ARK Invest, led by the ever-optimistic Cathie Wood, has sent shockwaves through the investment world with its latest take on Tesla (TSLA). The firm released a new open-source model for Tesla, predicting a staggering price target of $2,600 per share by 2029. This translates to a potential 1,300% gain from the current price, highlighting ARK’s unwavering belief in Tesla’s long-term potential.

The crux of ARK’s bullish thesis rests on Tesla’s aggressive push into the robotaxi market. The analyst team, led by Tasha Keeney, Sam Korus, and Daniel Maguire, believes Tesla will launch a robotaxi service within the next two years, with a near certainty of success within five years. This robotaxi dominance is expected to be the primary driver of Tesla’s future value, contributing a whopping 90% of its enterprise value and earnings by 2029.

While Tesla’s electric vehicle (EV) segment is undeniable, ARK sees it playing a secondary role. They project EVs to account for only 25% of total sales and roughly 10% of Tesla’s earnings potential in 2029. The reasoning behind this lies in the significantly higher margins anticipated from the robotaxi business.

ARK’s model dives into the details of this robotaxi dominance. They believe Tesla will initially own and operate the robotaxi fleet, capturing a hefty 80% average take rate in the final years. This strategy allows Tesla to retain all revenue per mile for the first 1-3 years, maximizing profits before transitioning to a third-party ownership model later.

Beyond the immediate robotaxi play, ARK sees further upside for Tesla. The recent release of Full Self-Driving v12, which leverages a video data-learning neural network, is viewed as a game-changer. This technology eliminates over 300,000 lines of manual code, potentially streamlining future advancements in autonomous driving. Additionally, ARK claims Tesla is accumulating data at a rate 110 times faster than Waymo (GOOG), a testament to their commitment to self-driving leadership.

Looking even further ahead, ARK explores the potential of generalizable humanoid robots. Their research suggests this market could reach a staggering $24 trillion globally, and Tesla, with its Optimus project, is well-positioned to capture a significant share if it chooses to enter the market.

The market reacted positively to ARK’s bullish outlook. Tesla’s stock price saw a 1.61% rise in early trading on Wednesday. It’s important to note that ARK’s forecasts are inherently ambitious, and the company’s reputation is built on a willingness to take bold investment stances.

For investors, the release of the open-source model is a significant development. This transparency allows anyone to delve into ARK’s assumptions and methodologies, fostering discussion and potentially strengthening the overall analysis. The model is particularly relevant for those holding Tesla shares in the ARK Autonomous Technology & Robotics ETF (ARKQ) or the ARK Next Generation Internet ETF (ARKW), where Tesla is a major holding.

While the future remains uncertain, ARK Invest has certainly made a bold statement. Their unwavering faith in Tesla’s robotaxi dominance and leadership in autonomous driving technologies paints a picture of a company poised for exponential growth. Only time will tell if ARK’s vision materializes, but one thing is for sure: Tesla’s journey in the coming years will be closely watched by investors and enthusiasts alike.

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