Live markets, Wednesday, October 13, 2021
Tesla’s soaring stock prices did not reveal the full potential of Elon Musk’s visionary electric vehicle group, according to Australian fund manager Holon Global, who says his shares could be worth 400% more than their price of $ 805.
Holon says that an in-depth study of Tesla shows that it will leverage its first-in-place advantage and manufacturing advantage to dominate the market and leave behind rivals in debt.
“Holon values Tesla’s current share price at US $ 3,369 using a discounted cash flow valuation approach which, if done, would make it the largest company in the world with a market cap above 3 trillion US dollars. Holon also believes Tesla has the potential to surpass a valuation of $ 10 trillion by 2050. “
Holon’s business case shows Tesla dominates the burgeoning electric vehicle (EV) market, which is expected to double to 206 million vehicles per year by 2050 thanks to the advantage of Tesla’s first motor and to what Holon describes as an unbeatable advantage in the making.
The company says Tesla shares will be worth US $ 6,244 per share by 2030.
“Few investors understand the enormous difficulty of making the switch from ICE (internal combustion engine) vehicle manufacturing to electric vehicles. Tesla’s widespread adoption of automation across its vehicle manufacturing plants has resulted in significantly higher operating profitability than its largest ICE vehicle competitors, ”said Tim Davies, research director at Holon.
Holon predicts that Tesla’s manufacturing capacity and growing profit margins will allow Tesla to continuously lower prices for electric vehicles and capture additional market share at the expense of traditional automakers late in the electric vehicle opportunity.
Davies says Tesla’s operating profit margins in the second quarter of 2021 reached 24%, which is significantly higher than its much larger competitors, which also carry more than $ 900 billion in debt.
Holon believes that few of them will generate enough free cash flow to fund their electric vehicle investment needs, increasing the likelihood that many traditional automakers will disappear over the next 10 years.
And that ignores the compelling value proposition Tesla customers can have in a fully integrated power generation, storage and transportation solution, according to Davies.
For an average family of four living in Sydney, switching from grid electricity to a solar panel and battery storage solution and using the electricity generated from this integrated system to charge your EV, will generate net present value (NPV) savings of $ 70,000 over the next 25 years, he says.
These savings can fund the purchase of a Tesla Model 2 vehicle (expected release in 2023) as well as a second replacement Model 2 vehicle in 2035 (assuming a 12-year vehicle life cycle).
“No other automaker can offer an integrated solution that comes close to Tesla’s offering. Holon believes this substantial cost saving will accelerate demand for electric vehicles and energy products which could be significantly higher than Holon’s current estimates, ”Davies said.