TSLA Expected Rate of Return

[jhm]

What is a "long-term expected rate of return"? This is the annual average rate of return over the next 5 to 10 years that you must believe is likely in order to feel good about buying the stock.

For example, suppose the TSLA stock price is $1500 today.

• If believed the stock price would be $2416 in 5 years, would that be attractive enough to buy more shares today? That is 10% annual return. You could do about as well investing in a SP500 index fund instead.
• If believed the stock price would be $3732 in 5 years, would that be attractive enough to buy more shares today? That is 20% annual return. You could do about as well investing in a Nasdaq index fund instead.
  
• If believed the stock price would be $5569 in 5 years, would that be attractive enough to buy more shares today? That is 30% annual return. You could do about as well investing in an ARK Invest fund instead.
  
• If believed the stock price would be $8067 in 5 years, would that be attractive enough to buy more shares today? That is 40% annual return. You would need to pick a better performing stock (or leveraged fund) to do any better than buying more TSLA.

I am anchoring these choices to specific benchmark ETFs. It is good to ask oneself, "Over the next 5 to 10 years, would I be better off simply investing in an ETF rather than owning Tesla directly?" For most of my time holding TSLA, I would have done better just putting that money into QQQ. It's only been in the last calendar year that my long-term investment in TSLA has outperformed QQQ. Meanwhile, ARKK has out performed QQQ on a cumulative basis for most of the last 5 years. So would I be better off just converting my Tesla shares into ARKK or QQQ for the next 5 years? What future price must I believe about Tesla is necessary for me to believe that holding TSLA is better than holding ARKK or QQQ or SPY?

The answer to these questions will be different for all of us. There is no one correct answer, but rather it comes down to what we value most and how we feel about investing investing in Tesla.

 

[hershey101]

@jhm According to my long-term discount model (here), I try to add at some discount rate that's halfway between $QQQ and $ARKK... My long term goal is to have my investments yield me 30%... I believe as long as my $TSLA position yields me 25% (on average), I can gain the additional 5% yield via options trading around that core position.

I think the past 4 months have severely skewed the returns of all investments.... For comparing to a baseline, I recommend going to pre-2020 and estimating returns based on that.

 

[jhm]

@jhm According to my long-term discount model (here), I try to add at some discount rate that's halfway between $QQQ and $ARKK... My long term goal is to have my investments yield me 30%... I believe as long as my $TSLA position yields me 25% (on average), I can gain the additional 5% yield via options trading around that core position.

I think the past 4 months have severely skewed the returns of all investments.... For comparing to a baseline, I recommend going to pre-2020 and estimating returns based on that.

The ETF returns are inclusive of dividends, not an issue for TSLA. SPY and QQQ both did better on the 10-year horizon than on the most recent 5 years. ARKK's recent gains are heavily influenced by TSLA. Tesla's specific performance is of course very dependent on recent months, but this is actually what we long-term longs were waiting patiently for. Do any of us actually believe 40% return or $8000/sh is possible by 2025? I don't know. That's why I pose it as a survey.

 

[jhm]

I believe as long as my $TSLA position yields me 25% (on average), I can gain the additional 5% yield via options trading around that core position.

So you would have voted for 25% had it been an option?

In hindsight I wish I had included 15%, 25% and 35% as options. I struggled to come up useful ETFs to serve as benchmarks at those levels.

ARKK looks to be in range of 25% to 30%. It depends on just how replicable their investment strategy proves to be. As I understand it they are looking for innovators that can pop in the span of 5 years. They've got a bench of 35 to 55 of these companies. They like stocks that trade like Tesla: goes sideways for years while developing the business, then they take off when the market finally realizes they've been underestimated all along. Tesla and Square are the latest to pop. But they've got another 30 to 50 that can take off at any moment and, they believe, are likely to do so within 5 years. This approach is not that far off from a venture capital portfolio. VCs don't really know what new tech or start up will really take off, so they invest in a lot of them. A couple of winners make pay off for scores of others that neve succeed. ARK plays the same numbers game, but focuses on post-IPO companies. Given the nature of this sort of strategy, I don't think it is far to look at performance under less than a 5-year timeframe. The fund inception date is Nov 2014, so you can't go back much further. Eventually a 10-year retrospective will give us a much better view of how this strategy pans out.

 

[rallykeeper]

The ETF returns are inclusive of dividends, not an issue for TSLA. SPY and QQQ both did better on the 10-year horizon than on the most recent 5 years. ARKK's recent gains are heavily influenced by TSLA. Tesla's specific performance is of course very dependent on recent months, but this is actually what we long-term longs were waiting patiently for. Do any of us actually believe 40% return or $8000/sh is possible by 2025? I don't know. That's why I pose it as a survey.

I voted 40% because I kind of came to that exact same conclusion earlier this week when assessing how I felt about $1700/share.

Ultimately it's a question of what multiple you put on Tesla's growth at the end of 2025.

My very dumb guy oversimplification (I'm using whole calendar years -- I know that screws up the rate of return):

- 2025 annual car/light truck sales: 160b Revenue (4m cars at 40k/car -- a slightly slower rate of growth than heretofore)
- 2025 annual other stuff: 20b Revenue

- Gross Margin 25% (probably modestly high, but given lack of prospective competition, maybe not -- see iPhone*)

- Other expenses: 10b (probably a bit low)

- EBIT: 35b

- Tax rate: 15% (on global sales -- similar to Apple)

- Net Income: ~30b

A multiple of 50 gets you a valuation of 1.5T (~8100/share). I'm not sure a 50x multiple for that level of demonstrated growth is unreasonable. I could probably argue that the multiple should be higher at that point.

Plus, I'm sure many on this site would quibble that my revenue numbers are actually conservative. Preaching the gospel of blind faith (and 50% annual revenue growth) would put Tesla at $225b revenue for 2025 (assuming they eke out $30b this year).

All in all seems that there's as much risk to the upside as the downside on an $8k price at 12/31/2025.



* Apple is actually a pretty interesting gut check even though it's in somewhat different industries (although given the scalability of software, I'd argue not as different as it appears on first glance). Today, in its non-hyper growth phase, it's being valued at ~30x TTM earnings. Given its near monopoly position, it also manages to hit 21% Net Income/Revenue. If Tesla managed 21% on 180b in revenues, it would only need a multiple of 39 to justify a 1.5T valuation.

 

[hershey101]

So you would have voted for 25% had it been an option?

Yep

ARKK looks to be in range of 25% to 30%. It depends on just how replicable their investment strategy proves to be. As I understand it they are looking for innovators that can pop in the span of 5 years. They've got a bench of 35 to 55 of these companies. They like stocks that trade like Tesla: goes sideways for years while developing the business, then they take off when the market finally realizes they've been underestimated all along. Tesla and Square are the latest to pop. But they've got another 30 to 50 that can take off at any moment and, they believe, are likely to do so within 5 years. This approach is not that far off from a venture capital portfolio. VCs don't really know what new tech or start up will really take off, so they invest in a lot of them. A couple of winners make pay off for scores of others that neve succeed. ARK plays the same numbers game, but focuses on post-IPO companies. Given the nature of this sort of strategy, I don't think it is far to look at performance under less than a 5-year timeframe. The fund inception date is Nov 2014, so you can't go back much further. Eventually a 10-year retrospective will give us a much better view of how this strategy pans out.

Yeah, I don't believe in diversification. It's easier for me to truly understand the business of 2-3 businesses then all 30-50 in ARKK's portfolio. So if $SQ, $TSLA, and a few others can get me an expected return of 25%+ each, I'd most likely end up splitting my portfolio amongst them, and have some hedges in place (eg. gold, cash, $TLT). I think there are a lot of folks here that understand $TSLA's business much better on a day-to-day basis than even ARK.

 

[jhm]

I voted 40% because I kind of came to that exact same conclusion earlier this week when assessing how I felt about $1700/share.

Ultimately it's a question of what multiple you put on Tesla's growth at the end of 2025.

My very dumb guy oversimplification (I'm using whole calendar years -- I know that screws up the rate of return):

- 2025 annual car/light truck sales: 160b Revenue (4m cars at 40k/car -- a slightly slower rate of growth than heretofore)
- 2025 annual other stuff: 20b Revenue

- Gross Margin 25% (probably modestly high, but given lack of prospective competition, maybe not -- see iPhone*)

- Other expenses: 10b (probably a bit low)

- EBIT: 35b

- Tax rate: 15% (on global sales -- similar to Apple)

- Net Income: ~30b

A multiple of 50 gets you a valuation of 1.5T (~8100/share). I'm not sure a 50x multiple for that level of demonstrated growth is unreasonable. I could probably argue that the multiple should be higher at that point.

Plus, I'm sure many on this site would quibble that my revenue numbers are actually conservative. Preaching the gospel of blind faith (and 50% annual revenue growth) would put Tesla at $225b revenue for 2025 (assuming they eke out $30b this year).

All in all seems that there's as much risk to the upside as the downside on an $8k price at 12/31/2025.



* Apple is actually a pretty interesting gut check even though it's in somewhat different industries (although given the scalability of software, I'd argue not as different as it appears on first glance). Today, in its non-hyper growth phase, it's being valued at ~30x TTM earnings. Given its near monopoly position, it also manages to hit 21% Net Income/Revenue. If Tesla managed 21% on 180b in revenues, it would only need a multiple of 39 to justify a 1.5T valuation.

Thanks for sharing your math. You arrive at $8100/sh in 2025. Just to probe a bit, would you be willing to pay as much as $2200 this summer in anticipation of $8100 in 2025? That would be just under 30% annual return. Would that still be acceptable return, or would you start considering other investments? How much would be too much to pay for Tesla right now?

 

[EinSV]

I struggled a little with the poll since I have different expectations for returns for the other benchmarks you listed.

The market has had a very strong run over the past 10 years and for the next 5-10 I think we would be very lucky if the S&P500 matched its long term average of ~9%. While QQQ and Ark may outperform by a few percentage points, expecting a match of the 20% and 30% returns of the past 5-10 years over the next 5-10 seems extremely optimistic to me. My guesses for the three benchmarks would be something like 7%, 9% and 11% over the next 5-10 years (including dividends).

With that in mind, if I expected Tesla to return 20% per year that would easily justify the investment. My expectation is 30-40%, with upside potential from there especially if Tesla is first to scale FSD. This makes holding an overconcentration in TSLA an easy decision, although if it keeps rising quickly at some point I may consider selling a little for diversification purposes (not a dirty word IMO when considering early retirement ).

 

[daniel]

I think it's an apples vs. oranges comparison. You're comparing an individual issue, a single company, with a benchmark index that combines an entire sector or the market as a whole. The risk profile is entirely different, and that changes everything. If Tesla is first to market with FSD, it will absolutely skyrocket. If the auto industry finally starts taking electric transportation seriously and Tesla starts getting real competition, the stock price could stagnate or even drop significantly. Right now the value of TSLA incorporates a high expectation. As long as Tesla continues to meet that expectation, its value will exceed the market. If it doesn't, then not so much.

Since its inception TSLA has been a great investment. That could change for any number of reasons depending on future developments. A really big battery breakthrough by another car company, for example, or if someone else beats Tesla to FSD, would be a game-changer for the worse for Tesla.

I make no predictions. I'm still long on TSLA. I think the making great cars will always keep it a strong company. But stock price is more about market expectations, and that's a whole 'nuther kettle of fish.

 

[jhm]

I struggled a little with the poll since I have different expectations for returns for the other benchmarks you listed.

The market has had a very strong run over the past 10 years and for the next 5-10 I think we would be very lucky if the S&P500 matched its long term average of ~9%. While QQQ and Ark may outperform by a few percentage points, expecting a match of the 20% and 30% returns of the past 5-10 years over the next 5-10 seems extremely optimistic to me. My guesses for the three benchmarks would be something like 7%, 9% and 11% over the next 5-10 years (including dividends).

With that in mind, if I expected Tesla to return 20% per year that would easily justify the investment. My expectation is 30-40%, with upside potential from there especially if Tesla is first to scale FSD. This makes holding an overconcentration in TSLA an easy decision, although if it keeps rising quickly at some point I may consider selling a little for diversification purposes (not a dirty word IMO when considering early retirement ).

Ok, so you're objecting to how I characterized the benchmarks as ~ x%. That's fine. The reason we have benchmarks is to be able to compare performance in the future.

So which of the three benchmarks SPY, QQQ and ARKK do you expect TSLA to beat cumulatively over the next 5 to 10 years?

This may be a better way to frame the question I'm trying to ask. It does not matter so much to me the absolute performance of the benchmarks, rather the performance relative to TSLA.

It sounds like you would expect Tesla to beat all three benchmarks.

 

[jhm]

I think it's an apples vs. oranges comparison. You're comparing an individual issue, a single company, with a benchmark index that combines an entire sector or the market as a whole. The risk profile is entirely different, and that changes everything. If Tesla is first to market with FSD, it will absolutely skyrocket. If the auto industry finally starts taking electric transportation seriously and Tesla starts getting real competition, the stock price could stagnate or even drop significantly. Right now the value of TSLA incorporates a high expectation. As long as Tesla continues to meet that expectation, its value will exceed the market. If it doesn't, then not so much.

Since its inception TSLA has been a great investment. That could change for any number of reasons depending on future developments. A really big battery breakthrough by another car company, for example, or if someone else beats Tesla to FSD, would be a game-changer for the worse for Tesla.

I make no predictions. I'm still long on TSLA. I think the making great cars will always keep it a strong company. But stock price is more about market expectations, and that's a whole 'nuther kettle of fish.

Investing is full of apples-to-oranges decisions. The question here is basically, which of the four (SPY, QQQ, ARKK, or TSLA) would you want to put your next investment dollar into? Or put differently, at what price of Tesla today would you sell to invest in which fund? I agree that these are all different fruit, but investors must choose from among a wide array of different fruit.

 

[daniel]

Investing is full of apples-to-oranges decisions. The question here is basically, which of the four (SPY, QQQ, ARKK, or TSLA) would you want to put your next investment dollar into? Or put differently, at what price of Tesla today would you sell to invest in which fund? I agree that these are all different fruit, but investors must choose from among a wide array of different fruit.

And that's why I'm a lousy investor, because I have no idea how to make those decisions. So except for TSLA and my dilemma now that it's 40 times what I paid, all my money is in conservative index funds and interest-paying bonds. I'd never have bought TSLA at $800, and yet I can't seem to bring myself to sell at $1,500.

 

[jhm]

Benchmark Definition

This article is helpful for understanding the concept of a benchmark. It is simply a refence portfolio that one may use for comparison on go forward basis.

BTW, I think the market is way overloaded with passive investing in index funds. This was grounded intellectually in the efficient market hypothesis and CAPM. It was believed that one could not reliably do better on a risk-adjusted basis than the "market portfolio." This devalued active investment and trained a large segment of investors that they could do no better than hold a cheap index fund.

In the US, the SP500 became privileged as the "market portfolio." But as any Tesla investor knows the SP500 applies specific filters to exclude some of the best performing stocks. The fact that QQQ has handily beaten SPY for the last 10 years should challenge the beliefs that undergird passive index fund investing. It should not be possible under EMH and CAPM. And specifically under CAPM, we ought to be able to explain this difference in performance based on beta. Well, according to my Merrill-Lynch sources, SPY has a beta of 0.97, while QQQ has a beta of 0.95. As far as CAPM is concerned these two portfolio have about the same risk. So this does not explain why for the past 5 years QQQ has had about double the return of SPY. If SP500 really was the theoretically correct "market portfolio," this should not be happening.

So what explains the difference? For one, Tesla (and other growing stocks) has been excluded from SPY while included in QQQ. If we look at actively managed ARKK, it has a beta of 1.13. So its risk level (per CAPM) is only slightly elevated relative to QQQ and SPY. And yet it's 5-year performance was about 10% and 18% points above the two respective benchmarks. This should not be happening if you believe the passive investment orthodoxy. But we see that it does happen because of how stocks like Tesla get excluded or weighted in these indexes. ARKK has been overweighted in Tesla and other innovative companies, this is the point of active management.

All this become much easier to understand if we reject the Efficient Market Hypothesis. In my view the market has systemically undervalued disruptive innovators like Tesla. The flipside is that the market has systemically overvalued companies on the wrong side of disruptive innovation. Fossil fuel related industries (oil&gas, auto) are subject to disruption that Tesla thrives on. The SP500 is much more exposed to these fossil-based industries. Notably oil & gas has underperformed the SP500 for a good number of years, thus dragging performance of SPY down especially over the last 5 years.

Obviously, one can have lengthy discussions about which stocks are boosting the indexes or driving them down. But I'd like to argue that the EMH is especially unreliable specifically where disruptive innovation is at play. As we have all witnessed with the Covid-19 pandemic the novelty of a pathogen poses risks that are very hard to navigate. As we learn more about Covid-19, treatments become more effective, preventative strategies become more efficient. We may even have a vaccine eventually. As the novelty wears off, society learns how best to adapt to it. EMH has to do with how quickly the market can react to information. The novelty of innovative technology is what makes it so disruptive. The market may well react quickly to information about a novel technology, but that does mean that it can accurately interpret that information or that potentially impacted businesses know how to adapt to the novel tech. It is common for a disrupted industry to underestimate just how quickly or perniciously a novel tech will impact them. Automakers still think they have an abundance of time to keep turning a profit on ICE. The oil industry still thinks peak oil demand is more than a decade away. Industry insiders are likely to be overconfident in how they appraise the risks, and many investors are likely to buy into beliefs of leaders in mature industries. So the whole set up leads to a systematic overestimation of the value and durability of BAU in the face of disruptive change, even as there is systemic undervaluation of potentially disruptive innovators. On a daily basis, Tesla investor battle the forces of FUD. Sadly, an efficient market can be moved as much by misinformation as from sound information. This is because the interpretive lens of the market is not yet familiar enough with the disruptive innovators to know how to filter out noise from reliable signal. The novelty of Tesla and its many technologies is a big part of what FUD is able to exploit. For example, one can think that EVs are inferior in all sorts of ways, and a whole genre of FUD plays on this. But when one actually has experience driving a Tesla, it can radically transform that person's outlook on the viability and attractiveness of EVs. The "EVs are inferior" FUD loses effectiveness. I would say the person who has actually driven a Tesla is in a much better position to value an investment in Tesla accurately. In terms of EMH, the market is reacting to information in real time, but I would suggest that the interpretation of that information changes as investors gain experience, especially direct personal experience, with a novel technology.

For another example, Tesla share price used to drop sharply with every report of a fire. The market was very efficient at reacting quickly to this information, but it was lousy at interpreting the significance of such reports. The novelty of EV battery fires led traders to think that such events signaled a much lower value for Tesla. Now, the market shrugs off such a report because it can now interpret such an event as having no materiality to the value of Tesla. The double standard was frustrating. ICE vehicles have many fires everyday, but this has no impact on legacy automakers. The difference in interpretation had everything to do with the novelty of li-ion battery powered vehicles.

So my thesis is that EMH does not rule out the difficulty market participants have in interprting information particularly as it pertains to novel technology and disruptive innovation. Thus, innovation and disrupted industries can be systemically mispriced. This is why QQQ can regularly outperform SPY. Also the active investment practices of ARK Invest and many others who invest single name disruptive innovators like Tesla can outperform even QQQ. In short, innovation disrupts even passive investing.

 

[jhm]

And that's why I'm a lousy investor, because I have no idea how to make those decisions. So except for TSLA and my dilemma now that it's 40 times what I paid, all my money is in conservative index funds and interest-paying bonds. I'd never have bought TSLA at $800, and yet I can't seem to bring myself to sell at $1,500.

Makes sense, Tesla still has enormous growth ahead of it. It's not a bad strategy to hang onto your winners. It will become easier to cash some Tesla shares when you become convinced that some other investment has a brighter future. But that has not happen for you just yet, and those index funds are just not that enticing. Enjoy the juicy Tesla fruit you have!

 

[daniel]

Makes sense, Tesla still has enormous growth ahead of it. It's not a bad strategy to hang onto your winners. It will become easier to cash some Tesla shares when you become convinced that some other investment has a brighter future. But that has not happen for you just yet, and those index funds are just not that enticing. Enjoy the juicy Tesla fruit you have!

But see, that's the thing. I am never going to put that much money into any single stock issue. If I sell some of my TSLA the money would not go into something that I expect to do better; it would go into something I consider to be less risky, which would be mutual funds or small positions in a variety of bond issues. I didn't buy TSLA because I expected it to go way up. I bought it because I wanted to support electric cars. Its very success has created this unexpected dilemma for this risk-averse investor. (I will not sell all my shares. At the most, I'd sell down to my original investment amount.)

 

[VT_EE]

And that's why I'm a lousy investor, because I have no idea how to make those decisions. So except for TSLA and my dilemma now that it's 40 times what I paid, all my money is in conservative index funds and interest-paying bonds. I'd never have bought TSLA at $800, and yet I can't seem to bring myself to sell at $1,500.

I sold a quarter of my holdings at 500% gain ($1500/share). I wanted to lock in some gains as the stock is really pricey now. I have ridden stocks up and down before and won’t make that mistake again.

 

[Mo City]

I believe you must split this into two scenarios because of the wide divergence based on one specific issue: With and without full autonomy/robotaxis.

Without true autonomy: +40% annually; TSLA ~$8,000 in 2025. I feel TSLA's future without ever achieving full autonomy is vastly underestimated. Profit domination will happen without it, just slower.

With true autonomy: Literally the sky is the limit. Tesla would easily become the most valuable company on the planet if/when the market concludes they are the first to offer full autonomy on scale. It would be Tesla's "Skynet" moment.

 

[daniel]

With true autonomy: Literally the sky is the limit. Tesla would easily become the most valuable company on the planet if/when the market concludes they are the first to offer full autonomy on scale. It would be Tesla's "Skynet" moment.

Even if Tesla is the first to market with true autonomy, the monopoly would not last long. Lots of companies are working on it. The first to market (whoever that is) will have the market to themselves for a year at most. Within two years every major car company will have it. And there will be so much competition in the robotaxi business that profit will be squeezed to near zero. Right now Uber drivers don't even recover the depreciation on their cars. Robotaxi will be the same. You'll be able to get a little income from the car while you don't need to be driving it yourself, but not even enough to pay for the depreciation due to mileage. A lot of people will want autonomous cars, and enough of them will do robotaxi to drive down the price of rides to below cost, but the money will be in selling cars to people like me who don't want to have to drive. And at first, most people will be reluctant to trust it. By the time non-Tesla owners are ready to trust autonomous cars, their own preferred car maker will have them. And Tesla might not be first to market.

Bottom line: Tesla is going to grow on the strength of the quality of its cars and on the advantages of electric transportation. True autonomy is coming but is not the make-or-break for Tesla. And it won't be Tesla's Skynet. I'll tell you who's going to become the most valuable company on the planet: The first one to market with a truly lifelike AI sexbot.

 

[Mo City]

Even if Tesla is the first to market with true autonomy, the monopoly would not last long. Lots of companies are working on it. The first to market (whoever that is) will have the market to themselves for a year at most. Within two years every major car company will have it. And there will be so much competition in the robotaxi business that profit will be squeezed to near zero. Right now Uber drivers don't even recover the depreciation on their cars. Robotaxi will be the same. You'll be able to get a little income from the car while you don't need to be driving it yourself, but not even enough to pay for the depreciation due to mileage. A lot of people will want autonomous cars, and enough of them will do robotaxi to drive down the price of rides to below cost, but the money will be in selling cars to people like me who don't want to have to drive. And at first, most people will be reluctant to trust it. By the time non-Tesla owners are ready to trust autonomous cars, their own preferred car maker will have them. And Tesla might not be first to market.

Bottom line: Tesla is going to grow on the strength of the quality of its cars and on the advantages of electric transportation. True autonomy is coming but is not the make-or-break for Tesla. And it won't be Tesla's Skynet. I'll tell you who's going to become the most valuable company on the planet: The first one to market with a truly lifelike AI sexbot.

No.

Distribution is the difference between Tesla and everyone else. This is what makes them so dangerous.

Think about it: When Tesla solves autonomy, multiple million cars (depending when it happens) will have it instantly. Instantly! They can monetize and weaponize it from the jump. For regular new car sales, people who want autonomy will have one option for quite some time: Tesla. Until competitors can create sensor suites that cost less than $50K and don't make the car look like a clown show, they probably aren't even in the game. Additionally, arriving at any sort of scale will take several years.

Tesla does not have to be first, just not too far behind. If they are first, they become a wood chipper and it's a bloodbath for everyone else.

 

[daniel]

No.

Distribution is the difference between Tesla and everyone else. This is what makes them so dangerous.

Think about it: When Tesla solves autonomy, multiple million cars (depending when it happens) will have it instantly. Instantly! They can monetize and weaponize it from the jump. For regular new car sales, people who want autonomy will have one option for quite some time: Tesla. Until competitors can create sensor suites that cost less than $50K and don't make the car look like a clown show, they probably aren't even in the game. Additionally, arriving at any sort of scale will take several years.

Tesla does not have to be first, just not too far behind. If they are first, they become a wood chipper and it's a bloodbath for everyone else.

You are assuming that when Tesla achieves true autonomy it will be with the current hardware, so that the press of a button uploads it to everyone who pays (or has paid) the price. That might indeed happen. But it is an assumption and we don't know for certain. I personally think it will not be the case. I personally think that the present computer is two generations shy of the needed computing power and that the current sensor suite is inadequate. I also think that the software for it is five to ten years away.

Like any relatively new company that produces such a great product, I expect TSLA to continue to out-perform the market. But also like any company that skyrockets in the years of its early success, the rate of return will eventually settle down. If noting else than because exponential growth is always limited by outside conditions. At some point the other car makers will finally see the writing on the wall and get serious about electric cars and Tesla will finally face real competition and the stock price will reflect that.

Bottom line: Nobody can know what the market will do.