Tesla Stock Forecast: Will TSLA Become the Largest Company by 2030?

Mohit Oberoi, CFA - Author

Nov. 3 2021, Published 8:28 a.m. ET

Tesla (TSLA) stock has been on a fire over the last month. The stock gained over 51 percent during the period, which took its YTD gains to 66 percent. It has become the latest entrant to the $1 trillion club and the first automotive company to do so. What’s the 2030 forecast for TSLA and could the Elon Musk-run company become the world’s largest company by then?

Article continues below advertisement

Tesla, or for that matter Musk, is quite divisive. Many people see Tesla and Musk as disruptors who're shaping the automotive industry's zero-emission future. However, many others see Musk’s antics as the sole driver for Tesla soaring stock price. What Tesla has managed to achieve is nothing short of phenomenal.

How many cars can Tesla sell by 2030?

Tesla sold almost half a million cars in 2020 and has already surpassed that number in the first nine months of 2021. The company’s annual production run rate is now close to 1 million cars. The Berlin and Texas Gigafactories still aren't running yet. Once these plants come online and Tesla adds even more Gigafactories globally, the deliveries will likely rise exponentially.

Article continues below advertisement

Tesla expects its deliveries to rise at a CAGR of around 50 percent over the foreseeable future. Adam Jonas of Morgan Stanley is a longtime Tesla bull, but he's bearish on startup EV company Lucid Motors. He expects Tesla to deliver 5.8 million vehicles by 2030.

Article continues below advertisement

That would make the company the fifth-largest automotive company based on the current numbers and the volumes would be more than half of what Toyota delivered in 2020.

Article continues below advertisement

Tesla stock forecast 2030

When looking at Tesla stock’s 2030 forecast, we’ll need to look beyond the automotive business. The business is currently the biggest revenue driver for TSLA. Over the next 10 years, other businesses will also contribute significantly to the top line and bottom line.

For example, the energy business currently makes up less than 10 percent of Tesla’s revenues. Musk expects the business to eventually become as large as the automotive business.

Article continues below advertisement

The biggest profitability driver for Tesla could be the software part of the business, which includes the Autopilot and robotaxis. Musk expects the price for Autopilot to rise 10-fold from these levels and reach $100,000. Mobileye expects the TAM (total addressable market) for robotaxis to rise to $165 billion by 2030.

Article continues below advertisement

Overall, Tesla is at the forefront in the global pivot towards a greener future. Instead of positioning itself as an electric car company, Tesla has positioned the brand as a renewable energy company.

Article continues below advertisement

Will TSLA become the world's largest company?

If Tesla continues to dominate the EV industry like it currently does, it could become the world’s largest company. Chamath Palihapitiya thinks that the first trillionaire would come from the green energy sector. Bill Gates thinks that the climate tech sector has the potential to produce many more Teslas.

What risks does TSLA face in the long term?

Over the long term, Tesla will face increased competition from legacy automotive companies and startup EV companies. By the middle of this decade, the EV market will become crowded—just like the ICE (internal combustion engine) market is now. Apple’s rumored entry into the industry is another potential risk for TSLA.

Article continues below advertisement

Buyers will be spoilt for choice, unlike now where there aren't a lot of quality EV models available. Given Tesla's focus on innovation and quality, there isn't any reason to believe that Tesla will be severely impacted by the increased competition.

The aura around Musk combined with the strong product proposition from the company makes Tesla an aspirational car for many people. Looking at the global impetus towards a lower carbon economy, there's a real possibility that Tesla could become the world’s largest company much sooner than 2030.


Latest Tesla Motors Inc News and Updates

    © Copyright 2022 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.