Tesla’s Ten-Year Journey: Record Returns and Future Prospects

Let’s get to the numbers. If you had invested $10,000 in Tesla ten years ago, your investment would be worth a remarkable $215,600 at current prices, showcasing an annualized growth rate nearing 36%.

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Tesla (NASDAQ: TSLA) has emerged as the second-best performer among the “Magnificent Seven” stocks over the past decade, trailing only Nvidia. This substantial return reflects the immense value that CEO Elon Musk’s company has delivered to investors. The pressing question now is whether this trend will persist into the next decade.

The Next Move Forward for Tesla

Ten years ago, many investors might have believed in Tesla’s potential to become the premier electric vehicle (EV) manufacturer and a leader in the transforming transportation market. Both expectations have materialized, positioning Tesla as the dominant player in the U.S. EV sector.

While growth in EV sales has slowed, the industry remains focused on electrification, and Tesla’s scale is unparalleled in the U.S. EV market. For instance, the company’s cost per vehicle has decreased from over $38,000 at the start of 2023 to below $35,000—an essential factor in an industry scrutinized for high consumer costs.

Looking ahead, Tesla anticipates numerous Stock price catalysts in 2025, including its new Model Y, which has achieved best-selling status globally. CFO Vaiibhav Taneja stated, “We are still on track to launch a more affordable model in the first half of 2025,” alongside the much-anticipated “robotaxi” offering.

Tesla’s Cybercab

A pivotal step for Tesla’s future lies in its development of autonomous vehicles, particularly the robotaxi, or Cybercab. The company plans to debut the Cybercab in Austin this year, with full-scale production expected to commence in 2026.

Image source: Getty Images.

Cathie Wood of ARK Invest, a long-standing advocate for Tesla, has set a staggering $2,600 price target for the stock by 2029—nearly ten times its current price—primarily due to her confidence in the Cybercab’s success. This projection represents a more grounded expectation compared to the company’s earlier years, as Tesla has significantly solidified its position in the automotive market.

ARK’s valuation model indicates that by 2029, approximately 88% of Tesla’s enterprise value will derive from robotaxis, while only 9% will come from traditional EV sales. This translates to a potential price contribution of $2,288 per share from robotaxis and merely $234 from EVs. Effectively, ARK’s analysis suggests that today’s stock price of around $259 reflects a mere $25 for the robotaxi business according to their model.

The conclusion is clear: the bullish outlook for Tesla hinges not solely on its vehicle sales but rather on its potential for generating long-term income through full self-driving technology and profit sharing from Cybercab kilometers driven.

Image source: Getty Images.

Consider the Risks Involved

There are inherent risks with this optimistic outlook. First, Tesla has a history of struggling to launch technology on schedule. In 2019, Musk suggested a fleet of 1 million robotaxis would be operational by the following year. Yet, as of 2022, he projected volume production would start in 2024, only to later estimate completion “before 2027.”

Second, the bulk of Tesla’s projected value relies on yet unreleased products, and the pursuit of full self-driving and the Cybercab carry significant risks, especially in light of media scrutiny. Meanwhile, competitors like Waymo have been operating autonomous ride services for nearly five years.

Third, Musk’s political actions, especially regarding government spending, have made him a contentious figure, possibly affecting Tesla’s brand image as sales across Europe have sharply declined. The recent first-quarter production and delivery figures raised concerns, as Tesla produced 26,000 more vehicles than it sold, leading to increased inventory levels. Additionally, production is shifting towards the new Model Y, which isn’t yet available in some markets, such as the UK, which will see its first deliveries in May.

Finally, ARK’s model contains numerous assumptions, including significantly reduced battery costs, cost per mile, and robotaxi adoption alongside regulatory approvals. Thus, many variables must align favorably for Tesla to meet ARK’s ambitious price target.

Image source: Getty Images.

The Next Decade for Tesla

Musk has set a clear timeline for the Cybercab rollout: Austin, Texas, in June. Investors are also looking forward to sales performance for the new Model Y and the expected successful launch of a low-cost model, which is critical for Tesla to maintain its EV leadership in the U.S.

Nevertheless, while ARK’s model includes several highly optimistic assumptions to support the $2,600 price target, the current market seems to overlook the potential contributions from the robotaxi venture. This outlook could shift with a successful launch, yet it’s reasonable for investors to remain cautious and monitor the situation closely, particularly following the concerning delivery data from the first quarter. They will want to see improvements in the second quarter as inventory ideally converts into sales.

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*Stock Advisor returns as of April 1, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.