How Many Cars Must Tesla Sell: This Interactive Calculator Has The Scary Answer

Tyler Durden's picture

With the story du jour of electric car wunderkind Tesla so far only just that, a story (inasmuch as the gorgeous Fisker Karma was also just that at least until the day it transformed into a bankruptcy filing), if one that has cost shorts dearly including their shirts, slowly the company's fundamentals are coming into view. And just as importantly, the question of how it all clicks together.

To assist with that, Reuters Breakingviews has compiled an interactive forecast that models how many cars luxury (for now) car maker would needs to sell (hopefully not all at the EBT-ineligible $100K price point) in order to grow into Elon Musk's target market cap of $43 billion, or roughly where GM is right now. The answer: a base-case assuming a 15x P/E multiple in 2022, a 12% pretax margin, and a 25%/25%/50% split between the Model S ($100K), Model X ($75K) and the still to be disclosed "Bluestar" lower-priced car ($40K) , results in a mindblowing 537,815 cars that will have to be sold in 2022, implying a 35.5% annualized sales growth from the 35,000 cars projected to be sold in 2013 (even if today's numbers did not quite validate this runrate), a cumulative total over the next decade of just under 2,000,000 Teslas.

Idiotic? Ridiculous? Absolutely. But crazier things have happened.

Where it gets really fun is if the priced to perfection model does not quite work out as expected, and instead of the "base case" we get a world in which the premium electric car buyers shift their attention to someone with a newer, better, cooler proposal (couldn't possibly happen, right Apple?), in which the market reprices the growth in the story, and in which margins tumble. For the sake of simplicity, let's assume a 10x PE multiple in 2022, a 5% pre-tax margin, and all sales dominated by the lower end car model.

In that case Reuters would need a far bigger chart, because in that case Tesla would not to sell not less than a gargantuan 3,085,714 cars in 2012 to "grow" into its projected market cap, a 64.5% sales CAGR! It also means that over the next decade, Tesla will have to sell a cumulatve 7.8 million electric cars.

Good luck.

Oh, and just to keep it simple, we won't dwell to much on how many tens of billions Tesla would have to invest to develop a recharging station infrastructure that can support between 2 million and 8 million cars sold over the next decade. That's a bedtime horror story best left for another time.

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HelluvaEngineer's picture

I recommend they shift into battery powered Armored Personnel Carriers.  I hear there is a booming business in those.

SMG's picture

Tyler, You and your  "logic".  When will you learn?


Muppet Pimp's picture

Forward Comrades, the machinery of government will squash any opposition to our statist utopian plans!  There is actually a second Tesla bailout already planned, see page 36,871 of Obamacare.  That is the section on 'subsidized transportation via electric cars for medical appointments' for those within 3000% of the poverty line.

eatthebanksters's picture

This reminds me of the story of the bird that ate the the bird was flying along the worm stuck his head out the bird's asshole and whistled before asking, "How high are we?"  The bird answered,"Ten thousand feet," to which the worm retorted,"You ain't shittin' are ya?"

FEDbuster's picture

They should switch to selling 1/2 ton rated "rascals" for super markets, warehouse stores, etc...  Scooters for the morbidly obese (and the too old to walk) is the future of American electric vehicle companies.  Four foot wide seats, run flat tires, lots of low end torque....   The damn things are in such high demand here, that I see the fatties and nearly deads sitting on benches waiting for them to return to the charging stations.   Most of the time when I go shopping not a single one is available at the front of the store.

Oh regional Indian's picture

"lot's of low end torque"

That's heavy man, really heavy....

Run flat tires?


I think soon there will be micro-blimps to ferry such folk...

Moar Giant Soda's.... Moar Chips.... Moar Dips.... moar, moar, moar...


El Viejo's picture

And "More science for Moore Science High" (Apologies to Fire Sign Theatre.)

And speaking of moar science. Here is a little story you might find useful. A friend of mine almost burned down his house. It happened like this. He kept a small AC Adapter plugged in to an AC Outlet behind a small wooden cabinet. The low voltage connector stayed on top of the cabinet to recharge his cell phone when the batt was low. He heard a bunch of popping and found his AC outlet melting down and arcing and quickly unplugged the adapter. His 20 amp house breaker did not trip.

I know this much from my own personal experience. As electronics has become smaller and smaller AC adapters have done the same. A lot of them come with a small step-down transformer connected directly to the adapter's plug. (no fuse) Depending on where the transformer shorts (and a lot of transformers short over time) the current draw maybe larger or smaller. If the current is not enough to trip a 20 amp breaker over time heat can build up to quite a high temp in the shorted AC Adapter. Hot enough to cause a fire I suspect.

After this occured I started keeping my AC adapters/chargers on a power strip with an On/Off Switch and a 10 amp breaker on the strip. (you can buy pwr strips with or without breakers. I now buy them with)

Disclaimer: I am not a professional engineer, but I do have 30+ years experience with electrical and electronic problems.

FEDbuster's picture

"I think soon there will be micro-blimps to ferry such folk..."

These people are "micro-blimps".  The 500 lb+ population is growing exponentially (pun intended).

Ident 7777 economy's picture

Bzzzzt!  WRONG!


Most of these 'chargers' are off-line switchers, NOT transformers. BIG difference in failure mode (think CFL failure)

El Viejo's picture

A volunteer group I belong to ordered 30 VHF radios from a large Asian country. When we received them two would not charge and one of the charging stands smoked. I disassembled one of the AC adapter/chargers. Inside was a transformer connected right to the AC plug pins.

Ahmeexnal's picture

What a fraud. Time to short this sucker with both hands.

dtwn's picture

And not to mention the continuing diminishment of purchasing power and wages.

Alea Iactaest's picture

I still get hung up on fundamentals. What's the total projected market size for e-vehicles in 2020? Who else will be selling premium e-vehicles (hint: BMW i3/i8, M-B, Audi to say nothing about Toyota, Nissan, GM, Ford, etc.)? So what is the projected market share for Tesla?

Then there's the small matter of battery replacement for older cars, recycling of heavy metals, Fisker's problems with small fires, etc.

By the way, what's the plan to re-wire neighborhoods to support the electical demand when 20% of households are charging their cars every night? How's that going to work in the summer when everyone's running A/C?

El Viejo's picture

Beautiful car. I saw one of the sedans the other day. Too bad we all can't be art collectors.

zerozulu's picture

Keeping in mind the inflation, in 10 years time Tesla can sell one car for 37 million dollars and will be able to achieve its target.

eatthebanksters's picture

Bennie's only goal is to save Tesla.

Non Passaran's picture

But they are very special.
They have secret sauce that noone can match.
AAPL to $1000.

patb's picture

What's the total projected market size for e-vehicles in 2020? 


if you are talking north american,  i'd estimate a million units/year and maybe 4 million Hybrids

of various flavors.


Who else will be selling premium e-vehicles (hint: BMW i3/i8, M-B, Audi to say nothing about Toyota, Nissan, GM, Ford, etc.)


I'd say by that time, most of the premium brands will have hybrids or electrics in their product suites.

So what is the projected market share for Tesla?  You should ask the analysts on Tesla stock.

Battery Replacement will become like engine rebuilds, a big expense but not one every person goes through.  Recycling will be driven by the value of the battery metals.  If there is a profit, it will happen.


Charging at night will be simple, The grid is rarely stressed at night.


spankthebernank's picture

These are beautiful cars and they are electric.  Its analagous to buying precious metals to take back control of our money. If you want to take a big bite out of the fossil fuel powerstructure, buy electric.  These cars and this company should be supported.

Pure Evil's picture

LOL to infinity and beyond.

Is this MDB's replacement or his new sidekick?

nmewn's picture

I read it as sarcasm...but who knows these

One can fork over (or finance) 62k or 82k depending battery (60 or 85) and have (the battery, the guts, the engine) warranty for a whole eight years!

What other car manufacturer has the balls to do that?

Where do I sign up? ;-)

(Quarter million miles on the ole 98 Chevy P-up...still kickin it at 70mph)

Tijuana Donkey Show's picture

Yea, but does your Chevy-P-up have a battery built from third world harvested rare earth elements, and still generate a carbon signature from all of the "green: coal based electricity it uses? How dare you challenge Obama's plan for the future?

SamAdams's picture

Careful, you'll start a fire.  Just ask Fisker...

Kirk2NCC1701's picture

No, it's "Fuck Wall St, and anything they have to sell!"

Buy (with cash) or Barter on 'Main St', or build or grow it youself.  Starve the Beast.

Ahmeexnal's picture

Who cares about wheeled vehicles anyway. Brazil is about to start worldwide distribution of Vrils:

msohn's picture

Tesla competes at a different level across every core business competency:


(1) Manufacturing = Bought NUMMI plant at 10c on the dollar = No PPE overhead via D&A, excess labor, etc. Manufacturing will flex with growth.

(2) Sales = (For now) no dealer footprint means no 55 days of lot inventory (all sorts of positive impacts)

(3) R&D = Nobody is close in battery technology


Take a real look under the Frunk and you will see that the business proposition here must be analyzed on its own merits. This is a 21st century auto company, so it does not make sense to use metrics like "P/E" when the capital structure ought to be relative unburdened by legacy and off-balance sheet items. This is very simiilar to Amazon, eBay, etc in the early 2000s or maybe Dell, EMC, Cisco in the early 1990s . . . This does not mean being a stupid growth investor that can't read balance sheets. This is about long term investing. And this is when the markets are fun.

HeliBen's picture

Its like AAPL, except no one really buys their products.

NoDebt's picture

We lose money on every one, but we make it up in volume!

Hopium Dealer's picture

deficit and debt are not bad for an economy. just ask any college liberal and their economic God Paul Krugman.

ziggy59's picture

...or they can just do whats considered the now new normal..


Baffle With BS..

No one needs to know!

Ricky Bobby's picture

Henry Ford did it, what's the big deal. Oh I forgot two different countries.

sitenine's picture

Why electric? With a little innovation maybe they can run their cars on hype, just like their financing model!

HelluvaEngineer's picture

Ed Begley Jr. however outraces them in a vehicle powered by his own "sense of self-satisfaction."


NoDebt's picture

John DeLorean tried something similar back in the 80s.  Near as I can tell, he tried to run his cars and his company on the excess energy his body created when he shoveled huge quantities of coke up his nose, but I digress.  Hopium is a much stronger drug than coke, so who knows?  Maybe it'll work this time.

Agreed, this one has "field of dreams" written all over it.

HelluvaEngineer's picture

It would have been an amazing car, except for that stupid V6 Renault drivetrain.  Seriously, how hard is it to put in a Chevy 350? 

NoDebt's picture

Damned straight.  Not many cars that couldn't have been made better with a Small Block Chevy under the hood.  I always thought the Buick Grand National turbo 231/3.8L would have been ideal in that car (and they existed in the same vintage as the DeLorean).  That would have been one ass-kickin' little ride.

HelluvaEngineer's picture

Good point.  I belive the grand national beat the 911 turbo in the 1/4 mile, or possibly I am smoking something.  Also the Typhoon and Syclone were incredible.

NoDebt's picture

The GN beat the Ferrari 308 and I think Ferrari 328 of it's day (the Magnum PI Ferrari).  Not sure if it beat the 911 Turbo.  Been too long to remember trivia like that.

Sy/Ty trucks were a slightly different breed- they used the Chevy 4.3L V6 engine (basically a 350 Chevy with 2 cylinders lopped off) plus, of course, the magic hair dryer.  The combination of that engine package plus one of the first production GM AWD systems made them absolutely world-killers from stoplight to stoplight.  They could hook on spit.  They could do sub-5-second 0-60 IN THE RAIN.  Great trucks.  I'm always on the lookout for a beat up Sy/Ty in need of some TLC.

The Buick GN used the Buick 60* 3.8L V6 engine.  Totally different engine family, but honestly, a better motor to start with for a turbo application, in my opinion.  Great for a low-revving, torque-heavy application like a turbo setup.  Bottom end built like a tractor engine.  Stronger than dirt.  You could run in the 10s all day long on a stock GN bottom end.

Ah, don't get me started.  I'm getting all misty.  I love fast muscle cars, new or old vintage.  Money is just how I pay for them.


Pancho Villa's picture

But the stainless steel chassis made it easy to retrofit with a flux capacitor powered by a small plutonium reactor.

NoDebt's picture

That's true.  I forgot about that.

Matt's picture

Hydrogen powered car; you just fill it up with urine, goes through the catalyst and purifyers, then onto the combustion chamber.

Non Passaran's picture

Golden Shower Transport Co. Ltd.

LetThemEatRand's picture

I suppose they could decide to make oil cost $200 a barrel and Tesla's technology would then become a hot commodity.  But that would imply manipulation.  

sitenine's picture

Yes, but that would also invite competition. Of course, that's also taking for granted that competition would still be legal. Tesla is supposed to be the 'future', and that's about it. Folks are, for whatever reason, CONVINCED that this technology will somehow save us all from ever having to confront even the mere idea of peak oil.

malek's picture

Come on LTER, you can do better than that.

To allow Tesla for it's "fair share" of car sales, effective immediately directive 47-11 requires
- new cars to have a gasoline tank volume no bigger than 2 gallons (or an energy equivalent of other fuel)
- all gas pump nozzles to have a flow rate no higher than 4 gallons per hour!