Cathie Wood’s Ark Invest Management expects Tesla Inc. stock to hit US$3,000 by 2025, up from its current price of US$655. At that price, the company would be worth almost US$3 trillion, based on the number of shares outstanding.

Ark expects there’s a 50 per cent chance of Tesla achieving fully autonomous driving within five years, which could allow the company to scale its planned robotaxi service quickly, according to a Friday note on Ark’s website.

It also added Tesla’s insurance business into its model, believing the offering could be rolled out to more states in the next few years with better-than-average margins, thanks to “highly detailed driving data” the company collects.

Wood has been among Tesla’s most ardent supporters, holding large stakes of the company in her flagship fund. When Tesla shares saw a pullback in February, she bought more.

According to Ark’s new model, in the best case scenario, Tesla could reach US$4,000 per share in 2025, and in the bear case, US$1,500. The company forecasts Tesla’s unit sales to be between 5 million and 10 million vehicles in 2025, assuming increased capital efficiency.

The US$3,000 target is far higher than any analyst who covers the company, the highest being US$1,200 among estimates compiled by Bloomberg. Fueled by zealous supporters, Tesla shares rose more than 740 per cent last year, the best performance on the S&P 500. Elon Musk, its chief executive officer, became the richest person in the world in January, before Jeff Bezos reclaimed the title.

Not Close

Analysts have speculated about the prospect that Tesla will launch a robotaxi service since at least 2015, but there’s little indication its technology is close to making this possible anytime soon. Tesla recently told California authorities that human drivers will still need to constantly supervise a new city streets function within its “full self-driving” suite of features sold as part of its Autopilot package.

As for the company’s insurance product, that began in August 2019 and is currently available only in California. The company includes vehicle insurance revenue within its “services and other” category, along with after-sales service, sales of used vehicles and retail merchandise. Last year, all of that business combined was about 7 per cent of total revenue.

Ark’s model didn’t incorporate Tesla’s utility energy storage or solar business, nor did it consider future price fluctuations for Tesla’s Bitcoin holdings.

Barron’s reported the price target earlier.

--With assistance from Craig Trudell.