Is Tesla (TSLA -4.68%) an electrical car (EV) firm? At first blush, it appears a foolish query. It is essentially the most profitable EV firm in historical past, having parlayed its success with vehicles all the way in which to changing into the seventh-largest American firm, with a market cap of greater than $1 trillion.
But, CEO Elon Musk says there’s one other product that may take his firm to the subsequent degree. This is what it’s.
Picture supply: Getty Photographs.
What Tesla is in the present day
Earlier than we talk about what product might signify the long run for Tesla, let’s recap the present state of the enterprise. In a nutshell, it stays principally an EV firm.
As of its most up-to-date quarter (the three months ending on Dec. 31), the corporate reported $25.7 billion in complete income. This is how that broke down by phase:
- $19.8 billion (77%) from automaking
- $3.1 billion (12%) from power storage and technology
- $2.8 billion (11%) from companies and different sources
In different phrases, somewhat greater than three out of each 4 {dollars} in Tesla gross sales got here instantly from EVs. What’s extra, it might be argued that a lot of the companies and power storage gross sales (if not most) had been downstream of EV gross sales.
So when Musk factors to a non-EV product as the long run, he means simply that. It’s going to take time for any product to upstage the primary income stream, which is EV gross sales.
However, investing is about skating to the place the puck goes, to not the place it’s. And on that entrance, traders ought to know the place Tesla is headed.
Merely put, it’s attempting to transition from an EV firm to a robotics firm. And the product that might lead that growth is Optimus, its humanoid robotic.
A game-changing product within the making?
Optimus is a humanoid robotic that stands about 5-foot-8 and weighs round 125 kilos. It walks as quick as 5 miles per hour, can carry about 40 kilos, and is powered with a 52-volt battery pack.
A number of Optimus prototypes had been on show at Tesla’s We, Robotic occasion final October. They handed out reward baggage, chatted with friends, and even danced.
But, Musk sees the Optimus robotic as way over only a novelty to be rolled out at events. It is supposed to function a labor-saving machine, performing menial, repetitive, or harmful duties in any variety of fields.
And if Tesla can finally meet Musk’s aim of promoting every Optimus for below $25,000, particular person households might be prepared to pay for a robotic that might carry out numerous around-the-house duties. Certainly, how a lot would you pay in case you by no means needed to mow the garden, wash the dishes, or do the laundry ever once more?
On the newest Tesla earnings name, Musk stated, “I feel long-term, Optimus has the potential to be north of $10 trillion in income.”
And whereas that will seem to be a implausible determine to throw out, traders should not instantly dismiss it. In any case, the smartphone — a much more humble machine in each design and worth level — has modified the world and generated comparable gross sales. In line with Statista and Counterpoint Analysis information, complete smartphone gross sales between 2014-2024 amounted to about $4.6 trillion.
In that Jan. 29 name with analysts, Musk stated:
I see a path. I am not saying it is a simple path, however I see a path of Tesla being essentially the most beneficial firm on the earth by far. Not even shut, like possibly a number of occasions greater than — I imply there’s a path the place Tesla is price greater than the subsequent high 5 corporations mixed. There is a path to that. … it is like a tough path however it’s an achievable path.
And that’s overwhelmingly as a result of autonomous autos and autonomous humanoid robots. So our focus is definitely constructing in direction of that.
Although Optimus stays a good distance from producing important gross sales for Tesla, traders ought to pay attention to its potential. The corporate’s short-term prospects are intently tied to car gross sales, power storage, and advances in full self-driving and robotaxis, however its future might be tied to Optimus.
