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Tesla projected to sell 20 million cars in 2027
29 Sep 2020 (110 views)

Elon Mask said that Tesla is projected to sell 20 million cars in 2030. This compares with a projection of 500,000 cars in 2020. See this report

Is this projection achievable?

Tesla is expected to introduced its cybertruck which has a large market in America. It will also introduce a lower price car in the $25,000 range for the mass market. 

However, the projection of 20 million seems to be too optimistic. 

I will probably scale it down to 5 million cars in 2030 - 10 times of the projected sales in 2020.

Assume a net profit of $5,000 per car for Tesla. The projected profit for Tesla in 2030 is $25 billion. Based on the market capitalization of $400 billion, this implies a price earning ratio of 16X.

If the PE ratio is 32 times, it implies that the stock price for Tesla can double in 10 years or a growth of 6% per year.

On this projection, the current share price of Tesla can be considered to be "fair" and justified. 

If Tesla can produce and sell more than 5 million cars in 2030 and the profit margin can be kept at $5,000 per car or higher, it is justified for the stock price to go up higher.

My assessment is that the current price already factored in an optimistic future for Tesla. I would not chase it higher.

Tan Kin Lian

 


Tesla projected to sell 20 million cars in 2027
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Elon Mask said that Tesla is projected to sell 20 million cars in 2030. This compares with a projection of 500,000 cars in 2020. See this report

Is this projection achievable?

Tesla is expected to introduced its cybertruck which has a large market in America. It will also introduce a lower price car in the $25,000 range for the mass market. 

However, the projection of 20 million seems to be too optimistic. 

I will probably scale it down to 5 million cars in 2030 - 10 times of the projected sales in 2020.

Assume a net profit of $5,000 per car for Tesla. The projected profit for Tesla in 2030 is $25 billion. Based on the market capitalization of $400 billion, this implies a price earning ratio of 16X.

If the PE ratio is 32 times, it implies that the stock price for Tesla can double in 10 years or a growth of 6% per year.

On this projection, the current share price of Tesla can be considered to be "fair" and justified. 

If Tesla can produce and sell more than 5 million cars in 2030 and the profit margin can be kept at $5,000 per car or higher, it is justified for the stock price to go up higher.

My assessment is that the current price already factored in an optimistic future for Tesla. I would not chase it higher.

Tan Kin Lian