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Kathy Wood. Kathy, welcome. I know 15,000 a share is not your base case. It's your It's your reach case. What is your base case of where this $700 stock is in four years? Yes, the base case uh it's a 5year target. So, the end of 24 uh it's $7,000. And we have we've arrived at that price by waiting the probabilities of 10 different scenarios including bankruptcy to be honest.
So, we've been tried to be as fair and balanced as uh we possibly could be, but our confidence level that this is this stock is heading for $7,000 over the next 5 years is very high. So, you take out your lowest probability scenarios, you take out uh the ones that you think are just aren't going to work or the highly outlandish ones where everything has to click exactly right.
On what bricks is this $7,000 foundation founded? Is it improving margins? Is it the lowering the cost of production of the vehicles as they get up to scale or what? Yes, the there are three sources for the increase in our estimate our estimated price target. Uh one is as Tesla killers entered the market last year we expected uh Tesla's market share to go down from 17% globally that includes China to something lower.
Instead it went up to 18%. And the reason 17% in electric vehicles or in all vehicles no electric vehicles this is global there there are many electric vehicle manufacturers in China very low quality but very so what we're learning is Tesla is just so far ahead of the pack and I'm talking about the BMWs the Mercedes uh uh as far as range and other important metrics when it comes to electric vehicles uh their battery cost is 3 years ahead 3 to four years ahead of any other auto manufacturer in terms of the cost declines and so every other auto manufacturer will if they want to be competitive with Tesla uh will and I'm including BMW and Daimler and all if they want to be competitive like for like they will have to sell their cars at a loss at the same time they're losing their internal combustion engine business.
So they they have a big problem. So, are you confident enough in their ability to overcome what I would call sort of manufacturing hairballs that have have struck them in the past and caused them to miss or delay production targets? Uh, so nothing is in a straight line. You can't promise. But, uh, what they did in Shanghai was unbelievable.
Uh, you know, breaking ground and producing within a year. Uh, and I think they're taking those learnings elsewhere. uh in Germany outside of Berlin we've been thinking okay that's a setup for bureaucracy uh they have been welcomed with open arms because Germany doesn't want to lose the auto industry right and they don't want to lose the jobs so uh uh and now we're hearing potentially about Texas so we think they're going to surprise uh on the production side now it took a lot of trial and error just like with their Falcon rockets when they were trying to land them was failure failure failure failure are then success and now they've been successful pretty much every time since.
So, I think they've gotten the manufacturing. Kathy, when you take Tyler's question to the next level, is it do you dig in and get granular on the opportunities when you look at the some of the parts? Is it going to be panels, autonomous drive, or batteries that are the new breakout? Because when we look to to Tyler's point, when we look at the cars and production, everyone thinks they're an expert on what they can and can't do with Tesla.
But is there going to be shockers going forward where there's going to be a breakout valuation on batteries because their technology is so far advanced? Yeah, I think they uh acquired a company called Maxwell Technologies and they've been very secretive about what that is going to do for their battery technology.
So what I just said to you does not even incorporate Maxwell. Uh so yes, we do think there are surprises on the battery front. They have their own AI chip for autonomous, the only auto manufacturer to have one. And James Wang who worked at our analyst who worked at Nvidia for 8 n years uh took a look at those specs and said four years ahead of anything that Nvidia is going to be able to produce because it's single purpose.
It's not general purpose. Uh so we think they're going to be way ahead of the game on autonomous and that's where the real surprises are going to be because uh autonomous is a recurring revenue very high margin almost software as a service-like opportunity autonomous taxi networks and uh what what you have baked in the cake from the street primarily are low margin gross margins uh more like auto you know in the 25 30% range.
We actually think gross margins because of their battery technology could head for 40% on the EV itself and then the incremental revenues from autonomous would be in the 80% plus range. And we think that's what people are missing. And in our $7,000 target, so the scenario testing, we assume only a 25% chance that they're going to be up and running uh with autonomous within two to three years.
Karen, jump in. Yeah. So kudos to you. I mean, you had what I thought was an outlandish uh target two years ago or one and a half years ago, and here we are. And so, you have another one, maybe outlandish, maybe spot on. But let me ask you, when you get to this 7,000 to pick your more moderate case, what's it trading at as a multiple of earnings or as a what will that what will that valuation then be?
So, in five years, again, we we don't really operate like that. We're just trying to figure out the cash flows and do and then discount them. But one of the things that I'd like to focus on is Tesla's stock moved lower once again Monday, falling almost 5% in midday trading, the continuation of a fairly steady decline since Donald Trump took office.
Shares of the automaker trading at around $384 per share in midday trading are down more than $43 a share since their close on January 17th, a dip of more than 10%. That comes as CEO Elon Musk has been spending a large percentage of his time running the Department of Government Efficiency in Washington DC and not focusing as heavily on Tesla.
The steady drop in Tesla's stock is likely due to a variety of factors. Monday's decline follows news that Tesla has lost market share in Sweden and Norway despite a large increase in overall car demand. In January, Tesla sold 405 new vehicles in Sweden, a 44% drop from the year prior. Norway was down 38% with 689 vehicle sales.
Also, the looming enforcement of tariffs on China and Canada are scaring investors. Musk recently conceded on an earnings call with analysts that while Tesla has tried to localize its supply chain, it's still very reliant on parts from across the world for all our businesses. Therefore, the imposition of tariffs, which is very likely, will have an impact on our business and profitability.
Canada is a key supplier of automotive parts, as is China. And Canadian officials are specifically focusing some of their eyeire with Trump's tariffs on Musk. Premier Doug Ford announced Monday that Ontario would scrap a $100 million contact with Starling, which is part of Musk's SpaceX. Tesla's stock moved lower once again Monday, falling almost 5% in midday trading, the continuation of a fairly steady decline since Donald Trump took office.
Shares of the automaker trading at around $384 per share in midday trading are down more than $43 a share since their close on January 17th, a dip of more than 10%. That comes as CEO Elon Musk has been spending a large percentage of his time running the Department of Government Efficiency in Washington DC and not focusing as heavily on Tesla.
The steady drop in Tesla's stock is likely due to a variety of factors. Monday's decline follows news that Tesla has lost market share in Sweden and Norway despite a large increase in overall car demand. In January, Tesla sold 405 new vehicles in Sweden, a 44% drop from the year prior. Norway was down 38% with 689 vehicle sales.
Also, the looming enforcement of tariffs on China and Canada are scaring investors. Musk recently conceded on an earnings call with analysts that while Tesla has tried to localize its supply chain, it's still very reliant on parts from across the world for all our businesses. Therefore, the imposition of tariffs, which is very likely, will have an impact on our business and profitability.
Canada is a key supplier of automotive parts, as is China. And Canadian officials are specifically focusing some of their eyeire with Trump's tariffs on Musk. Premier Doug Ford announced Monday that Ontario would scrap a $100 million contract with Starlink, which is part of Musk's SpaceX.
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