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I mean, there's just no one's even close. No one, Google's not close, Cruise Automation's not close. No one's close. At 7,000 plus versus 1,900 now, we're still well above that. It's still one of the most We believe it will drive more performance than most stocks in our portfolio even today. . So, in this video we're watching some clips from a recent interview with Ark Invest founder and chief investment officer Cathie Wood.
Now, those of you who watch the channel will know I'm a big fan of Cathie and Ark. In fact, out of the five different stocks I own in my portfolio, yes, just five, ArkW is among them. That really speaks volumes to how impressed I am with Ark and Cathie and their style of investment in disruptive innovation.
So, let's look at what Cathie had to say about Tesla, the autonomous opportunity, price targets for the stock, and a whole lot more. But first, hey guys, if you're in the US and you'd like up to two free stocks, check out the link in the description to Webull. If you open a new account and fund it with $100, you get two free stocks, one of them valued up to $1,400.
ake using the link in the description. Let's get back to it. Obviously, you're a big fan of Tesla. Why do you continue to like this idea? Uh we still think it's way underestimated even with the massive move it has had. It hit $350 at the bottom in March. Mhm. Um and is now 1,900 roughly there. Yeah, it went over 1,900 and fell back a little bit today.
Yes. Uh and even with this, our bear case for this stock has been 1,500. Now, that's a five-year price target. Okay. That assumed that Tesla would lose market share. We first made this analysis in 2018. 2018, Tesla had a 17% share of the global EV market including China. Last year, I think I've got this number right, they had 23% share.
We assumed for our bear case that Tesla would lose market share from that 17% and go down to in our base case 11% and in our bear case 6%. Instead, what has happened? It went up to 23% last year and now I think we're up to, this is rough, as of midyear, about 26%. So, it's still increasing. Has 78.9 to 80% share in the United States.
And even in China, where I think there are 150 electric vehicle manufacturers, crazy crazy, um Tesla has 21 had in June 21% of that market. Think about that. 150 and Tesla's 21%. The fact that Tesla owns the US EV market is not a surprise to anyone. There's literally no competition. There's just nothing there.
All the big auto makers, they've either put out absolute trash or they haven't even tried. But in China, with so much competition, around 150 different electric vehicle makers, how the hell is Tesla maintaining around a 1/5 market share? This is absolutely insane. Let's just say, just for the sake of argument, that Tesla can continue to maintain around a 20% market share of the EV market globally, they will be selling around 20 million vehicles per year once most new vehicle sales are electric.
Keep in mind that at this point in time, Teslas are not cheap. Yes, the total cost of ownership is comparable to a Camry or Accord or a Civic. I get all that. But the sticker price is just out of reach of a lot of people. So, how in the hell is a premium priced vehicle taking such a huge market share even when there's a ton of other options for consumers?
I'm just kidding, that's a trick question. If you know Tesla, you know the answer. Nothing comes close in terms of value. Sure, something may be cheaper to buy, but the value you get for your money, nothing close to a Tesla. The truth is, for consumers who are making a logical and rational purchasing decision, and I know that's not everyone, okay?
Not buying a Tesla, if you're in the market for a new vehicle and it's within your budget, is a really bonehead decision unless you have very unusual requirements. I don't know, maybe you need to carry giraffes regularly in your vehicle and they won't fit in a Tesla or something strange like that. If we look at things objectively, okay, not emotionally, objectively, there is no other choice.
Best performance, fastest acceleration, lowest running cost, like I could keep going on, safety, infotainment, like blah blah blah blah blah. It's not even close. On everything that matters to most rational consumers, Tesla wins by miles and this is what we're seeing reflected in their sales and their market share.
So, it's not losing share, it's gaining share. And in that bear case, we have nothing for autonomous at all and nothing for ride-hailing. Ride-hailing, we do think they're going to start a ride-hailing service this year. They're going to compete against Uber and Lyft. Uh we believe if they do that, and and again, we think they will, we think that the bear case is history.
Um and so, when we see it past uh 1,500 to 1,900, um we're not worried at all and in fact, our base case, which is in the 7,000 range, this is again a five-year target, our base case will also go up if they do launch this ride-hailing network because we have not included uh that. And in our base case, we have simply assumed that they keep their share from last year, not lose it.
So, we're at 1,900 now, 7,000 before ride-hailing. It will go up with ride-hailing. Our minimum hurdle rate of return for any stock in our portfolio is 15% at a compound annual rate over the next five years. Okay. That means a doubling over five years. So, at 7,000 plus versus 1,900 now, we're still well above that.
It's still one of the most We believe it will drive more performance than most stocks in our portfolio even today. This is an incredibly important point from Cathie and I think a lot of people out there, investors, people that are thinking about Tesla stock are missing this trick. Think about it logically.
If Tesla intends to launch an autonomous taxi network in the future, would it not make sense prior to that to launch a ride-hailing network with human drivers to build the infrastructure, get people used to the idea, iron out bugs, all those kind of things? And what an opportune moment to launch this ride-hailing network later this year in the wake of a global pandemic, lots of people have lost jobs, had reduced income, etc., especially gig workers.
With the legislation or with in California and obviously Uber's been affected with it having to have full-time employees, would a Tesla be affected by that? Would their ride-hailing network be affected by that or it's just these are Tesla drivers and and they're just taking advantage of their Tesla car and connecting with other drivers and and driving to from one location to the other?
Well, even Well, Tesla could actually hire these people, make them full-time employees because the total cost of ownership for Model 3 today Mhm. is about 30% less than a Toyota Camry. Uh mostly because of the residual value. Okay. In fact, I've seen uh some Model S's uh selling for 90% of what people bought them for.
Okay. Model 3's will be even better if those become the ride-hailing network cars. So, what's going to happen? Tesla will say to a person, "Join us and for $5,000 down or $7,000, buy Well, we'll let you buy a Model 3. You can work the rest of the price off. And oh, by the way, it's going to be cheaper for you than a Toyota Camry." In my opinion, this sounds like an absolutely fantastic idea providing it doesn't cause Tesla any financial issues in the short term because they're not getting all of their upfront revenue from a vehicle sale, it's getting paid off over time.
Let me know your thoughts in the comments below, guys. Do you think Tesla should launch their ride-hailing network and allow customers to become employees by buying a Tesla with a small deposit and paying off the balance over time? So, they will do that and then what does that do? If they If they drive for 50% or 60% of the day compared to the 5% of the day that I drive and less than that now that we're that I'm not driving to the train station, Yeah.
they're going to be delivering uh real miles data, real miles traveled to Tesla to feed its autonomous network. Wow. So, we think they have somewhere between 14 and 15 billion miles worth of data. The just like what I mentioned with the genomic space data in Vitae, same is true in the autonomous taxi network.
The winner is going to be that company with the most data and the highest quality data and the best AI deep learning neural network expertise. Uh and they're doing some very interesting things with video labeling in the AI uh area, which we think has them miles I mean, there's just no one's even close.
No one, Google's not close, Cruise Automation's not close. No one's close. There seems to be two trains of thought, actually thought's probably not the right word. There seems to be two different opinions on whether or not Tesla will win full self-driving. One set of opinions comes from those people who have at least a cursory understanding of how machine learning and deep networks work and realize that Tesla's exponentially growing data lead will cause them to win full self-driving.
And there's the second group who just don't understand machine learning, neural nets, don't know how important data is, and they're a little bit unsure. Let me be clear, there is no ambiguity here. Tesla has won full self-driving. Sure, I can't prove it yet, but I'll be happy to clip this in a couple of years and say, "How did I know?" Oh, that's right, cuz I understood data and machine learning.
Yeah, it's kind of obvious. Even in China, Baidu was supposed to be the autonomous taxi platform. Yeah. You know, it's interesting. Uh we we just learned that uh Nvidia is no longer included as a part of that platform. It's now Xilinx, which is an FPGA. That is FPGAs are not going to be driving autonomous taxi networks or platforms.
So, we think even in China, Tesla might have more of a shot at the autonomous opportunity than we expected. We expect them maybe to get 10% of that market. We do think each market's going to be a natural geographic monopoly. We think Tesla will get the bulk of the US market. We didn't think that about China, and we still don't think that about China, but Baidu is suggesting to us, or the moves they've made recently, that hmm, maybe even Tesla has a shot there.
But you still think that, you know, these guys are definitely going to be the the first ones, or most likely going to be the first ones, to really get to that stage five, I guess, with self-driving. Yes, I I I do believe. I actually uh Elon is saying that he's been um driving to and from work pretty much without uh in the prototype of their full self-driving car, pretty much without having to intervene.
So, I I think they're What I love about Elon Musk is he's he he's the guinea pig. He's willing, right? And and and I believe him when when he says that. So, they are they probably, because of the billions of miles of data they have seen, more corner cases uh than I think most auto manufacturers and technology companies will see in the next 5 years.
So, it's going to be very tough for anyone to catch up to them. Not to labor the point, but for those of you who don't have a deep understanding of how Tesla is collecting these data for full self-driving, why I'm so confident, and why Cathie is so confident that they'll win autonomy. Every vehicle they've made for the last few years has a full sensor suite, collecting data, and training the full self-driving AI to improve.
Every time there's a driver intervention, Tesla automatically sends back all the data. It's basically saying, "Hey, AI wasn't doing a good enough job there. The driver had to intervene. Let's figure out what was going on, and we can improve from there." Maybe it was 6 months ago, or a year ago, when they announced that they were going to get more into the insurance business, too.
How do you think that's going to affect uh their their model? Yeah, I think this will help them in on the ride-hailing uh side of things. Okay. I remember uh talking to Uber drivers, and the insurance costs were killing them. I I mean, I really felt terrible for them. They were getting you know, that that that the hikes they were seeing were enormous.
Um so, Tesla knows more about how its cars are going to perform with autopilot uh than any insurance company will. So, Tesla will self-insure. We're we're pretty sure of that. And so, the insurance costs are going to come down uh dramatically. For an in-depth look at Tesla insurance, check out my video.
But in a nutshell, this is a huge opportunity for Tesla. Now, obviously, it means that they've got better data than anybody else. The telemetry, everything else in a Tesla, nothing close. Nobody else, unless you are Tesla, can get the same data. But there's another point that I heard recently from Elon Musk.
A really interesting feedback loop has formed. See, Tesla is now actually getting claims for vehicles that have been in collisions in California, where they've launched Tesla insurance. And what's happening in this process of repairing these vehicles, Tesla engineers, manufacturing, are actually learning how they can make their vehicle better, cheaper to repair, and more efficient.
Talk about winning. You know, when the when NHTSA did the uh analysis on the first fatal crash, um uh the Model S fatal in Florida, um what it took them 6 months to do that study, but after they finished, and remember, this was about 3 years ago, Yeah. uh even NHTSA stated in its report, I may not have this exactly right, the wording, but they said that anyone driving a Tesla car with autopilot was going to experience 40 per was going to be 40% safer.
Now, was it 40% fewer accidents or fatal accidents? I don't remember, but 40% safer. Any insurance company knowing that would price accordingly. They're not willing to do that right now. Insurance companies are a little bit behind the times. They don't understand this autonomous concept. Uh Tesla does, so it can self-insure.
So, I hope you guys have found this video insightful. Just to reiterate, Ark Invest have a $7,000 base case price target on Tesla over the next 5 years, and that does not include autonomy or ride-hailing. And with Tesla stock over $2,000 as I record this, I just want to say something to everyone who doubted Cathie Wood, Ark Invest, and their research 1, 2 plus years ago.
Who's laughing now? Now, I'm not trying to be rude, but I'm trying to be abrasive enough that you understand that if you missed the trick, if you thought Cathie Wood sounded like a suggesting that Tesla stock would be worth thousands of dollars within a few years, it's probably worth reconsidering your investment thesis around Tesla, and asking yourself, "What did I miss?" I'm Stev of course, don't forget your free stocks with WeBull.
If you're in the US, you can start a new account with WeBull using my link below. Deposit $100, you'll get two free stocks, one of them valued up to $1,400. And if you're in Australia, New Zealand, or the UK, you can get a free stock using the link in the description to Stake. mp;.
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