Cathie Wood might be one of the biggest Tesla (TSLA +0.69%) fans on the planet. The electric vehicle (EV) maker is the top holding for two of Wood's Ark Invest exchange-traded funds (ETFs). It's also the No. 1 overall holding for Ark Invest.
If Wood's forecast is correct, Tesla's share price could soar roughly 9x by 2029. However, it's about to be put-up-or-shut-up time for her bullish view of Tesla.
Image source: Tesla.
Wood's Tesla projections
Wood and her Ark Invest team believe that Tesla will sell a lot more EVs four years from now than it does today. Their bullish projection is that the company's EVs sold will jump from around 1.8 million in 2024 to 14.4 million in 2029.
However, Wood's optimistic view about Tesla's future isn't primarily based on EV sales. Ark Invest estimates that close to 90% of Tesla's earnings will stem from autonomous ride-hailing services (robotaxis) within the next four years.
Wood expects Tesla will own and operate its own robotaxi fleet, at least at first. Over time, though, she anticipates that third-party companies will run the vehicle networks, with recurring revenue generated for Tesla. Ark Invest predicts that Tesla's business model will be transformed "as every car becomes an AI-powered cash flow-generation machine."
In a recent interview with Barron's, Wood said she thinks consumers will save money by using Tesla's autonomous ride-hailing service instead of buying a new car. She also believes that Tesla's robotaxis will be less expensive than Uber Technologies and Lyft.
By the way, Wood's price target of a 9x increase for Tesla by 2029 is a middle-of-the-road estimate. Her bullish case is that the stock could skyrocket 11x higher over the next four years.
Putting Wood's theory to the test
Importantly, Wood's optimism about Tesla hinges on the company actually launching a robotaxi service. After years of waiting, that's about to happen. Tesla CEO Elon Musk said in the company's first-quarter earnings call, "The team and I are laser focused on bringing robotaxi to Austin in June."
Musk thinks Tesla can scale up quickly after its Austin robotaxi debut. He told analysts in the Q1 earnings call, "Once we make it work in a few cities, we can basically make it work in all cities that [have] legal jurisdiction." He predicted that Tesla will operate robotaxis "in many other cities in the U.S. by the end of this year."
But Tesla faces competition. Alphabet's Waymo already operates robotaxis in Austin, Los Angeles, Phoenix, and San Francisco, with more cities on the way. Uber is partnering with Waymo and May Mobility. Lyft has also teamed up with May Mobility, with plans to roll out an autonomous ride-hailing service in Atlanta this summer.
How Tesla will fare against these rivals remains to be seen. Musk argued in the Q1 earnings call that Waymo's cars are much more expensive and manufactured in low volumes, which he thinks will give Tesla an edge. It's possible, though, that Waymo's first-mover advantage and partnerships with multiple major automakers could work in its favor. One way or the other, we should soon begin to see early signs that indicate whether Wood's ultra-bullish take about Tesla's prospects in the robotaxi market is warranted.
Tesla's current challenges
In the meantime, Tesla continues to struggle. Its stock has plunged around 30% this year. The company's revenue tumbled 9% year over year in Q1. Tesla missed analysts' top- and bottom-line estimates. The Trump administration's tariffs create significant uncertainty.
NASDAQ: TSLA
Key Data Points
Musk believes that Tesla's business should be resilient to tariffs to some extent because of its focus on North American manufacturing. He noted in the Q1 call, "We're more localized than any other manufacturer, and we have a lot of things underway to increase the localization, to reduce supply chain risk associated with geopolitical uncertainty."
Wood is on the same page. We'll probably soon find out if she's right on this Tesla prediction, too.
