Why Autopilot v9 could make Tesla too expensive to take private

[strangecosmos]

ARK Invest estimates the net present value of the autonomous ride-hailing industry at $2 trillion.

Using this $2 trillion net present value estimate— if you think Tesla has a 30% chance of gaining a 7% market share, that would put the share price at $541. A 40% chance of a 10% market share: $765.

Analyst Pierre Ferragu has a long-term price target of $530. He argues that $420 is too expensive for private investors. $541 is slightly above his price target, and $765 is far above it.

Autopilot v9 is supposed to hit sometime in September— could be later, knowing Elon. If I’m understanding right, in this release, Tesla owners will be able to drive an entire highway from onramp to offramp without touching the controls— except to keep their hands on the wheel. That would be an incredibly impressive achievement, if so.

If Autopilot v9 really can do this, I think it might prompt more mainstream analysts and institutional investors to start thinking about the value of the autonomous ride-hailing opportunity. We could see that start to get priced in.

So, Autopilot v9 could make Tesla too expensive to take private. Of course, I don’t know what price private investors are willing to pay. It is an odd discussion because I don’t understand why private investors would pay a premium to own private equity in Tesla rather than just buy the public shares. Perhaps the Saudi Arabian foreign investment fund is willing to pay any price. But why?

 

[BOBTHEJOCKEY]

ARK Invest estimates the net present value of the autonomous ride-hailing industry at $2 trillion.

Using this $2 trillion net present value estimate— if you think Tesla has a 30% chance of gaining a 7% market share, that would put the share price at $541. A 40% chance of a 10% market share: $765.

Analyst Pierre Ferragu has a long-term price target of $530. He argues that $420 is too expensive for private investors. $541 is slightly above his price target, and $765 is far above it.

Autopilot v9 is supposed to hit sometime in September— could be later, knowing Elon. If I’m understanding right, in this release, Tesla owners will be able to drive an entire highway from onramp to offramp without touching the controls— except to keep their hands on the wheel. That would be an incredibly impressive achievement, if so.

If Autopilot v9 really can do this, I think it might prompt more mainstream analysts and institutional investors to start thinking about the value of the autonomous ride-hailing opportunity. We could see that start to get priced in.

So, Autopilot v9 could make Tesla too expensive to take private. Of course, I don’t know what price private investors are willing to pay. It is an odd discussion because I don’t understand why private investors would pay a premium to own private equity in Tesla rather than just buy the public shares. Perhaps the Saudi Arabian foreign investment fund is willing to pay any price. But why?

If you want to buy some shares at a certain price it's quick and easy. You don't have to worry about your purchase affecting the price of the stock. If someone that wants to buy 5 BILLION dollars worth it would take a long time to get a decent price. That's why they are willing to pay more. Tell me if I am wrong but that's the way I see it.

 

[commasign]

The coast to coast self driving demo will be game changing. It's just a question of when that will happen.

 

[strangecosmos]

The coast to coast self driving demo will be game changing. It's just a question of when that will happen.

I keep questioning whether Tesla is really saying Autopilot v9 in September will drive on highways with no driver input. To me, that is more impressive than the coast-to-coast demo — which is almost entirely highways. Putting something into production is more impressive than a demo.The demo just shows higher reliability, I guess.

 

[Cirrus MS100D]

I like your optimism, but I think too many folks have played “tweets down the lane” with Elon’s original tweets on the subject. There is no definitive “Ver 9 will have X, Y, and Z.”

At this point, it seems like some early access folks MAY get Ver 9 MAYBE in August, which would historically be a sign us “regular folk” would see it MAYBE sometime in September.

But while Elon’s tweets have hinted that AP improvements “can start to happen” in Ver 9, so many people have read into this that once Ver 9 drops, we’ll have on/off ramp Level 3+ Highway AutoPilot, and there simply isn’t any evidence of this.

 

[Johann Koeber]

My thought on this is:

IF TSLA is too expensive to be taken private
maybe there will be no more need to.

It should silence the shorts
It should cost them a lot of $$$
It would make finding capital for Tesla easy

Maybe no more need to go private.

So it's win/win: Either we see TSLA in the four digits or we go private.

 

[_jmk]

Odds are it might actually do that with the new hardware. If you now go slow enough so that the ap2 cpu/gpu keeps up, this thing drives quite well already.

 

[strangecosmos]

This is what Stuart Bowers, a VP of Engineering, said:

So right now, a lot of the focus is on Autopilot v9, which is our sort of on-ramp to off-ramp solution that's going to automatically attempt to change lanes, understand what lane the car is in, understand the route the user wants to travel and take that route for the user and ultimately hand back control to that user which is kind of stay in (11:50) control.

 

[dandurston]

I'm optimistic about V9. If it can do auto-lane changing on highways then Tesla is going to get a lot of good publicity.

 

[strangecosmos]

If it really can do on-ramp to off-ramp without the driver doing anything (except keeping their hands on the wheel and watching the road), that will be insane! I will be blown away.

 

[jeewee3000]

The coast to coast self driving demo will be game changing. It's just a question of when that will happen.

"End of this year" - Elon in (insert year)

 

[jeewee3000]

If it really can do on-ramp to off-ramp without the driver doing anything (except keeping their hands on the wheel and watching the road), that will be insane! I will be blown away.

I'd be blown away too but I can't imagine the stock price getting a huge bump from this. Maximum 10% I'd say.

 

[Shock-On-T]

ARK Invest estimates the net present value of the autonomous ride-hailing industry at $2 trillion.

Using this $2 trillion net present value estimate— if you think Tesla has a 30% chance of gaining a 7% market share, that would put the share price at $541. A 40% chance of a 10% market share: $765.

Analyst Pierre Ferragu has a long-term price target of $530. He argues that $420 is too expensive for private investors. $541 is slightly above his price target, and $765 is far above it.

Autopilot v9 is supposed to hit sometime in September— could be later, knowing Elon. If I’m understanding right, in this release, Tesla owners will be able to drive an entire highway from onramp to offramp without touching the controls— except to keep their hands on the wheel. That would be an incredibly impressive achievement, if so.

If Autopilot v9 really can do this, I think it might prompt more mainstream analysts and institutional investors to start thinking about the value of the autonomous ride-hailing opportunity. We could see that start to get priced in.

So, Autopilot v9 could make Tesla too expensive to take private. Of course, I don’t know what price private investors are willing to pay. It is an odd discussion because I don’t understand why private investors would pay a premium to own private equity in Tesla rather than just buy the public shares. Perhaps the Saudi Arabian foreign investment fund is willing to pay any price. But why?

Ah, but what if it's a 23% chance of a 4% market share!??! Or an 18% of a 3% share?
But wait, if it's a 50% of an 80% share then the price is $7650!!!

Oh I'm so confused!

 

[strangecosmos]

I'd be blown away too but I can't imagine the stock price getting a huge bump from this. Maximum 10% I'd say.

If indeed we are heading toward a 2020 or a 2021 where wide scale deployment of fully autonomous taxis is possible, I would think there has to be some point before 2020 where the stock market starts to estimate those future earnings and start to price them in.

Cathie Wood says the net present value of Tesla is $2,000 per share. Pierre Ferragu’s long-term price target is only $530 per share because he doesn’t factor in autonomous taxis. Similarly, Cathie Wood gave a 5-year price target of $700 if autonomous taxis don’t materialize.

If Tesla’s net present value is indeed $2,000 per share, but it’s trading at $250-$400 per share because the stock market doesn’t price in the autonomous taxi opportunity... surely that has to change as the autonomous taxi opportunity gets closer.

Tesla releasing an version of Autopilot that can fully drive highways on its own (with driver monitoring) would — maybe — make that opportunity seem a lot more real to many people. Maybe.

 

[jeewee3000]

If indeed we are heading toward a 2020 or a 2021 where wide scale deployment of fully autonomous taxis is possible, I would think there has to be some point before 2020 where the stock market starts to estimate those future earnings and start to price them in.

Cathie Wood says the net present value of Tesla is $2,000 per share. Pierre Ferragu’s long-term price target is only $530 per share because he doesn’t factor in autonomous taxis. Similarly, Cathie Wood gave a 5-year price target of $700 if autonomous taxis don’t materialize.

If Tesla’s net present value is indeed $2,000 per share, but it’s trading at $250-$400 per share because the stock market doesn’t price in the autonomous taxi opportunity... surely that has to change as the autonomous taxi opportunity gets closer.

Tesla releasing an version of Autopilot that can fully drive highways on its own (with driver monitoring) would — maybe — make that opportunity seem a lot more real to many people. Maybe.

I follow your reasoning and can partly agree, but I am adding other factors.

In todays world I can't imagine one company dominating autonomous vehicle technology for an extended period of time. That's why I'm not that worried that Tesla could come in second or third reaching Level5 autonomy: it won't matter much in the end. Many people are very brand loyal in the car industry and won't adopt early autonomous technology instantly. (I'm not saying Tesla has a demand issue, not at all, but just that other car makers also have a lot of demand)

So if autonomy goes wide, I don't see why Tesla's stock would soar and other companies be left in the dust. I think this will be a more gradual transition technology-wise (and stock price wise).

Either way, Tesla will go private before autonomy ever happens, so there.

 

[ItsNotAboutTheMoney]

Level 5: huge value
Anything else: much smaller volume

 

[ValueAnalyst]

Level 5: huge value
Anything else: much smaller volume

Level 3 even if only on highways would push FSD take rate higher than the current 15%, and this has significant margin & cash flow implications. Please note that the current FSD-capable fleet size, which has not opted for FSD at point of sale, exceeds 200,000 units. One or two killer FSD-exclusive features could bring in hundreds of millions of dollars in revenue with high margin in just a matter of weeks.

 

[Johan]

Tesla Network - for profit ride sharing managed by Tesla

 

[Mo City]

I follow your reasoning and can partly agree, but I am adding other factors.

In todays world I can't imagine one company dominating autonomous vehicle technology for an extended period of time. That's why I'm not that worried that Tesla could come in second or third reaching Level5 autonomy: it won't matter much in the end. Many people are very brand loyal in the car industry and won't adopt early autonomous technology instantly. (I'm not saying Tesla has a demand issue, not at all, but just that other car makers also have a lot of demand)

So if autonomy goes wide, I don't see why Tesla's stock would soar and other companies be left in the dust. I think this will be a more gradual transition technology-wise (and stock price wise).

Either way, Tesla will go private before autonomy ever happens, so there.

Why wouldn't the first mover to autonomy dominate, especially if it's Tesla? Who else puts self-driving capability into every vehicle they sell? Because of the expense of their equipment, all of the others are limited to fleet autonomy. Any legit reason for this to change soon? If Tesla is first to autonomy, they can drive a stake into the others. For the record, I have serious doubts a chip upgrade + improved software will be enough for full self-driving. But if so, it will be very ugly.

The Tesla going private ship has sailed.

 

[eye.surgeon]

The glamour of level 5 autonomous driving overlooks the reality that assisted driving should be the real target. Unlike L5 autonomy, assisted driving can virtually eliminate accidents, avoid the legal quagmire of L5 driivng, and provide most of the real benefit of assisted driving, and this could be achieved within a couple years. I don't need to take a nap driving to work, I just want to pay attention while the car drives me and assist it when it needs my help. True L5 driving is a long ways away. I would put the likelihood of Tesla achieving an autonomous coast to coast drive in the near future about the same as Tesla selling a $35k Model 3, which is to say slim to zero.