Hey guys, it's sasha tesla has recently published an absolute monster of a quarterly result with ridiculous, record-breaking numbers everywhere you look and in this video i will share my updated model with you i'll tell you which assumptions i have updated and why, if you're just here for The number you didn't really have to click on the video. It was right there in the thumbnail. My target price for tesla has gone up from three thousand dollars to three thousand three hundred dollars. Tesla is growing orders of magnitude faster than any major car manufacturer.

Their demand is going absolutely through the roof and accelerating with no inventory available anywhere and wait times of several months for a new car. Their gross margins of 30.6 and net margins of 14.7 percent are ridiculous, and that includes one-off taxes and does not yet include benefits from opening the two biggest car factories in the world or the benefit of 4680 sales. I shared my new price target and model in the member discord yesterday morning, and i said the tesla sell-off is entirely unwarranted. Based on my numbers and based on my opinion, this was before tesla went up 10.7 in one day, so congratulations to everyone who wasn't selling stock because of panic.

I've been busy buying as much tesla stock as i could, with whatever cash i could find over the last few days. I bought about eight shares, which is a lot for me and i will continue buying, while i feel the stock is massively undervalued. If you want to buy tesla stock and you're based in the uk, the cheapest way to do it is by using light here who are the sponsor of today's video and by the way, lightyear might be sponsoring this ad slot in this video, so blah blah blah. It's an advert yeah, i get it, but seriously.

Lightyear is the only investing app in the uk where you can go and buy tesla stock without paying any fees at all they're the only one with trading to want to, and free trade, which are very popular. You have to pay foreign exchange fees, every single transaction that you make light here doesn't charge. Those stake and etoro are great platforms. They only charge you 0.5 percent when you load and withdraw money into the account, so they are better than those other ones, but they're still not as cheap as light year, because lightyear lets you convert up to 3 000 pounds per month completely for free.

So if you want to try the only investing app in the uk that lets you invest in u.s stocks for free use, my link in the description and light here will give you a 10 bonus just for creating an account and making any initial deposit of one Pound or more now, remember, the next few months in the stock market are going to be massively volatile that much. We know inflation is still here and it may well get worse. Interest rates are due to begin going up in march, based on the latest fed announcement, and we might see big increases in interest rates later this year if inflation continues climbing. So, while nobody out there, including me, has any idea what the stock market is going to do, it is very likely that we are going to see quite a bit of instability and a lot of volatility on the back of the sentiment that this is causing.

It is possible that the situation gets a lot better in the summer as the world emerges from the last two years after the weak and new variance, and then we're going to have a massive rally in the stock market with tesla smashing all-time highs. In the second half of the year that is possible, it is also possible that inflation goes up to 7.5 percent. When we see january's numbers in february, the fed begins raising rates more aggressively than they've recently announced over the next two quarters, and we walk right into a massive long-term recession. So remember that the target price in my model is my view on what the fair value of tesla stock is based on my projected future cash flows for the company.

It is not a prediction of the market movement and i do not know if or when the market will get closer to my view. It might take a few months. It could take several years, it might never happen. I just know that my target price was two thousand eight hundred dollars in april 2021.

When i made a video on it, it was three thousand dollars in july 2021, and this is my next update. So my target price seems to be a little bit more consistent and a lot less reactionary than every single analyst i've seen on wall street. So let me walk you through the model. Remember i share all of my personal target prices in the member discord and team members get access to the models as well, including this one.

So if you're interested in all the details join my patreon, the link is in the description as well. The first thing i adjusted in my model from the last version was the car business assumptions. First up i have moved out the compact model right to the very end of 2024 and there is no meaningful production volume there until 2026.. So the start point for the compact is about three years away in my model, and i am assuming that eventually, tesla probably will launch a smaller car, but i think that will come only once.

Fsd is ready. Based on my latest updates. I have also pushed the cyber truck back to the very end of 2023, with only 5 000 cyber trucks sold right at the end of next year. It might be conservative, maybe it's not, i don't know we'll see, but that's what i've gone with, and that is my base case at the moment, and i've also done the same thing for the semi.

I know we've been hearing a lot of rumors about pepsi and the mega chargers and all that, but there has been very little official confirmation of anything, so i am pushing them out by two years as well. For that reason, i then went and accelerated the production of model 3 and model y cars, because that is the direction tesla is going in and we are seeing demand for those cars go absolutely bonkers. On the last earnings call, elon musk said supply chain issues in critical components such as batteries have largely now been resolved, so production should continue scaling and will not be impacted by battery supply issues in 2022, including supplies of the 4680 cells for the new model y Production over in texas, so i have fremont manufacturing 500 000 model 3 y cars and shanghai selling 940 000 cars this year. Now, shanghai is running at a run rate of about 840 000 cars per year as of q4, so this number is higher, but they are building that factory extension, which should enable production to push significantly beyond where they're, currently at somewhere from may or june.

So possibly going towards 1.1 million, maybe even more so 940 000 for the total across the year seems to make sense to me. I then have gigaberlin and giga texas opening up in q1, and i have penciled in relatively modest first year, numbers of 125 and 150 000 cars for each of them. I have austin going a little faster and scaling a little bit bigger than berlin. That is their headquarters.

I said gross margins for the cars to sit at around 31, which is roughly where they are today, but in the first year i've actually dropped those down to 25 for those two new factories. As you know, they're figuring out production to be conservative, i've also assumed lower margins on the cyber truck and the semi. We can update that as and when we know more on the pricing and all of that i probably think i am well under there, but we'll see. I then have three more factories in the plan to open over the next decade, provisionally i'm presuming another asia factory somewhere one to serve central and south america, if provisionally penciled in mexico, plus one either on the us east coast or a second plant in europe.

Now elon musk has said that they plan to announce new factory sites multiple sites later this year on the last earnings call. So we will know more when that happens, and i'm assuming that these factories are not going to be quite as epic as texas and berlin. In this model, if they are great, my assumptions are only going to go up. My assumptions have berlin ramping to about 800 000 cars in 2024..

That's roughly the same pace as we saw in shanghai and the factory then maxes out at 1.8 million cars, which sounds huge because that would make berlin bigger than any other car factory in the world except giga texas. But shanghai is a much much much smaller factory and it is older and it had a lot less experience when they first built it, and that factory is probably looking about 1.2 million cars just next year. So i don't really see why berlin can get to 1.8 million cars in 10 years time. Now.

Texas is the big one here. Tesla have moved their hq to austin and that site in texas is enormous. It is absolutely huge and the potential for additional factory buildings there is insane. That is certainly what tesla have been planning.

I have giga austin ramping to 1.1 million cars a year over the next three years, so again, very similar to shanghai since that factory opened. But then i have it scale further, as new factory buildings go up on site and i cap it at about 2.4 million cars a year over the next decade, which is a lot that is huge that would make it easily. The biggest car factory in the world buy some margin, which some people might think is a tall order, but i simply don't see how it won't be. If you just look at what they have already built, the direction is going the size of the plot and the plans they've already submitted.

I don't see how it won't be doing given what we've already seen from their fremont plant and in china that production only increases by roughly a factor of two all the way from 2024 to 2031.. Now i've said production for the other three new factories to eventually reach between 1 and 1.5 million cars per year, so they should sit somewhere between shanghai and berlin in terms of size. So i'm not saying they're all going to be huge. I'm presuming that texas is going to be the big one if you're wondering that makes the total production hit 1.8 million cars this year and then grow to 10.6 million cars in 2031..

My assumption on total car production have actually increased quite considerably over the last 18 months, because tesla have shown that they can scale. They have the capability, the knowledge and the technology to scale far beyond where anyone expected on their shanghai example. So that total in 10 years time is big, it is on par with what the biggest car manufacturers in the world, like toyota, were making before the pandemic struck. But tesla is not the early stage company it once was.

They made almost a million cars last year and i'm projecting a rate of growth that is actually on average way below their 50 internal target for the next few years. So tesla's car business is where i made the majority of my assumption updates. I also updated the supercharger assumptions i'm actually reduced to the growth rate of superchargers, because tesla has been growing them at below my previous estimates recently and i'm expecting that that won't change in the near future and the other big change was the update on full self-driving. Now there are over 2 million tesla cars in total in the world at the moment and on the earnings cortez revealed that around 60 000 of them currently have fsd enabled fsd beta.

That is three percent. That is significantly more than i thought, or i think anybody else thought and currently fsd is massively restricted. You have to go and apply, you have to have the right score and it is only available in united states. So i have increased my fsd update numbers.

I start with four percent in 2022 and i presume that one in five teslas then has fsd by the time we get to 2028.. Now. Some might think that this may be on the high side. I actually think that is possibly conservative based on what fsd is already looking like and where i think it is going, but it is a lot higher than what i've had before in the same model.

Now i haven't changed any of the other assumptions in here. My fsd pricing is still very cheap. I think it might be on the low side. I have it costing 140 per month on average and i'm assuming that they don't sell any outright, because it goes just a full subscription mode.

Both of those conservative assumptions and i'm also assuming that at the end of 2024 fsd, will become so good that one other car manufacturer will do a deal with tesla for a very low volume where you'll be able to go and buy tesla's ffsd on their cars And it will then scale from there that point is three years away, so i don't necessarily think that is particularly unreasonable and that is what elon musk alluded to as the target business model for tesla on the earnings score, so that is about all on this tab. My energy assumptions have actually not moved at all because they were quite close to what tesla has been doing recently. I already restated them a few months ago, and my storage deployment grows relatively steadily at first, but then hits 639 gigawatt hours in 2031.. That is actually around 40 percent less than the one terawatt hour capacity that elon musk announced in the 10-year plan on the call.

But i'm happy to stick with the 639. For now, until we see the actual ramp happening and can see that the numbers are coming in and if we then add up and multiply all of these assumptions, we get a total revenue of 103 billion dollars for this year in 2022. And that then goes up to 1.2 trillion in 2031., so it is big. It is a 10 times increase over a 10-year period, which sounds like a lot, but these numbers are directly coming from the assumptions that i just showed you.

So if you think that that number is way too high, you need to think of which of the assumptions that we just went through are way way off by the same factor. Do you think they won't make 10 million cars? Do you think they're only going to make say 2 million cars in 10 years time or or what is it? The vast majority of my revenue by the way is coming from the car business over 60 percent of it in this model in 2031, and that's the car business that grows to be roughly the size of toyota manufacturing and the relatively conservative. I think, fsd assumptions. So you know go figure.

I still think the energy business will eventually become huge for tesla, potentially even bigger than the car business, but the delays in growth on that front uh over the last two years mean that i have reduced my assumptions and i've pushed them further out into the future. So this remains a minor part of the overall tesla business, even in 10 years time in this model - and that's it stick a five percent rate of growth past the horizon with a moderate 22 times multiple in ebitda, and i have a target share price of around 3 300 on average. Now the beauty of this kind of model is that it is a bottom-up model, not a top-down one, and that means i get to the final numbers by adding up all the little things like the number of cars made, the margins, etc, etc. Instead of just projecting the total revenue numbers by themselves, so that means, if someone disagrees with the valuation and says my target price - is massively overvalued several times too high.

They have to point out specifically where, in the assumptions my model is way out, makes it a little bit harder to just throw out random numbers. I don't have the optimus teslabot in this business model at all. I don't have robot taxi as a business for tesla. In this model, at all, i just have tesla selling cars with fsd.

I don't have them growing to 20 million cars or 40 million cars per year, or anything like that. I just had them roughly match toyota and volkswagen two years ago for tesla in 10 years time, and i see a huge upside in the share price of over 200 with those assumptions, which is why i've been increasing my tesla position recently. If you found this video useful, please don't forget to smash the like button for the youtube algorithm by the way. If you want to discuss this model, see the target prices as and when i update them and look at the model itself feel free to join us on patreon.

The link in the description and i'll see you in the discord. Thank you so much for watching this. Video, i really really appreciate it and, as always i'll see you guys later, you.