Tesla Is Both Going To Be The Greatest Firm In The World Or Collapse In Subsequent Few Years

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So, Tesla held its huge annual shareholder assembly yesterday, and that included a vote to (once more) give Elon Musk by far the largest CEO compensation package deal in historical past. However the greatest story at Tesla is identical because it was final quarter, final yr, and within the years to return. The corporate is attempting to shift into an AI and robotics firm. Whereas its income and earnings are nearly fully from producing and promoting vehicles proper now, Elon Musk and the corporate have been very clear currently — in the event you don’t consider in Tesla’s AI and robotics work and plans, you shouldn’t be invested in Tesla. Once more, that is what was emphasised within the annual Tesla shareholder assembly.

Tesla Chair Robyn Denholm famous that Tesla is exclusive in how giant its retail shareholder base is. The very fact is: institutional traders are much less inclined to consider that one thing will occur that’s by no means occurred earlier than, that one thing might be created that hasn’t been created earlier than. Retail shareholders are extra inclined to consider in desires. A decade in the past, the dream was mass-produced, high-volume, inexpensive electrical vehicles. Those that believed had been rewarded when Tesla manufacturing and gross sales exploded. Those that didn’t consider and had been ridiculed by critics for years obtained the final chuckle. As we speak, the dream is one thing very completely different. Tesla gross sales have stagnated and even dropped after their lengthy climb, however the focus is now on AI, true full self driving, and a brand new era of robots which might be extra like people and able to doing quite a lot of duties.

Tesla’s previous success doesn’t predict what’s going to occur sooner or later. It could possibly be that Tesla once more achieves what most suppose it can’t, or it could possibly be that Tesla can’t succeed on this very completely different enterprise. The brand new targets are usually not as “easy” as scaling up mass manufacturing of electrical vehicles. They contain going the place no firm has gone earlier than in advancing synthetic intelligence to be able to allow widespread use of robotaxis by thousands and thousands of individuals and synthetic intelligence plus robotics to be able to allow human-like robots that may carry out all kinds of duties.

However how about some quotes from Tesla now? To kick off, from the recorded intro video for the assembly, Elon Musk states, “My prediction is {that a} majority of Tesla’s long run worth might be Optimus.” He additionally states, “Relating to FSD model 12, it’s profound. The speed of enchancment is speedy. It is perhaps the largest asset worth appreciation in historical past when you are able to do unsupervised full self-driving.”

However, once more, simply because Tesla achieved what it did up to now doesn’t imply it’ll obtain these targets. It’s an entire completely different sport. Once more, you don’t must take my phrase for it. Right here’s what Elon Musk said at yesterday’s assembly: “I believe we’re not simply opening a brand new chapter for Tesla. We’re beginning a brand new e book.”

I don’t suppose anybody is aware of for certain what’s going to occur, however surely, Elon Musk and Tesla shareholders consider within the story of this new e book. If every little thing works, Tesla would be the solely firm on the planet with broadly out there unsupervised full self-driving functionality in thousands and thousands of client vehicles. It would even be bringing a brand new product — a brand new house and office robotic — to who is aware of what number of consumers? If these items work, potential development and earnings are unattainable to think about. And the way lengthy it will take different firms to catch up can also be fully unpredictable, notably resulting from Tesla’s distinctive knowledge supply and head begin.

If these items don’t work, nonetheless, Tesla will proceed to compete towards a whole bunch of different automakers promoting increasingly, and higher and higher, electrical automobiles. If it fails on these huge makes an attempt, that might be a tarnish on the corporate and it’s going to be very tough to develop at anyplace near the speed it has beforehand grown at. In the meantime, actually, if it continues to pour cash into FSD and robots and so they don’t bear fruit, particularly financially, then Tesla could possibly be pouring cash down a drain and massively disappointing shareholders with billions of {dollars} of inventory on the road. One may even say that if it fails on FSD and robotics, the corporate may collapse on itself — particularly if it has overbuilt its factories, shops, and repair facilities. What occurs in the event you plan for, and construct for, 50% development a yr however then find yourself with 0% development a yr?

Being fully trustworthy and frank, I don’t have a powerful, clear opinion on what’s going to occur. It’s laborious to know what Tesla can and may’t obtain with its method to FSD, robotaxis, and superior robots. I’ve learn numerous feedback for and towards the corporate. Some appear convincing on one aspect, and a few appear convincing on the opposite aspect. However none can definitively inform us if Tesla’s method will work ultimately. And we are able to’t blindly consider Elon Musk, who mentioned there can be a full self-driving demonstration from San Francisco to New York Metropolis about 7 years in the past, and has misjudged the progress and way forward for the know-how for a number of years. We can also’t blindly consider skilled critics who say Tesla received’t obtain these items as a result of they haven’t been accomplished earlier than and Tesla doesn’t have the best technological method, as a result of we heard that about SpaceX’s reusable rockets (and different issues), we heard that concerning the Tesla Mannequin S, the Tesla Mannequin X, the Tesla Mannequin 3, and the Cybertruck. There are all the time some consultants who’re hyper-skeptical, have restricted imaginative and prescient, and find yourself being flawed. I’ve seen it far an excessive amount of, particularly within the case of Tesla, to blindly consider consultants.

In the meanwhile, for me, it’s a stalemate. I see causes to consider and causes to not consider. The loopy factor is simply how a lot is on the road on this case. It’s not a selection between a burger or a burrito. It’s about whether or not Tesla will change into the largest firm on the planet or stagnate and collapse. Maybe we’ll have higher perception into the place issues are headed by the tip of the yr, or maybe even by the tip of the summer season. We’ll see. Within the meantime, please do share intensive, detailed arguments that make the case for both aspect. I’m all the time on the lookout for new clues!