Key Points
Robotaxis and unsupervised full self-driving (FSD) could add value and new income streams.
Cash flow from these businesses could fund the Optimus robot project, which CEO Elon Musk believes could represent up to 80% of Tesla’s future value.
The investment case for Tesla (NASDAQ: TSLA) is best understood as an intrinsically connected series of high-risk/high-reward investments, but with a difference. Here's why that difference means Tesla is a stock that could set you up for life, though there are no guarantees in investing.
Tesla is much more than a car company
The company's detractors often focus on Tesla as an electric vehicle (EV) company and then cite its sky-high valuation as a reason to avoid the stock altogether. That's fair enough, but it overlooks what the rest of the market is considering: the vast potential to build on the market-leading EV business with a robotaxi business that generates enormous amounts of recurring revenue on a ride-per-mile basis. In addition, the potential release of unsupervised full self-driving (FSD) would add considerable value to Tesla's EVs as well as generate significant income through sales of FSD.
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Thinking longer term, the cash flow from robotaxis, not to mention EVs and the energy generation and storage business, will fund the development of the Optimus robot that CEO Elon Musk thinks will be worth 80% of Tesla's value in the future.
What makes Tesla different and why it could set investors up for life
Robotaxis, unsupervised FSD, Optimus, etc. None of these things is yet a reality, and until they are, Tesla will continue to carry a significant amount of risk, which is why it should be viewed as a high-risk/high-reward stock. However, Tesla is a very different proposition than most high-growth stocks in that it's already an established leader in its industry, whether that be EVs (robotaxis and unsupervised FSD) or Optimus (AI).
Moreover, it has the financial backing and resources to continue investing in its growth initiatives. This isn't a barely known small-cap company struggling to establish a market presence; it's the leading EV company developing adjacent technologies as part of an evolution that the rest of the automotive market was also chasing.
All told, these qualities make it an attractive stock for investors seeking a more speculative investment in their portfolio. And it could end up making more investors very wealthy.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.