Tesla Skeptics Three Conditions for Tesla to Double in 2021

Tesla started 2021 at a price of $735 per share. Q42019, had 112,000 cars delivered. This was 448,000 cars on an annualized basis. 2021 actually had 500,000 cars delivered despite a pandemic that caused factory shutdowns which removed 60,000 cars. There was an expansion in China of the Model 3 plant in Shanghai.

Tesla has completed the Model Y plant in Shanghai. 250,000 Model Y from China in 2021 and 300,000 Model 3 from China and 450,000 cars from Fremont and 30,000 from Berlin and 20,000 from Texas would get Tesla to 1,050,000 cars.

For Item 2, rumors and actions indicate that Tesla could begin some kind of operation in India by June 2021. It seems reasonable that India would offer big incentives for Tesla to start operations in India. Tesla appears to be partnering with Tata. An R&D base in India would be useful for software development.

Tesla YouTubers have speculated that Tesla would start selling three-wheel vehicles in India. Tesla has over $20 billion to start new gigafactories. As Berlin and Texas are complete in Q22021 then I would expect at least 2 and more likely 4 new gigafactories to be announced. I expect Tesla Shanghai to continue expansion from 550,000 cars to 1 million car capacity in 2022 to 2023.

For Item 3, the SP500 index funds cannot sell Tesla while it remains in the SP500. Funds that Benchmark to the SP500 have to acquire Tesla. If the Benchmark funds do not buy Tesla at the same weighting which is now about 1.9% of total funds then they are effectively shorting Tesla relative SP500 funds. There are about $5 trillion in SP500 funds and $8 trillion in funds that Benchmark to the SP500. Tesla above $695 means that all Benchmark funds underweight Tesla are losing ground to SP500 funds. Tesla at 1500 would mean Benchmark funds with no Tesla would lost 160 basis points relative to SP500 index funds.

Every year people add money to 401K and IRAs. At year-end 2019, Investors held slightly more mutual fund assets in DC plans ($5.1 trillion) than in IRAs ($4.8 trillion). Among DC plans, 401(k) plans held the most assets in mutual funds, with $4.0 trillion, followed by 403(b) plans ($551 billion), other private-sector DC plans ($421 billion), and 457 plans ($133 billion). About $1 trillion a year is invested into 401k and IRA. If half of the mutual fund and ETFs were index funds or benchmark index funds and Tesla was purchased at equal weight, then there would be $10 billion in added Tesla purchases every year from index and benchmark index funds at the current level. If Tesla reaches $1500 then the weighting would be 3%.

My Catalysts for Tesla to Double or Triple This Year

Tesla operationally succeeds as described above. Also, shortly after Tesla surpasses $1000 per share, Tesla will announce another 5:1 split. The last split initiated a runup in Tesla stock price by 50%. Tesla will be announcing new self-driving software improvements.

Sources -Motley Fool, Twitter – Telsa Club India
Written By Brian Wang, Nextbigfuture.com (Brian owns shares of Tesla)

3 thoughts on “Tesla Skeptics Three Conditions for Tesla to Double in 2021”

  1. If getting to 1M or 5M in production doesn't justify its current valuation, I dont see why it would justify double. I dont subscribe to the idea that a series of past unjustifiable events can be used as sufficient support for future unjustifiable events.
    I understand we're talking about slightly different things, my commentary is strictly about past and potential future valuations be justified and not on if it will or will not occur.

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  2. The mention of three wheeler auto rickshaws/tuktuks in india is interesting from a number of standpoints. Those types of vehicles typically started from motorcycle origins, and most are typically open sided. The current low cost associated with them is due to low materials usage and low cost of individual components due to mass production of boh mtoorcycle and tuktuk components. They are also predominantly used in taxi service or semi-ad hoc rideshare systems (as a substitute to centrally managed/operated mass transit systems, as they organically form). Naturally, the low labor costs where tuktuks are often deployed contribute to low operating expense as well, provided the fuel is cheap. Transitioning to electric tuktuks would require a substantial government regulatory push (air pollution controls in major cities for example), a substantial rise in fuel costs (CNG tuktuks exist, so not liquid fuel beholden as a hedge…), or possibly a substantial drop in electric cost (or substantial improvement in grid reliability). There is also the possibility that electric vehicles need substantial cooling hardware, which leads to potential availability of air conditioning, which means you prefer a closed body format, which pushes you towards kei-car/ ultracompact boxy cars rather than a tuktuk 3 wheeler…

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  3. I don’t think the template is for Tesla to consume Capital building GFs, the $20B on it’s balance sheet will stay there to provide security for lenders. New GFs will be financed with bridge loans for a year or so during construction and then flipped to long term loans secured by the GF facility and paid by it’s earnings. GFs can pay for themselves. That’s the achievement of getting new GFs into production in a year or less. This allows Tesla to scale up to 20M+ vehicles/year in less than a decade.

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