Tesla Stock Forecast 2025
There is little doubt that electric vehicles (EVs) represent the future of the global automotive industry, and Tesla (NASDAQ: TSLA) has created a brand that is synonymous with EVs by redefining consumer perception around EVs.
Following an epic rally in 2020, Tesla’s valuation has climbed to make the company the most valuable automaker in the world, despite delivering just a fraction of the unit volumes of legacy car companies.
Investors are pricing in considerable growth going forward, with Tesla stock currently trading at 681.5 times earnings and 20.9 times sales. Those valuation multiples are well above peers in the auto sector.
Tesla is a polarizing stock, both among consumers as well as Wall Street analysts. The average price target for Tesla shares is approximately $673, with a high of $1,200 and a low of $150. With such a wide range of valuation estimates, it’s clear that Tesla investors face a lot of uncertainty and risks in the years ahead.
Price: $687.2 (as of close Jul 30, 2021)
Tesla Stock Forecast 2021
In terms of the consensus estimate, analysts are modeling for Tesla to report $49.35 billion in revenue for 2021, which would represent 57% growth over the $31.5 billion in sales that the EV maker posted in 2020.
Tesla was able to grow its top line by 28% last year thanks to strong growth in vehicle deliveries, despite the COVID-19 pandemic and its impacts on global auto sales. Vehicle deliveries jumped by 36% to reach 500,000 in 2020. So far in 2021, the company delivered nearly 185,000 cars in the first quarter, which included no Model S or Model X vehicles as Tesla is revamping its production lines for those vehicles following an internal refresh.
The company’s outlook for 2021 is somewhat vague, with Tesla forecasting average annual growth in vehicle deliveries of 50% over a “multi-year horizon.” Some years may enjoy higher growth, and Tesla expects 2021 to be one of those years. If the company hits 50% delivery growth, that translates into roughly 750,000 deliveries in 2021.
The consensus estimate calls for adjusted earnings per share (EPS) of $4.44 this year. Tesla shares are now trading at around 153 times 2021 estimated EPS.
Tesla Stock Forecast 2025
Analysts are forecasting that Tesla’s revenue will continue marching higher in the years ahead, reaching an estimated $130.9 billion in 2025. That would represent a compound annual growth rate (CAGR) of 21.5% if Tesla can hit Wall Street’s expectations. Growth will expectedly decelerate as the revenue base grows.
Here’s the path that analysts see Tesla’s revenue taking through 2025.
As far as adjusted EPS expectations, here’s what Wall Street is looking for.
|Year||Adjusted EPS||YOY Growth|
Tesla only recently achieved full-year profitability on a GAAP (Generally Accepted Accounting Principles) basis, which paved its way into the S&P 500. GAAP net income is expected to be $3.3 billion in 2021 before climbing to $10.6 billion in 2025.
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Tesla Stock Forecast 2030
The global auto sector is still in the early innings of the electric revolution. Beyond electrification, there are also megatrends around autonomous vehicles (AVs) and connectivity. Automotive executives and analysts expect more change to occur in the industry in the next 5 to 10 years than has transpired over the past 50. With so much disruptive change on the horizon, it’s difficult to predict how the future will play out with much certainty.
Still, analysts’ long-term forecasts can be useful in setting ballpark expectations.
Here are Wall Street’s forecasts for adjusted EPS.
|Year||Adjusted EPS||YOY Growth|
Tesla Bull Case
Tesla will need to execute well on numerous technological challenges in order to satisfy investors’ lofty expectations. By far, the most important will be the development of autonomous driving software, which CEO Elon Musk has been promising for years without delivering.
If and when the EV leader can officially launch Level 5 autonomous driving software, it plans to create a Tesla network of robotaxis that would represent a major threat to ride-sharing platforms like Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT). Musk’s vision is that Tesla owners can tap a button in the Tesla app to share their idle vehicles, earning revenue while the car is not in use (with Tesla taking a cut).
The company is also entering the Class 8 truck market with Tesla Semi, which will dramatically expand its total addressable market (TAM). There is also a new Roadster supercar in the works. Both the Semi and Roadster have faced delays, as Tesla has not yet launched either vehicle despite unveiling them in 2017.
Tesla is also growing its solar power and stationary storage business, which it got through its controversial acquisition of sister company SolarCity back in 2016.
Global EV adoption remains quite low, with just 3% penetration in 2020. Internal combustion engine (ICE) vehicles comprised the remaining 97%. EV adoption is expected to continue rising around the world as governments enact supportive policies in the fight against climate change. If Tesla can maintain its dominance of EVs while the category expands, that should drive growth for years to come.
Tesla Bear Case
In no uncertain terms, Tesla has a record of missing its deadlines. Musk has a reputation for setting ambitious schedules that may not be realistic, but investors have grown accustomed to this habit. It’s worth noting that Tesla ultimately does deliver on many of Musk’s goals, just later than expected.
With so much of Tesla’s valuation predicated on the expectation of Level 5 autonomy, failing to develop the software could be devastating to the stock price. That’s especially true since Tesla recently changed course to abandon radar in lieu of a vision-only system, a controversial decision that has boggled industry pundits. The company was already alone in choosing not to use lidar, which virtually all competing AV developers utilize, but betting on vision-only autonomous driving is an even riskier proposition.
Additionally, EV competition is intensifying from both established incumbents as well as an entirely new breed of EV startups. Tesla will need to defend its EV dominance while simultaneously continuing to push the technological envelope.
Interested in adding more EV stocks to your portfolio? Check out our list of the best electric car stocks.