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!

I do not have time to get into the details today, so if you want to know why Tesla’s robotaxis and FSD, read my article here. But in summary, because Musk went against his engineers’ warning and made FSD a vision-only system, the system is a total train wreck. Public data shows that it requires critical disengagements more than 34 times more frequently than Waymo’s, and that it is more than 99% less safe than Musk claims. In short, it isn’t good enough to be fully autonomous, not by a long shot.

Tesla is a million miles behind in the robotaxi game.

But reaching this mythical multi-trillion dollar valuation has been the only thing keeping Tesla stock so inflated for the past few years. The public failure of the robotaxi rollout, and the lies this insane valuation prediction was based on, are becoming increasingly apparent and could decimate Tesla’s worth, and Musk’s wealth along with it.

But, while Musk is a total moron, he isn’t an idiot. He knew FSD and the robotaxis wouldn’t work, so he created a backup. A new bandwagon to drive investor hype in Tesla. The Optimus humanoid robot!

Musk now claims that this C3PO wannabe will soon make up 80% of Tesla’s revenue, and could drive its total value up to $25 trillion. Which just makes him sound like that kid at school who claimed his dad’s car had a million horsepower.

But, to be fair to Musk, all he has to do is sell 100 million of these robots each year to get that $8.5 trillion valuation (as calculated by Reuters).

For some context, the entire world produces approximately 94 million cars per year, and Tesla itself has built around 8 million cars in its entire lifetime. Scaling manufacturing of these bots to that level in just 10 years’ time is basicallyimpossible.

There is also a demand issue. The public simply can’t afford to buy this number of robots. Tesla’s bots cost $30,000, and the average new car price globally is about the same. A new car is the most expensive thing most people ever buy, particularly now that house ownership is almost non-existent for my generation, and let’s not forget the working class and middle class are being financially squeezed harder and harder each year. So, how on Earth can people suddenly afford this many bots?!

That is why Musk has said that these robots will take up manual labour jobs in factories. But in the US, only 12.76 million people work in factories, and in Europe, there are only 30 million. There are other industries, like agriculture and the trades, which could use these bots, but they have a similarly sized workforce. Simply put, in the West, there are only a few hundred million jobs Optimus could theoretically replace. There simply isn’t the demand for 100 million bots a year.

Musk and Cathy Woods like to say that they will usher in a time of plenty, and will be used to expand the entire economy, creating more jobs for themselves in a kind of snowball effect. But that isn’t true. Again, to do that, you need to increase demand, and you can only do that by making the working class and middle class (i.e. the 99%) more wealthy, and replacing all their jobs with robots won’t do that!

So, even if we assume these robots actually work, Tesla will never be able to scale up production fast enough, or have enough demand to sell enough Optimus robots to meet that $8.5 trillion mark.

But again, these robots don’t work!

Honda’s 20-year-old ASIMO robot is more capable than an Optimus robot, and the robots from Unitree and Boston Dynamics are far more capable. Even after years of development, the new v3 version of Optimus is laughably crap (watch here). It struggles to process basic requests, and the only thing it has been shown to be capable of doing is walking like it has a full nappy. We have yet to see it truly interact with objects, or even do basic tasks autonomously, after three years of apparently intensive development.

Again, Tesla’s technology is miles behind the industry leaders.

But it will get better over time, right? Well, don’t count on that. Don’t forget that for over a decade, Tesla has failed to make an AI that can drive a car safely, and that is a far more constrained and simple task than a general-purpose robot. Not only that, but AI technology is already butting up against some major limitations with the efficient compute frontier and the Floridi conjecture. So, expecting Tesla to crack this technology in the next ten years is straight-up fanciful.

But even if Tesla somehow solved these issues, it wouldn’t matter because the entire idea of Optimus is fundamentally flawed. Humanoid robots only make sense in sci-fi; in the real world, no matter how capable they are, they make zero sense. They are slow, inaccurate, really hard to program even with modern AI systems, unreliable and massively limited.

It isn’t just me saying that, but Chris Walti, the original lead designer of Optimus, who left Tesla in 2022. He has said that the humanoid form factor isn’t “a useful form factor”. According to Walti, “most of the work that has to be done in industry is highly repetitive tasks where velocity is key”, and that the humanoid form factor is really inefficient at this, particularly compared to a specialised robot. Why? Well, as Walti put it, “We weren’t designed to do repetitive tasks over and over again. So why would you take a hyper-suboptimal system that really isn’t designed to do repetitive tasks and have it do repetitive tasks?”

So, for Optimus to increase Tesla’s valuation to $8.5 trillion, Musk needs to sell 100 million a year, but building that many per year within the next decade is impossible, and there isn’t the demand for a market for that many robots, even if they were fully capable, which Tesla’s robot isn’t. But, even if it were fully capable, it isn’t a good solution for the vast majority of the jobs it is predicted to take.

The entire idea of Optimus is moronic to its core.

However, that doesn’t matter; Musk can still push Tesla to $8.5 trillion, because reality no longer matters. It hasn’t for years.

AI, robotics, automaker and financial Experts, and even Tesla’s own engineers and executives have known that Tesla’s robotaxi claims are utterly shite for years. Yet investor money has poured in to support Musk’s claims, inflating Tesla’s value to over 20 times its actual worth, making him one of the wealthiest men in the world.

Tesla’s value hasn’t been based on delivering tangible results for well over six years at this point. What makes you think that will change now?

Notice how Musk said Optimus will make 80% of Tesla’s value, not revenue. He knows this crap won’t actually work. But he knows it will drive hype.

Reality is starting to undermine the robotaxi lies used to exaggerate Tesla’s worth. So Musk is replacing that with robot lies, which can artificially inflate it even more. One of the major reasons generative AI companies like OpenAI are worth so much, despite their product being far, far less useful than promised, is that we can anthropomorphise their product. Our stupid pattern-seeking brain tricks us into thinking this word calculate is a thinking being (even though it absolutely isn’t), and we inherently attach immense value to that. All Musk is doing is taking his AI chatbot, Grok, and putting it into a humanoid shape, enabling us to anthropomorphise it even more. Sure, it will be fucking useless, but it will be able to do just enough for us to perceive it as an entity. This next-level anthropomorphising can manipulate enough investor hype, bury the objective reality of these machines, and take Tesla’s value to the multi-trillions of dollars.

But not for long. Eventually, reality will hit, and the value will plummet. But Musk and his cronies will have sold off at the peak, robbing investors and the broader economy blind. It’s effectively a somewhat legal rug pull. And that is what should terrify you. We are in the information age, where information, no matter how false, is more valuable than reality, and Musk and the other tech bros can use that to extract as much value out of the market as possible, leaving only crumbs for the rest of us.

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Sources: Reuters, Mashable, CNBC, Will Lockett, Will Lockett, Will Lockett, FBI, AIPRM, Brookings, USA Facts, ARK Invest, CMC, Statista, ACEA, Eurostat, Will Lockett