Tesla's Future: Boom or Bust?

Ladies and Gentlemen, buckle up! We're diving headfirst into the electrifying world of Tesla, where the future is as unpredictable as a rollercoaster ride. Elon Musk, the mastermind behind Tesla, is bullish on doubling the company's output in the next couple of years. But hold onto your hats, because Gene Munster, the Managing Partner at Deepwater Asset Management, has a different story to tell. He predicts that Tesla deliveries will decline by 5% in 2025 before surging 40% in 2026. So, what's the real deal? Let's break it down!



First things first, let's talk about Elon Musk's optimism. The man is a visionary, and he's got a track record to back it up. Tesla's production capacity has skyrocketed from 35,000 vehicles in 2014 to a whopping 1,845,985 in 2023. That's a growth trajectory that would make any investor drool! Musk's plan to double the output is backed by a 60% increase in production capacity this year, with an additional 25% capacity growth in 2026. It's a bold move, but it's not without precedent. Tesla has consistently increased its production capacity year over year, and its ability to produce 50,000 vehicles in just under 14 days in 2022 is a testament to its efficiency and scalability.

But here's where it gets interesting. Gene Munster, the Managing Partner at Deepwater Asset Management, has a different take. He predicts that Tesla deliveries will decline by 5% in 2025 before surging 40% in 2026. Why the decline? Well, it's all about the challenges. Tesla is facing a significant retooling project for the latest Model Y, which will result in several weeks of lost production. On top of that, there's a shortage of batteries, which Musk himself acknowledged as the main constraint on Tesla's output. And let's not forget about the complexities of building Optimus humanoid robots, which could divert resources and attention away from vehicle production.

So, what does this mean for investors? Well, it's a mixed bag. On one hand, the near-term decline in deliveries and the associated retooling and battery constraints could negatively impact Tesla's cash flow and stock performance in the short term. But on the other hand, the long-term growth prospects, including the potential for a 40% surge in deliveries in 2026, could be highly beneficial for investors. The predicted increase in capacity and the introduction of new products like the Cybercab could drive significant revenue growth and improve Tesla's market position.



But here's the million-dollar question: will consumers buy that increased capacity? That's the key question that Munster raised, and it's a valid one. Tesla's stock has declined over 50% from recent highs, with protests emerging in the U.S. and Europe criticizing Musk's political activities. The company's first-quarter earnings report in April may provide crucial insights into whether it can reverse these negative trends and meet its long-term growth projections.

So, what's the verdict? Should you buy, sell, or hold? Well, that's up to you. But one thing's for sure: Tesla is a company that's always on the move, always pushing the boundaries of what's possible. And that, my friends, is what makes it such an exciting investment opportunity. So, buckle up and get ready for the ride of your life!