Tesla's stock has been falling ever since the company reported earnings in July, largely over concerns of weakening margins amid continuous price cuts. But the company, which is still up more than 90% for the year, is just at the beginning of its growth, Wedbush analyst Dan Ives said in an interview with The Street.
The Tesla (TSLA) -) bears, Ives said, are negative because they are looking at Tesla as a car company. He remains incredibly bullish on the company's outlook because, similar to Cathie Wood of Ark Invest, he views the company as a major player in the tech and AI space.
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"Bulls have disruptive technology and that continues to be the big debate around the name," Ives said. "I've always viewed them as a tech play. And I can argue the FSD angle makes them one of the best AI plays when you look down the road three to five years."
And Tesla as a tech company, rather than a car company, is something that it will achieve profits through the monetization of certain invaluable services, Ives said. The company's Supercharging network represents the very beginning of this monetization.
Ives and his team released new projections around the Tesla supercharging network last week, saying that the network could bring in up to $20 billion in revenue annually by the end of the decade, an amount equivalent to around 6% of Tesla's total revenue.
This latest model is based on the assumption of broader EV adoption, with Ives looking at EVs to make up around 20% of all cars by the end of the decade, compared with the current ratio of 3% to 4%.
"There's a lot of variables," Ives said of the model. "One is the vast majority of charging today happens at home or place of business. This is under the scenario that more EVs are being used outside of just commuting, driving around and also being charged at their own long distances."
Tesla's charging network is 'years ahead' of the competition
And in this scenario where EVs do tap into mass adoption, Tesla's charging network is "years ahead" of any competing network, which will force most competing brands to adopt Tesla's charging standard and make use of their network.
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"They're so ahead where the other OEMs need to tap in to that Supercharger network as part of the sales pitch when they're trying to get consumers to go EV," Ives said, citing Ford and GM's partnerships with Tesla as a game-changing moment for Tesla. "Now over time, there's a major revenue opportunity here, others are going to go after it. So it's not just going to be them."
"I think they're years ahead of any competitor."
The monetization of the service of charging, Ives thinks, is just the first step in the true diversification -- and growth -- of Tesla's business.
Today, the bulk of Tesla's revenue is driven by EV sales. Ives thinks that will begin to change over the next few years.
"But when you look toward the end of the decade, you're going to have battery technology, storage services, that can start to comprise 20% or more of overall revenue," Ives said. "Our whole point is that the bears will disagree. But it's showing that this is a real monetization opportunity."
Ives has said on multiple occasions that Tesla is currently at a moment that is equivalent to Apple (AAPL) -) in 2008, right before the company surged to explosive heights. His reasoning is that Apple's services before that point had not been given any sort of valuation. But as the company was able to monetize those services, the valuation soared from billions to trillions.
Tesla, on the brink of being able to monetize services from charging, to batteries, to self-driving is at a similar flex-point of coming growth, Ives said.
"I believe it starts to expand the sum of the parts valuation over the coming years as they look to monetize," Ives said.
Tesla's stock dipped slightly in pre-market trading.
