Tesla Mostly Beyond Car Hardware By 2024

by

Tesla had 16% of its revenue from its non-car business in the third quarter of 2020. This might have increased to 20% in Q4 of 2020.

Tesla should be proving the ramp of car production to about 4 million cars by 2024.

2020 500,000 cars
2021e 850,000-1M cars
2022e 1.5M-2.0M cars
2023e 2.2-3M cars (Fremont 750K, 1M China, 500k Texas, 500k Berlin, 250K next factory)
2024e 3.5-4.5M cars (Fremont 800k, 1.0M China. 1M Texas, 1M Berlin, 500k next factory)
2025e 4.5-6.5M cars

4.5M cars/year at $40K avg price in 2024 would be $180 billion
If this was at a 25% margin. This would be $45 billion gross margin.

The ASP (average selling price) for FSD is $8,500 in 2020 with an attach rate of 35%. (per Loup Ventures).

As FSD gets closer to full autonomy and users find it more valuable, the attach rate will increase, as well as the price.
2020e 35% attach rate and $8500 ASP (If 80% margin for 500,000 cars, $1.5 billion in rev and $1.2 billion in gross margin)
2021e 37.5% attach rate and $10,000 ASP, (If 80% margin for 1M cars, $3.75 billion in rev and $3.0 billion in gross margin)
2022e 40% attach rate and $11,000 ASP, (If 80% margin for 2M cars, $8.8 billion in rev and $7.7 billion in gross margin)
2023e 43% attach rate and $12,000 ASP, (If 80% margin for 3M cars, $15.5 billion in rev and $12.4 billion in gross margin)
2024e 46% attach rate and $13,000 ASP, (If 80% margin for 4.5M cars, $27 billion in rev and $24.5 billion in gross margin)
2025e 50% attach rate and $15,000 ASP, (If 80% margin for 6.5M cars, $49 billion in rev and $39 billion in gross margin)

Tesla will also have monthly subscriptions version of FSD and lesser versions of FSD. So the people who do not have full self-driving will likely not be buying a Tesla that had no version of autopilot. This would boost the autonomy software sales by another 15-30%.

Tesla car insurance is priced in the US from about $3000-5500 per year and Tesla makes about 10% as an agent. Tesla could make more if they become the issuer of insurance. Canadian Tesla car insurance costs are far less at C$1200-C$3500. Canada has far fewer expensive lawsuits over accidents. Tesla should be able to expand to get licensed to sell in more locations and to verically integrate. Tesla should be able to evolve to covering all their cars and making $1K per year.

If we assume that half of all Tesla buyers buy Tesla insurance and they make 50% margin. Insurance accumulates because all the existing cars would renew their insurance.
2021e 50% attach rate and $1,000 ASP, (If 50% margin for 1M new cars+ 1M old cars, $1 billion in rev and $0.5 billion in gross margin)
2022e 50% attach rate and $1,000 ASP, (If 50% margin for 2M cars+2M old cars, $2 billion in rev and $1 billion in gross margin)
2023e 50% attach rate and $1,000 ASP, (If 50% margin for 3M cars+ 4M old, $3.5 billion in rev and $1.75 billion in gross margin)
2024e 50% attach rate and $1,000 ASP, (If 50% margin for 4.5M cars+7M old cars, $5.7 billion in rev and $2.8 billion in gross margin)
2025e 50% attach rate and $1,000 ASP, (If 50% margin for 6.5M cars+11.5 M old cars, $9 billion in rev and 4.5 billion in gross margin)

Tesla would have precise real-time data for every driver and car. They will be able to precisely offer the correct price for insurance. Tesla cars are ten times safer than regular cars because of the autopilot. Tesla cars could become 20 or 100 times safer in terms of accident per miles. The Tesla insurance could easily be 95-100% of Tesla buyers and the margin could increase on the insurance. This would make it two to four times larger profit from insurance.

2024e 90% attach rate and $1,000 ASP, (If 80% margin for 4.5M cars+7M old cars, $10.4 billion in rev and $8.3 billion in gross margin)
2025e 90% attach rate and $1,000 ASP, (If 80% margin for 6.5M cars+11.5 M old cars, $16.2 billion in rev and $13 billion in gross margin)

Tesla will also have sales of games, communication and other entertainment.

The solar and batteries could also ramp to very significant levels by 2024. Perhaps 20-40% of revenue. I will look at a more precise forecast later.

So by 2024, Tesla could making $45 billion margin on car hardware sales and $28 billion to $32.8 billion on autopilot FSD and Insurance and another $9-18 billion on solar, batteries and energy. This would be $82-106B in margin.

We could halve that to estimate net income at $42B-53B in net income.
If Tesla had a 40PE, the company would be worth $1.7 trillion to 2.2 trillion.
If Tesla had a 80PE, the company would be worth $3.4 trillion 4.4 trillion.
If Tesla had a 100PE, the company would be worth $4.2 trillion 5.3 trillion.

SOURCES- Brian Wang analysis, Tesla data, Loup Ventures
Written by Brian Wang, Nextbigfuture.com (Brian has shares of Tesla)

15 thoughts on “Tesla Mostly Beyond Car Hardware By 2024”

  1. I suppose Tesla could do a new generation of solar tiles that collect heat as well as solar during sunny winter days and dump heat on summer nights. That'd also give a means to do snow removal in winter as well – nice for solar roofs. Might as well build in insulation and weather sealing as well.

  2. I mean, the video repeatedly claims Musk/Tesla would somehow make a more efficient home HVAC system…

    Which takes us back to my original question, to which you responded that efficiency isn't the advantage.

    The video speculates about integration of appliances (such as water heater and water filter) as one MEANS to greater efficiency. But again that's something that has been considered before, but never done. It might be hard to sell into new homes, let alone existing homes, if it would make the home dependent on a single incompatible supplier.

    Now if the video had raised the possibility of a Tesla design that puts a small and inexpensive HVAC / air-filter unit in the ceiling or wall of every room and still comes in cheaper than central air while replacing big air ducts all over a house with slender heat-transfer hoses, THAT might be radical enough to look at.

    It'd be like how electric cars were popular for a while before ICE designs took over, but now Tesla is bringing them back. We started with room AC and before that with room heaters (fireplaces) – maybe a clean-sheet design with modern tech would take us back to that.

  3. Tesla insurance is still only available in CA, after at least a year. Here in NC it costs an arm, and a leg.
    What's keeping Tesla from rolling out insurance in at least one more state?
    Any non CA citizens need to check insurance costs before ordering a Tesla vehicle.

  5. A guess is a home energy management system that was cognizant of electrical and thermal energy storage, mapped to statistical power usage for the home. Simple example is a cold and heat store coupled with home HVAC, timed to store heat for morning hot water use, and store cold for assisting daytime cooling by precooling at night. Run a heatpump to precharge the cold store and store waste heat as hot water. Depending on grid prices, balance between using Powerwall power and low cost overnight grid power for the precharging heatpump ops.

    But that's a big move, and requires a lot of equipment up front that isn't small, so makes it harder for a retrofit. It would also to a degree favor natural gas powered fuel cells as they provide a thermal source for powering thermal swing cooling and electrical power. Tesla's solar tiles have no thermal component so can't take easy advantage of that.

  8. Does Tesla have any real advantage over existing heat pump tech, which I would presume has already been made pretty efficient over the years?

  9. I wonder if Freemont will ramp at all? If I were Elon Musk, I would strive to get all new capacity somewhere else than California….

  10. Barrons writes: "EV makers are now worth about $1.3 trillion. Traditional car makers have a combined market capitalization of about $1.2 trillion. That covers almost 100 auto makers around the globe with market caps ranging from $10 million all the way
    to Tesla (TSLA).

    Tesla is worth about $1 trillion, based on its fully diluted share count. It's necessary to use the diluted share count to make the math work. The difference between basic shares outstanding and diluted shares outstanding is, essentially, management stock options. Tesla has a lot of those because of how CEO Elon Musk gets paid. His options will become stock someday so investors should pay close attention to the fully diluted share count."

    So, if Musk decides to cash in his shares, the stock could take a big hit on dilution, or the fear of it. The current P/E is over 1,700. New EV companies as well as traditional ICE makers like monster VW are getting into the game big time finally. Apple may join in a couple of years. Tesla not even in top 20 cars in Europe, a rich market. To get cheaper, Tesla will have to reduce its margins, maybe by half or more, or cede the low end market to others, like Apple does & have you seen Apple's PE lately (40) & Apple has a far larger cash position? OK, new markets, Musk (Key man risk!), etc., but still, it's not an IPO & range anxiety is still a thing & so are average $90k Teslas.

  11. Never ever forget home HVAC. 2.5 ton gas pack (downstair unit) went out day before Christmas. It was a Lenox that was 7 years old and the heat exchanger cracked badly. The part was under warranty, but it took two weeks to get it and get it installed. Meanwhile, temps were dipping into the high 20s (Fahrenheit). The upstairs unit, a Rhem, frosted up solid trying to keep up, but inside temps were in the 50s. A gas fireplace and a couple space heaters were all I had for two weeks. It really sucked. The wife cried tears of joy the day the new heat exchanger was installed. I don't want to live through that one again

  12. We will see. But past sales trajectory is as follows

    Tesla production and sales over 8 years is showing 50%+ growth in car sales
    22,000 cars in 2013
    31,500 cars in 2014
    40,000 cars in 2015
    76,000 cars in 2016
    103,000 cars in 2017
    244,000 cars in 2018
    357,000 cars in 2019
    would gave been 560,000 cars in 2020 without pandemic shutdowns. More than doubled in 2018 vs 2017. The Shanghai Model Ys factory is ramping and selling now.

    Not forecasting any surge beyond fast trends and mainly looking at actual factories built and coming online and other improvements.
    What is your forecast? You are betting on competition? Which ones?

  15. Since the forecast is way above the past trajectory of Tesla sales, while more cars compatible with Tesla's become available, This is BS.

Comments are closed.