ARK Invest's Bullish Outlook on Tesla's Cybertruck and AI Advancements

 

Introduction:

ARK Invest, led by Cathie Wood, has expressed optimism about Tesla's upcoming Cybertruck and the company's advancements in artificial intelligence (AI). Analysts believe the Cybertruck has the potential to surpass expectations and become a mainstream product, as indicated by existing reservations and search trends. Additionally, ARK predicts significant growth in the global electric vehicle (EV) market share, with Tesla being a major player. Let's delve into the details.

The Potential of the Cybertruck:

According to ARK analyst Sam Korus, the Cybertruck has garnered 1.5 million reservations, and early Google Trends data suggests it could achieve mainstream success comparable to the Tesla Model Y. The surge in "Cybertruck" searches, especially in truck-centric regions, indicates a strong desire for this electric pickup. While these metrics provide positive indicators, Korus emphasizes that broader trends also contribute to the Cybertruck's potential.

EV Market Growth and Tesla's Role:

Contrary to initial forecasts, the US Energy Information Administration (EIA) has continually revised its projections for EV market penetration. With EV market share exceeding 5% and predicted to reach 14% by 2040, the EIA's earlier estimates were far below the mark. ARK believes that the global EV market share could surpass 70% by 2027, with the US not far behind. Their outlook assumes significant price reductions resulting from declining battery costs.

Challenging Conventional Forecasts:

While industry experts generally anticipate cost declines and EV market growth, ARK's projections of 70% market penetration by 2027 are more aggressive than most. Even the Biden Administration's goal of achieving 50% electric vehicle sales by 2030 has been deemed ambitious by some studies. Nonetheless, ARK's track record of accurate Tesla predictions adds weight to their bullish stance.

Implications for Traditional Automakers:

ARK asserts that traditional automakers should not overlook the potential impact of Cybertruck success. If Tesla's electric pickup disrupts the market, it could spur further adoption of EVs and pose challenges for legacy automakers. The exponential growth in the EV sector should be a consideration for sell-side analysts.

Future Prospects and AI Advancements:

Tesla's AI capabilities, particularly in autonomous driving, are highly regarded by ARK and Cathie Wood. Wood predicts an $8-10 trillion revenue total addressable market (TAM) for Tesla in autonomous mobility by 2030, highlighting the company's involvement in the AI boom. Tesla's focus on AI-powered, fully self-driving software could yield 80% margins, driven by a neural network AI model.

Conclusion:

ARK Invest's bullish outlook on Tesla encompasses both the potential success of the Cybertruck and the company's AI advancements. With high expectations for EV market growth and Tesla's role within it, ARK predicts a prosperous future. While some projections may seem ambitious, the market's evolution and Tesla's track record warrant consideration. As the Cybertruck rolls out and Tesla continues to innovate, the company appears poised for further success in the EV and AI sectors.