Cathie Wood’s ARK Invest is out with another bullish call on Tesla (TSLA), specifically its upcoming Cybertruck pickup.
In a post on the fund’s website, analyst Sam Korus outlined a path were the the Cybertruck will be more than a “niche product,” which the firm says the consensus believes it will be. “In addition to 1.5 million existing Cybertruck reservations, early Google Trends data suggest that the Cybertruck could be as mainstream as the Tesla Model Y,” Korus wrote.
When Tesla CEO Elon Musk tweeted about Cybertruck production line in early April, Google searches for “Cybertruck” exceeded that of the Model Y, and Korus noted search volume originated in “truck-loving geographies," suggesting desire to buy the EV.
While search volume and reservations are positive data points, they are not necessarily dispositive of a huge upside surprise for Cybertruck sales. Korus said that there are other larger trends at play.
When the US Energy Information Administration (EIA) forecast long range EV penetration in 2014, it saw little to no market share by 2040, Korus noted. Last year, as US EV market share topped 5%, the EIA was still behind the curve with its projections and has been increasing its forecast over the years to catch up.
In its most recent 2022 forecast, the EIA sees EV penetration hitting 14% by 2040 then plateauing. Furthermore, the EIA expects trucks to make up 69% of all vehicles by 2050, with only 10% of those being EVs.
Korus and ARK believe there’s much more room to grow. Korus said the firm sees global EV market share hitting over 70% by 2027, with the US not far behind.
— Sam Korus (@skorusARK) April 7, 2023
The ARK chart above assumes drastic price reductions for the cost of EVs due to battery cost declines. Though the industry does expect cost declines for EVs, most analysts and industry experts are not calling for 70% market penetration by 2027. The Biden Administration is aiming for only 50% of new vehicle sales to be electric by 2030, and even some studies have called that goal unrealistic.
ARK, which has had huge calls on Tesla in the past come to fruition, is still doubling down on more Tesla success with the Cybertruck being a big driver.
“While sell-side analysts may be uncomfortable forecasting exponential EV growth, we believe it would be a mistake for them not to consider the implications Cybertruck success could have for traditional automakers,” Korus writes.
As for the Cybertruck’s current status, earlier this month Musk said Tesla would start rolling out “production Cybertrucks” later this year, with a delivery event planned for sometime in Q3.
Beyond Cybertruck, ARK founder Cathie Wood commented on the AI boom vis-à-vis Nvidia’s big earnings report, arguing it was Tesla itself that would be the biggest beneficiary.
"(Tesla) is the most obvious beneficiary of the recent breakthroughs in #AI, as it aims for an $8-10 trillion revenue TAM in autonomous mobility by 2030," Wood tweeted.
Wood’s bullishness on AI mirrors Musk’s comments on Tesla’s AI prowess, with the automaker expecting 80% margins eventually on its autonomous full-self driving (FSD) software, which Musk says would be end-to-end controlled by a neural network AI model.
Currently ARK has a $2,000 long-term price target for Tesla stock, with much of that powered by Tesla’s AI bets on its robotaxi business. Under a bull case scenario, ARK sees that robotaxi unit hitting $613 billion in revenue by 2027, accounting for two-thirds of Tesla’s enterprise value.