Tesla entered the S&P 500 index in December 2020, and the automaker has also made some pretty big moves since, with some analysts expecting the company to overtake others on the index in a big way.
A new report from Austin, Texas firm Worm Capital says Tesla is likely to dominate the rest of the S&P 500 index by 2030, according to Austin-based hedge fund, Worm Capital (via Fast Company)
The report was written by Worm Capital partner Eric Markowitz and researcher Cameron Tierney and comes from a multi-year study on market competitiveness across Tesla’s business — including its vehicles, batteries, trucking and AI.
Tesla is far ahead of competitors as EVs become the norm and new focus for automakers, and Markowitz and Tierney think the automaker’s rapid growth will help them earn a compound annual growth rate (CAGR) of 50 percent by 2030 — far outpacing expectations of the equities of fellow companies.
In the report, Markowitz and Tierney wrote, “Conventional Wall Street analysis consistently undervalues Tesla’s multiple business lines, its massive scale, its expanding margin profile, its leading revolution in complex manufacturing, its approach to real-world AI, its vertical integration, its software stack, and much more.”
Worm Capital says Tesla has the potential to “achieve a 20 million vehicle production run-rate by year-end 2030”, along with over 40% gross margins at scale. The report says Tesla shares could offer a “10x return by 2030–and potentially much more,” based on the company’s current business lines, excluding future robotaxi offerings and real-world AI products.
The key to Tesla’s long-term success, according to Worm Capital, is the company’s vertical integration, while noting there is no EV competition yet for the mass-produced Model 3 and Model Y. The report says “GM’s failed push into EVs is a sign of what’s yet to come.”
The news comes just as Tesla’s Gigafactory Berlin and Gigafactory Austin factories become operational and begin delivering their first vehicles — both expected to offer Tesla another major competitive advantage.
10x+ by 2030 means 5x+ along the way, so if Apple is less than $3T today and grows to say $4T by 2025, that would probably mean Tesla will pass them around 2025 as they are actually growing at a compound rate of closer to 70% than the 50% mentioned and this should continue for at least a couple more years as Austin and Berlin ramp and Shanghai and Fremont reach new heights in production too. The negative narrative is that Tesla only has 2 models and they need 20 or 30 like GM and VW etc. but that is a myth. They have enough back orders to keep them busy for the next couple of years without even needing to reduce their prices which they can easily do with their 30-40% margins. This entire growth story will (is already) fill the history books.