Cathie Wood explains why Elon Musk

Cathie Wood explains why Elon Musk

Cathie Wood and Elon Musk

Tesla is set to report third-quarter earnings after the bell Wednesday.

Between just two of Ark Invest’s ETFs — Ark Innovation and Autonomous Tech and Robotics — the investment firm owns more than 3 million shares of Tesla (TSLA) – Get Free Report. The shares are worth a total of more than $800 million and represent significant portions of each fund.

This nearly billion-dollar bet is designed to align with Ark’s bold bull thesis for Tesla: that the company will be trading at $2,000 per share by 2027 as it leads the nascent autonomous taxi revolution. Though Cathie Wood, Ark’s CEO and investment lead, has not been afraid to trim her firm’s holdings in the historically volatile tech giant, she remains confident that her clients will see a tremendous amount of upside by sticking with Tesla over the next five-year horizon.

As Wood has said on numerous occasions, the real reason behind this faith in Tesla comes down to the aforementioned autonomous taxi revolution. But her faith in Elon Musk as a leader and innovator is more qualitative.

“Difficult times, though, spur Elon’s creativity,” Wood told CNBC. “He is a troubleshooter and a brilliant technologist. We think that each time he does face turmoil, the intensity of his brain cells takes him to new answers.”

“We’ve seen this at Tesla every step along the way.”

Now that Musk has the scalability of electric vehicles under control, Wood said that the eccentric billionaire is “really focused” on figuring out the remainder of the self-driving equation. Wood said that a final software upgrade, followed by an expansion into the ride-hail sector, would be a “game-changer” for Tesla.

“We don’t think that he’s lost any focus,” she said.

Musk said in August that Tesla is closer than ever to cracking true full self-driving, a consistently fruitless promise he has been making for years.

Tesla’s current FSD system requires the hands-on, eyes-on attention of the driver, keeping the system at a Level Two designation. Omer Keilaf, CEO and co-founder of Innoviz Technologies, told TheStreet in September that Tesla will be doomed to remain at a Level Two designation until and unless the company decides to embrace lidar technology, something Musk has long been opposed to.

“You need to have a sensor that can provide backup to the camera,” Keilaf said. “The only sensor that is capable of seeing sufficient resolution and range is the lidar.”

Tesla, whose stock is up more than 100% for the year, will report earnings after the bell Wednesday.

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