stock’s value at press time. The bear case scenario also sees a nearly 800% upside.
Robotaxis Playing a Major Role
The investment firm said in the report that the “robotaxi will account for ~80% of Tesla’s enterprise value in 2031,” while also predicting that Tesla will offer “Optimus Robot-as-a-Service (RaaS)” that will be responsible for $215 billion in revenue. Robotaxis will bring in $753 billion in revenue for the EV maker, ARK said.
The model puts Tesla’s valuation at roughly $16.4 trillion, with Robotaxis comprising $13.31 trillion of that figure. ARK also predicts Tesla could sell 10.2 million vehicles by 2031 as its base case, with 8.1 million Robotaxis on the road.
The report then said that Tesla took nearly 7 months to report 1 million unsupervised driving miles, which was four times faster than Alphabet Inc.‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) Waymo, while the Cybercab will enable 40% lower operational costs per mile compared to Waymo at “equal utilization rates.”
The Optimus Factor
The report also pointed out that the humanoid robot sector will represent a $26 trillion total addressable market and that Tesla’s external deployments could scale to 1 million units by 2031. “Based on our research, Optimus will hit human level proficiency at ~4,000 MW (megawatts) or ~4 GW (gigawatts) of compute in 2031,” ARK said.
On Terafab chip manufacturing facility, ARK said that SpaceX would likely be footing a larger portion of the capex, while Tesla will focus on “building the initial research arm at an estimated cost of $3 billion,” and expand its AI spending to nearly $225 billion by the year 2031.
Tesla SpaceX Merger
“While our model assesses Tesla as a standalone business, a SpaceX-Tesla merger could take place within the next five years,” ARK said, predicting that a SpaceX-Tesla merger was going to happen.
The investment firm also said that Tesla’s “cash-generative robotaxi network could help fund SpaceX’s ambitious plans for orbital data centers.” ARK also said that SpaceX’s “compute-intensive frontier AI models” would help with Optimus deployments.
“Combined, we estimate that SpaceX and Tesla could generate $3.8 trillion in revenue and $2.7 trillion in EBIT15 by 2031,” the report said, with SpaceX responsible for 62% of the revenue and 69% of EBIT.
However, risks and challenges to the predictions remain, with a slower Robotaxi ramp being the primary risk to the model. “Elon Musk’s sudden departure, a natural disaster, or a pandemic” also remain key headwinds to the investment firm’s predictions.
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