Tesla CEO Elon Musk made it absolutely clear on today’s Tesla conference call: if you don’t believe in Tesla’s AI work and robotaxi plans, you shouldn’t be invested in Tesla stock (NASDAQ:TSLA). The company is not fundamentally a car company, as he noted. It’s fundamentally an AI company.
I think that’s already clear based on the company’s market cap. Many analysts have argued for years that they don’t take robotaxi potential into account, that it’s really about the nuts and bolts of making money selling cars, trucks, batteries, and solar panels. However, if you are assuming that’s the case, this disparity in market cap makes no sense:
I guess it’s possible that you could assume Tesla will make 10 times as many cars — or 10 times as much profit on cars and related services — than Ford in 3–5 years. However, that’s a bold forecast even for Tesla fans, let alone most Wall Street analysts and institutional investors. Furthermore, the dream seemed to be falling apart in the first quarter when Tesla’s year-over-year sales went down instead of rising by 50% or so.
But Musk decided today to kill any kind of ambiguity or illusion about what Tesla’s market value should be based on — it’s all about the AI and robotics.
Musk referenced the time when Nokia was dominating the phone market with flip phones and most people couldn’t see that smartphones were coming. He said we’re now at the phase where we’re going from what we might call “flip phone cars” to “smart cars.” The latter is a term he used as if it was a new term, but note that EV startups in China have been adamant they should be called smart car producers for a few years now. In any case, the point is clear — it’s about the intelligence in the cars and at Tesla HQ that will change the world and make TSLA special, not the cars.
“Once again, I would just like to strongly recommend that anyone who is I guess thinking about the Tesla stock should really drive FSD 12.3. Really, you can’t — it is impossible to understand the company if you do not do this,” he said at the end of the call.
Elsewhere on the call, Musk was asked about his importance to the company when it comes to these things. Will it all fall apart if he leaves? He doesn’t think so. “Even if I got kidnapped by aliens tomorrow, Tesla will solve autonomy, maybe a little slower, but it would solve autonomy for vehicles at least,” he said. “I don’t know if it would win with respect to Optimus, or with respect to future products. But there’s enough momentum for Tesla to solve autonomy, even if I disappeared, for vehicles.”
That’s an interesting take in itself, but something in there that might need teasing out a little bit is that he’s saying autonomy isn’t solved. Naturally, he emphasized throughout the call that FSD 12.3 is amazing, and we know there’s a robotaxi event planned for 8/8/2024, but his statement here is saying that they still aren’t really at the end of FSD development to get to robotaxi capability, and that he will get them there quicker than anyone who could replace him. It’s an interesting quote to ruminate on, especially in light of Musk saying that TSLA is really all about this matter now. Everyone betting on TSLA should be doing so because of their FSD approach and their AI work, but that has to be based on 1) the methods they’re using, and 2) their progress so far. One has to assume that those two things should be enough to convince you that Tesla will have AI and robotaxis far better than everyone else’s soon-ish — and sooner with Elon than without him.
