Musk Can Take Tesla To $8.5 Trillion, And That Should Terrify You.

The largest magic trick of all time is about to be pulled.

Tesla Optimus — Tesla

All the hoo-haa over Tesla offering Musk a $1 trillion pay package hinges on him getting the valuation from its current roughly $1 trillion market cap, all the way up to $8.5 trillion by 2025. That would make it nearly three times more valuable than the current most valuable company in the world. Let’s be frank, Musk’s plan on achieving this, from robotaxis that crash to useless robots that walk like they have shat themselves, simply won’t work. It is so moronic in such a vast plethora of ways that it is hard to get a concise reason as to why it will fail. It appears that Musk will almost certainly fail, and fail spectacularly. But I have forgotten something. We don’t live in that world any more, and in our new reality, Musk can hit $8.5 trillion quite easily. And when I say that should terrify you, I mean it. Let me explain.

As recently as last summer, major investors were already predicting that Tesla would reach this valuation solely based on robotaxis.

Cathy Wood’s infamous ARK Invest predicted that Tesla’s robotaxi service would rapidly roll out and generate between $603 billion and $951 billion per year in revenue by 2029, pushing Tesla’s valuation up to $7 trillion to $10.9 trillion by 2029.

But these figures are so laughably false it’s painful. By comparison, Uber has an annual revenue of $52 billion, and the global ride-hailing market is only worth (i.e. the total revenue generated by the market in a year) around $185 billion. And, yes, this market is predicted to grow, but even the most rosy of predictions places the global ride-hailing market to only reach $480 billion by 2032. So, how can Tesla double this market?

ARK Invest argues that most Teslas will soon be made fully autonomous as FSD will reach full autonomy. This will allow millions of robotaxis to flood the market and generate that extra revenue. But that ignores basic economics; flooding a market with supply will crash the market by suppressing the price of the service. And, even in the current market, no robotaxi service, not even Waymo, is even close to profitability. So no Tesla owner, taxi operator or investor looking to invest in Tesla building their own fleet, will want to get behind Tesla robotaxis. This idea also ignores the fact that most Teslas sold don’t have good enough hardware for full autonomy, and require an expensive upgrade that Tesla will have to pay for because they were sold with the promise that this feature would eventually come, or the fact that FSD no longer promises eventual autonomy, suggesting that Tesla have finally realised that no Tesla ever sold has the abiloity to be fully autonomous.

With all of that in mind, how on Earth can Tesla’s robotaxis generate nearly twice as much revenue as the ride-hailing market is predicted to generate annually in just four years’ time?

Even if FSD worked beautifully, that is nothing more than a fairytale.

But FSD doesn’t work well at all!