Whichever one you choose, it will be a wild ride.
Whichever one you choose, it will be a wild ride.
Elon Musk is the CEO of two publicly traded, trillion-dollar corporations. The first, Tesla (TSLA +3.76%), has produced outstanding returns since its 2010 IPO. The second, Space Exploration Technologies (SPCX +1.32%), has been on the market for only four months, but it holds the record for the largest IPO in history. Tesla and SpaceX are excellent businesses, but which one will be the better performer over the next five years?
Tesla's next era of growth may be about to start
Tesla is one of the leaders in the electric vehicle (EV) market. The company's Model Y has been the best-selling car (EV or not) for the past three years. However, Tesla's future is increasingly tied to other projects, especially its robotaxi ambitions. The company has made progress on that front recently. Tesla launched the Cybercab in early September, a vehicle specifically designed for its robotaxi fleet.
It carries only two passengers and has no mirrors, steering wheel, or pedals. It is likely cheaper to manufacture than Tesla's Model Y, which the company used for its robotaxi service until now. Tesla has another advantage: it offers subscriptions to its Full Self-Driving (FSD) software for $99 per month. The more people opt in, the more data it has to train and improve its FSD software, which can confer a competitive edge. Over the next five years, the company could make significant progress with its robotaxi fleet.
Musk once promised that the company would have a million robotaxis on the road by 2020. That didn't come close to happening: It only launched the service last year. But if the EV maker can scale its fleet to one million by 2031, and assuming significant utilization and reasonably competitive average per-ride prices, the robotaxi business might generate higher profits than EV sales. EV adoption may also rise through 2031.
Between these two businesses, and other potential projects, such as the company's humanoid robots, Tesla's profits and stock price could rise significantly over the next five years.
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SpaceX is revolutionizing multiple industries
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