Where will Tesla's share price be 5 years from now?

Back in June, ARK Invest suggested that Tesla (NASDAQ:TSLA) price could reach $2,600 in 2029. Most of their thesis was based on the business of a robotaxi company.

With less than a month until the (rescheduled) launch of Tesla's robot, now seems like a good time to revisit the ARK thesis. Should investors pick up the stock today at $230?

Robotaxis… finally?

Tesla was supposed to unveil its robot back in August. That didn't happen, but the revised date is now less than a month from departure.

It may be difficult to overstate the importance of this to investors. ARK's vision is that 90% of Tesla's revenue will come from its robotaxi business by 2029 – other than this, things look bleak.

Without the robotics service, Cathie Wood's company sees the stock worth $350 five years from now. And that's based on a human-driven ride-hailing service, which Tesla hasn't shown much interest in.

ARK estimates that the odds of Tesla not having a major robotics business by 2029 are less than 1 in 10,000. But I think investors should think carefully about the implications of this.

Regulation

The biggest problem, I think, is the law. It is a major obstacle to introducing an array of robots that (i) would significantly slow down or block the entire operation and (ii) are not under Tesla's control.

I think estimating the likelihood of a company getting regulatory approval for its autonomous vehicles in 2029 is difficult. That is especially true for someone outside the company.

In that case, the best thing to do is to check the margin of safety. But ARK's $2,600 price tag means a 99.9% chance of success for Tesla and that's without considering other risks.

That gives me courage to say the least. And while other autonomous car businesses are thriving, this is not a good sign for Tesla by default.

Competition

AlphabetsRobotics business Waymo has already had success with regulators. As a result, it has 700 autonomous vehicles already on the road.

Waymo's approval, however, doesn't mean the same thing is imminent for Tesla. Where Waymo uses lidar, Tesla's robot relies on cameras, ultrasonics, and radar to navigate.

Elon Musk says Tesla's system is easier to scale than setting a cap and could work on a different Earth. But that doesn't work very well in finding past administrators, who have a vested interest in this planet.

Ultimately, Tesla will have to demonstrate that its system is as safe as — if not safer than — Waymo's for regulators to sign off. And that may not be entirely accurate.

Great question

I agree with a lot about ARK's opinion on Tesla. The company's prospects look brighter if it can successfully launch a robotics network in the next five years than if it can't.

I think the question of regulatory approval is more complicated than ARK analysts make it out to be, though. And that makes me very cautious.

I'm not sure that the fair chance of assigning Tesla to launch its robotaxi network in the next five years is more than 99.99%. That's why my price target for the stock is so low.