I got a few requests from my last post to do a deeper dive into ARK's Tesla bear case after providing my thoughts on its bull case.
Breakdown of the Model's Assumptions
One of our readers, Pitounet, pointed out that ARK has hosted its model on Git. This has a lot more information on ARK's Monte Carlo analysis than the blog post. You can find the model here, and download it for yourself as an Excel file. Thanks, Pitounet!
There are four main tabs to change: Tesla Valuation, Valuation ASP Tables, Monte Carlo Inputs, and Monte Carlo ASP Tables. The one tab I found interesting was the Monte Carlo Inputs tab. This tab limits the minimum and maximum for the simulation, and shows us what ARK set as the defaults for each value. I've selected a few rows where the bear and bull case are far from the possible minimum and maximum values. I find it interesting that so many key values are far from the minimum and maximum values, and how others are tightly constrained (such as the factory utilization factor being between 95% and 99%, out of a range of 70% to 100%). For ride-hailing service, the miles per year averages to 30,000 miles per car. Another point of interest is miles traveled per robotaxi, with the average set to 110,000 miles per year. I plan to reset the values to the minimum and maximum to see what changes, as an experiment. The bear case for max annual production increase is 50%, which I find odd and implicitly bullish.
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