Here’s how Tesla stock (NASDAQ:TSLA) can reach $1,500, up from $300 currently. Tesla sold 1.7 million cars in 2024. The key ingredient is that Elon Musk is back in the driver’s seat, with his work at the Trump White House apparently winding down. Fully focused.
Focused on the original mission: transition the world to electric vehicles and become a market leader. Ten million cars a year. Market leadership has a halo effect. We believe that momentum will provide a strong tailwind for Tesla’s next bets – humanoid robots and robotaxis as well. As an aside, market leadership is in fact one of the factors we consider in constructing the market-beating Trefis High Quality portfolio (HQ) – a strategy of 30 stocks that targets long-term value creation. HQ has outperformed the S&P 500 and achieved returns greater than 91% since inception.
We lay out our upside case for Tesla to $1,500 below, as a counterpoint to our previous analysis that outlined a downside case to $100. Separately, see Nvidia Stock At 40% Safety.
So, how does this happen?
Musk Brings EV Momentum Back
First, cars. Tesla already has EV leadership. Despite the recent slowdown in EV sales in the U.S., the truth is that people want electric vehicles. Nearly 50% of cars sold in China in 2024 were EVs. This didn’t begin in China – it began in the U.S. Greta Thunberg thundered first in Europe. Then the climate message spread everywhere. People get it. Coal and gas are yesterday. Clean energy is today. The industry just needs its leader back – Musk, level-headed and championing clean energy again. The idea is simple. If China can do it, why can’t America? See Tesla’s lost cause.
Once consumers in the U.S. and Europe reconnect with the urgency of the climate mission, and Musk plays a central role in it, it becomes unstoppable. Can Tesla scale to 2.5 million cars this year and 3 million in 2026? Musk has done it before, going from 500,000 to 1.8 million cars in just three years. He can do it again. On the upside, we estimate that Tesla delivers 5 million vehicles by 2027, and 10 million by 2030. At an average price of $40,000 per vehicle and a conservative 20% net margin, that’s $80 billion in profit. At a 25x multiple, that’s a $2 trillion valuation for the automotive business alone.
Tesla’s Robotaxi Edge
Tesla has other major projects that could drive valuation. The robotaxi launch in Austin, expected around June, could kick off an enormous new business. To be sure, Tesla will be playing catch-up with Google’s Waymo, which has offered autonomous rides in several cities for almost five years now. Can Waymo 3x Google stock? But Tesla controls the whole stack – it builds the EVs, develops the software, and also operates the charging network. It also has a large base of vehicles on the road that can be brought on board its robotaxi fleet. That’s a real edge.
The ride-hailing market is already huge. Uber handled over 230 million rides per week in Q4 2024 alone. At roughly $30 per ride, that’s a $375 billion annual revenue pool. And that’s just human-driven rides. Autonomous could be bigger still. Waymo retains users better than Uber or Lyft and reports much fewer crashes than the U.S. average. Now for every person hailing a ride, ten still drive themselves. That could change quickly once people start seeing others relaxing in the back seat, watching Netflix, while they’re stuck behind the wheel. The roughly $375 billion market could double. A $750 billion autonomous ride-hailing market isn’t far-fetched. Now, suppose Tesla captures a third of that – $250 billion in annual revenue. At a 25% net margin, that’s almost $63 billion in profit. Apply a 30x multiple, and you get $1.9 trillion in value for ride-hailing alone.
Optimus Robots & Physical AI
Tesla is also working on humanoid robots called Optimus. The company says the robots are designed to carry out dangerous, boring, or repetitive tasks. Musk believes Optimus could eventually be Tesla’s most valuable business – and with good reason. Global labor shortages, rising wages, and soaring demand for automation all make the case for physical AI compelling. Optimus is hardly a moonshot. It’s the next logical step for a company that already builds advanced robots to manufacture its cars. And Tesla’s cars themselves are among the most sophisticated robots on wheels. Musk has said Tesla will build 10,000 Optimus units in 2025, with “several thousand” doing useful work by year-end. With a global labor force of over 3.5 billion people, even a fraction of that market could be transformative.
In our upside case, Tesla might build 10 million Optimus units per year, priced at $20,000 each with 20% net margins – that’s $40 billion in annual profit. At a 30x multiple, that implies a $1.2 trillion business.
Add it all up, and a $5 trillion valuation for Tesla starts to look plausible. That translates to a stock price of over $1,500 per share. What about a timeline for this? Building this sort of scale can take some time. Investors will need to look well into the future. Think 2030 or maybe even more. The point is not to get stuck – if you’re concerned, look even further out, say 2035! The bottom line: Tesla has the technology and scale, and is addressing a potentially massive market. With Musk back in the driver’s seat, this high valuation is within reach.
While Tesla is advancing transformative technologies, Trefis HQ portfolio is focused on long-term value creation. With a collection of 30 stocks, it has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.