Tesla’s Future Earnings: Transitioning from Electric Vehicles to a New Revenue Stream

Tesla (NASDAQ: TSLA) is facing a potential shift in its revenue streams, with Ark Investment Management forecasting that by 2029, 86% of Tesla’s earnings will come from sources other than its current passenger electric vehicle (EV) sales, which currently represent 79% of its revenue. In 2023, Tesla delivered a record 1.8 million units, but it reported a 2.3% decrease in deliveries in the first three quarters of 2024 compared to the same timeframe in 2023.

Furthermore, Wall Street estimates Tesla’s revenue will reach $99 billion in 2024, requiring a twelvefold increase, or a compound annual growth rate of 64.7%, by 2029 to meet Ark’s projections of $1.2 trillion in annual revenue, with FSD and Cybercab accounting for 63% of it. Tesla is also scaling back its plans for a low-cost EV while focusing on autonomous vehicles, with Elon Musk declaring that the Cybercab, a self-driving robotaxi, could see regulatory approval as early as next year in Texas.

Ark’s models suggest that FSD software could significantly enhance profit margins, potentially leading to 86% of a forecast $440 billion in earnings before interest, tax, depreciation, and amortization (EBITDA) by 2029. However, this ambitious forecast relies on rapid scaling of FSD and the Cybercab, while competition from low-cost EVs, particularly from Chinese manufacturers like BYD, poses ongoing challenges.