Is Tesla (NASDAQ: TSLA) an electrical automobile (EV) firm? At first blush, it appears a foolish query. It is probably the most profitable EV firm in historical past, having parlayed its success with automobiles all the best way 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 following degree. This is what it’s.
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Picture supply: Getty Photographs.
What Tesla is at the moment
Earlier than we talk about what product might symbolize the longer term 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 whole revenue. This is how that broke down by section:
- $19.8 billion (77%) from automaking
- $3.1 billion (12%) from vitality storage and era
- $2.8 billion (11%) from companies and different sources
In different phrases, slightly 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 vitality storage gross sales (if not most) have been downstream of EV gross sales.
So when Musk factors to a non-EV product as the longer term, he means simply that. It’ll 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 have 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 excess of only a novelty to be rolled out at events. It is meant to function a labor-saving system, performing menial, repetitive, or harmful duties in any variety of fields.
And if Tesla can ultimately meet Musk’s purpose of promoting every Optimus for underneath $25,000, particular person households could possibly be prepared to pay for a robotic that might carry out varied around-the-house duties. Certainly, how a lot would you pay in the event you by no means needed to mow the garden, wash the dishes, or do the laundry ever once more?
On the newest Teslaearnings name Musk mentioned, “I feel long-term, Optimus has the potential to be north of $10 trillion in income.”
And whereas that will look like a unbelievable determine to throw out, traders should not instantly dismiss it. In spite of everything, the smartphone — a much more humble system in each design and worth level — has modified the world and generated comparable gross sales. In accordance with Statista and Counterpoint Analysis information, whole smartphone gross sales between 2014-2024 amounted to about $4.6 trillion.
In that Jan. 29 name with analysts, Musk mentioned:
I see a path. I am not saying it is a straightforward path, however I see a path of Tesla being probably the most invaluable firm on the planet by far. Not even shut, like possibly a number of instances greater than — I imply there’s a path the place Tesla is value greater than the following prime 5 firms 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 the direction of that.
Despite the fact that Optimus stays a great distance from producing important gross sales for Tesla, traders ought to pay attention to its potential. The corporate’s short-term prospects are carefully tied to automobile gross sales, vitality storage, and advances in full self-driving and robotaxis, however its future might be tied to Optimus.
Don’t miss this second probability at a doubtlessly profitable alternative
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*Inventory Advisor returns as of February 21, 2025
Jake Lerch has positions in Tesla. The Motley Idiot has positions in and recommends Tesla. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
