Cathie Wood, and her team at ARK Invest, believe that Tesla (TSLA) could expand its overall addressable market by ten-fold if Elon Musk's EV maker were to develop a product that could sell at a half theprice of its current offerings.
During TSLA’s third quarter earnings call last week, CEO Elon Musk noted that the organization is developing an electric vehicle that would be available at roughly half the cost of the Model 3 and Model Y.
ARK Invest outlined that vehicles at price points north of $60K address approximately only 5% of the total U.S. automotive market. At the same time, that market expands to nearly 50% when a vehicle's price point drops below $30K. Therefore, if TSLA were to launch a cheaper option compared to the Model 3 and Model Y their addressable market would increase significantly.
Ark Invest stated: “In our view, fears of declining demand for Tesla vehicles are misplaced. If anything, Tesla is supply constrained at current price points, and a $30,000 vehicle could expand demand ten-fold. We would not be surprised if Tesla’s next-generation vehicle is the cyber robotaxi.”
Wood who has been a longtime bull on TSLA also added 10,821 shares of the EV giant to the ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) on Monday.
For ARKQ, Tesla represents the top holding, with a weighting in the fund of 10.12%.
Additionally, the ARK Innovation ETF (NYSEARCA:ARKK), Wood’s flagship fund, holds a 9.17% weighting towards the company. This represents ARKK's second-largest position.
The ARK Next Generation Internet ETF (NYSEARCA:ARKW) is also involved with TSLA, as the ETF positions the company as its second heaviest weighting at 8.26%.
Year-to-date price action: TSLA -47.2%, ARKQ -44.2%, ARKK -63.5%, and ARKW -62.9%.
In other TSLA related news, Morgan Stanley cut its base case price target on Overweight-rated Tesla to $330 from $350.