November 14, 2015

Telsa Motors could get to millions of cars per year by 2025

Tesla CEO Elon Musk announced his intentions to produce millions of cars by 2025. Production on that scale would make Tesla about the size BMW.

More assembly plants will be needed once Tesla reaches 500,000 sales a year. The automaker currently produces vehicles at its Fremont, Calif. plant, and plans to add another plant in China. A Gigafactory facility in Nevada will produce battery packs for Tesla and other automakers, reducing the cost of the now expensive components by at least 30 percent

Elon Musk has talked about maintaining a 30% growth rate for ten years to reach a market capitalization of $700 billion.

If you take this year’s revenue around $6 billion or thereabouts, and if we are able to maintain a 30% growth rate for 10 years added to your 10% profitability number and have a 20PE, our market cap would be basically the same as Apple’s is today. Now that’s going to require a bit — on the order of $700 billion. Obviously, getting there will require some significant CapEx.

But I’m hopeful that we can do this without any significant dilution to the company — maybe minor dilution, but nothing serious.

Elon Musk owns about 24% of Telsa Motors. This is about $7 billion of the current 28 billion valuation. If he had 20% of a $700 billion Telsa, then it would be $140 billion.







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