Tesla 2.0 or so ….

Navigating the Future: Tesla's Market Position and Six Opportunities Ahead

?? ?? when this was written the slide set of Tesla’s Q1 2024 call was not available - now it is, so I include an image here as introduction and update to the article from Slide Deck https://lnkd.in/dP3i6nWm

Some years ago Tesla had little real foundation for volume. It was a startup driven by a very charismatic leader and taking bold steps. In 2024 it has a strong foundation but also a disproportional huge market capitalization compared to others (I do not use peers).

The success of Tesla 2.0 will depend on how it delivers on this foundation AND on how solid this foundation is - there is ample criticism.

Tesla's Financial Footprint: A Brief Overview

Tesla's market capitalization and financial metrics, particularly free cash flow, have been subjects of keen interest for investors and market analysts. As of 2023, Tesla demonstrated a robust financial standing, despite fluctuations in free cash flow—a critical indicator of financial health and operational efficiency. This resilience in financial performance underscores Tesla's capacity to invest in growth opportunities, research, and development.

The Six Opportunities Ahead: A Framework for Tesla’s Valuation

1. Optimus: The development of a humanoid robot, Optimus, represents Tesla's foray into robotics and artificial intelligence. While still in early development, Optimus holds the potential for revolutionizing labor markets and productivity. Its impact, while significant, might be longer-term compared to other opportunities.

2. Robotaxi: The prospect of Robotaxi, leveraging Tesla's advanced Autopilot and Full Self-Driving (FSD) capabilities, presents a massive market opportunity. It directly taps into the ride-sharing economy and could significantly reduce operational costs, making it one of the most immediate and sizable opportunities for Tesla.

3. Energy Storage: As the world moves towards renewable energy, the demand for efficient energy storage solutions escalates. Tesla's energy storage systems, like Powerwall, Powerpack, and Megapack, are critical in this transition, offering substantial growth potential given the global push for green energy.

4. Charger Network: Tesla's expansive Supercharger network is a strategic asset, enhancing the company’s ecosystem and EV ownership experience. Expanding this network can solidify Tesla's position in the EV market and provide continuous revenue streams from existing EV owners.

5. Affordable BEVs: Introducing more affordable BEV models could dramatically expand Tesla's market reach and volume, addressing a wider demographic. This is especially pertinent as the global consumer base increasingly leans towards sustainability and electrification.

6. Electric Semi: The Electric Semi represents Tesla's entry into commercial transportation, a sector with significant emissions and a critical need for electrification. Given the size of the logistics and transportation industry, this could be a considerable opportunity, albeit with challenges in adoption and infrastructure.

Ranking Tesla’s Opportunities by Size and Impact

1. Robotaxi: Given its potential for near-term implementation and disruption of the ride-sharing sector, Robotaxi stands out as Tesla's most significant opportunity. It is also the one announced and promised for years. Who is actually beyond level 2 in autonomous driving ?https://www.dhirubhai.net/feed/update/urn:li:activity:7113615916566728704?updateEntityUrn=urn%3Ali%3Afs_feedUpdate%3A%28V2%2Curn%3Ali%3Aactivity%3A7113615916566728704%29

2. Energy Storage: With the global shift towards renewable energy, Tesla’s energy storage solutions could see expansive growth, ranking it as the second-largest opportunity.

3. Affordable BEVs: Making EVs more accessible could substantially increase Tesla's market share and influence, placing it third.

4. Charger Network: Expanding this network not only supports Tesla's vehicle ecosystem but also represents a growing revenue model, making it the fourth in terms of opportunity size.

5. Electric Semi: Addressing the commercial transportation sector's electrification places the Electric Semi as the fifth-largest opportunity, pivotal for long-term sustainability impact.

6. Optimus: While potentially revolutionary, Optimus's longer-term realization and impact on Tesla's core automotive and energy sectors rank it sixth.

Conclusion: Tesla's Strategic Path Forward

Tesla's valuation and future growth are intricately tied to its capacity to capitalize on these opportunities. With its strong financial foundation, Tesla is well-positioned to invest in these diverse areas, promising not just to enhance its market valuation but to significantly contribute to the global transition towards sustainable energy and transportation. As these opportunities unfold, Tesla's role in shaping the future of mobility, energy, and automation will undoubtedly be pivotal, offering an intriguing narrative for investors and the industry at large.

The ultimate question will be whether Tesla bridges the gap to its valuation by delivering on some of the opportunities above

Appendix

NACS

Valuating or monetizing Tesla's North American Charging Standard (NACS) system involves considering several factors and potential revenue streams. As the adoption of electric vehicles (EVs) continues to grow, charging infrastructure becomes increasingly critical. Tesla's decision to open up its NACS, known for its extensive Supercharger network, to other manufacturers and EVs presents various avenues for valuation and monetization. Here’s a comprehensive approach:

Direct Revenue Generation

1. Charging Fees: Charging non-Tesla EV owners for using the Supercharger network is a direct way to generate revenue. Tesla can implement various pricing models, including pay-per-charge, membership subscriptions, or time-based fees, to optimize earnings while encouraging network usage.

2. Network Expansion Partnerships: Collaborating with governments, municipalities, and private enterprises can help expand the Supercharger network. These partnerships could involve shared investments, subsidies, or incentives, reducing Tesla's capital expenditure while increasing the network's value and reach.

Indirect Revenue Streams

1. Data Monetization: The charging network can provide valuable data on user behavior, charging patterns, and EV usage. Tesla can analyze this data for internal improvements or sell anonymized data to third parties interested in EV market trends, infrastructure needs, and consumer behavior.

2. Advertising and Services: Charging stations, especially those located in prime areas, can offer advertising opportunities or auxiliary services (e.g., retail, food and beverage) to users waiting for their vehicles to charge. This can create additional revenue streams while enhancing the charging experience.

3. Licensing and Royalties: Tesla could license the NACS technology to other manufacturers, allowing them to build compatible vehicles or charging solutions. This could include upfront licensing fees, ongoing royalties, or both, contributing to Tesla's revenue.

Market Expansion and Brand Strengthening

1. Increased EV Adoption: By making the Supercharger network accessible to more users, Tesla can indirectly benefit from the accelerated adoption of EVs. A more extensive charging infrastructure can reduce range anxiety, making EVs a more viable option for a broader audience.

2. Brand Loyalty and Awareness: Offering a superior charging experience can enhance Tesla's brand loyalty and attract potential customers. The convenience and reliability of the Supercharger network can be a deciding factor for consumers choosing their next EV.

Strategic Valuation Considerations

1. Cost-Benefit Analysis: Assessing the costs of opening the NACS to non-Tesla EVs (such as potential congestion, increased maintenance, and capital expenditure for expansion) against the expected revenue and strategic benefits is crucial for valuation.

2. Competitive Positioning: The decision to open the NACS can position Tesla as a leader in EV infrastructure, potentially setting industry standards. This leadership position could be factored into the valuation, considering the long-term strategic advantages.

3. Sustainability and Regulatory Compliance: As governments worldwide push for greener transportation solutions, having an extensive charging network can position Tesla favorably in terms of regulatory compliance and incentives, enhancing its valuation.

Ultimately, the valuation and monetization strategy for Tesla's NACS system will depend on a balanced approach that considers direct and indirect revenue streams, strategic market positioning, and the broader impact on Tesla's ecosystem and the EV industry.

FSD

Valuating and monetizing Tesla's Full Self-Driving (FSD) system involves analyzing its current capabilities, market position, and future potential, alongside the broader context of the autonomous driving technology landscape. Given the complexity and rapid evolution of this field, valuation is subject to various assumptions, market conditions, and technological advancements. Here's an overview:

Current Valuation and Monetization Strategies

1. Upfront Payment and Subscription Models: Tesla currently offers FSD as an optional, high-cost feature on its vehicles, which customers can purchase upfront or via a subscription model. This direct monetization strategy capitalizes on consumer demand for advanced driving assistance systems (ADAS) and the promise of future full autonomy.

2. Data Collection and Improvement: The data collected from Tesla vehicles equipped with FSD technology is invaluable for improving the system through machine learning. While not a direct revenue stream, the enhancement of FSD's capabilities can lead to higher adoption rates, future revenue opportunities, and potentially licensing deals.

3. Insurance Premium Adjustments: Tesla has ventured into offering its own insurance products. By demonstrating that FSD improves safety and reduces accidents, Tesla could adjust insurance premiums for FSD-equipped vehicles, potentially increasing the attractiveness of both its insurance and FSD offerings.

Valuation for 2030 and Beyond: Perspectives and Opportunities

Looking towards 2030, several factors could significantly impact the valuation and monetization potential of Tesla's FSD system:

1. Technological Maturity and Regulatory Approval: The eventual achievement of Level 5 autonomy (complete self-driving in all conditions without human intervention) and the corresponding regulatory approvals could dramatically increase FSD's value. This would enable new business models such as Robotaxi services, fundamentally transforming transportation and generating substantial revenue.

2. Market Adoption and Expansion: As autonomous driving technology becomes more accepted and trusted by the public, market demand is likely to grow. Expansion into new markets and vehicle segments, including commercial and shared mobility applications, could further increase the value of Tesla's FSD system.

3. Competitive Landscape: The value of Tesla's FSD system will also be influenced by the competitive landscape. Partnerships, collaborations, or even licensing agreements with other automakers, ride-sharing companies, or logistics providers could offer new revenue streams and enhance valuation.

4. Ancillary Services and Ecosystem Integration: Fully autonomous vehicles could enable a range of new services and business models, from in-car entertainment and productivity solutions to integration with smart city infrastructure and services. Tesla's ability to capitalize on these opportunities will play a crucial role in the future valuation of its FSD system.

Financial Projections and Market Potential

- Current Value: It's challenging to isolate the current valuation of Tesla's FSD system from the overall valuation of the company. As of now, its value is intertwined with the sales of Tesla vehicles and the company's market capitalization. The additional price consumers are willing to pay for FSD features contributes directly to Tesla's revenues and margins.

- 2030 Perspective: Looking towards 2030, the potential market value of autonomous driving technology is expected to be in the hundreds of billions of dollars, if not more. Tesla's share of this market will depend on its technological advancements, competitive positioning, and ability to unlock new monetization channels. Assuming successful technological development and market expansion, Tesla's FSD system could significantly contribute to the company's valuation, potentially accounting for a substantial portion of its revenue through direct sales, services, and new business models like Robotaxi fleets.

?? ?? ?? added Nov. 10 from https://x.com/alojoh/status/1855286905455468601?s=61&t=gGLcMi4fYCbwPWrDdiH9SQ

By https://x.com/alojoh?s=21&t=gGLcMi4fYCbwPWrDdiH9SQ

A combination of these reasons will drive Tesla's share price significantly above the prior all-time high of $400 per share in the near future.

1. Refreshed Model Y from 1H 2025.

2. Second Megapack factory in Shangai from 1Q 2025.

3. Cybertruck: continued ramp, lower priced trim, international deliveries.

4. Next generation vehicles from H1 2025.

5. Robotaxi from 2026 and Cybercab for purchase 2026.

6. Tesla owner ride hailing launch California/Texas in 2025.

7. Large scale application of inhouse 4680 cell from 2025.

8. Semi factory completion in 1Q 2026.

9. Announcement of additional factory(ies) likely within H1 2025.

10. Tesla's lithium refining plant goes online (2025).

11. Tesla Robovan 2026.

12. Meaningful Optimus deployments end of 2025 and first customer trial programs (similar to Semi test program).

13. Tesla's global vehicle fleet exceeds 10M vehicles in H1 2026 providing unassailable lead in AI training data collection.

14. Strong relationship between Elon/Jensen (Elon was Jensen's first Nvidia AI customer) provides likely advantageous access to Nvidia data center products.

15. Tesla's AI training computer Dojo gen 2 in 2025 followed by Dojo gen 3 in 2026 providing large scale ultra-large token processing capability specific to the autonomy problem.

16. From 2026 wider adoption of Tesla owners contributing vehicles to ride hailing network.

17. Tesla robotaxi fleet exponential growth from 2H 2026.

18. Potential for Tesla to create virtual inferencing cluster with idle Tesla vehicles' onboard inferencing computer.

19. Under friendly U.S. administration, potential for Tesla to achieve more meaningful U.S. government vehicle penetration, currently dominated by GM and Ford.

20. Introduction of wireless charging likely to drive larger EV adoption and accelerated renewal cycle of existing EV owners (together with faster charging batteries).

21. SpaceX aura: under new administration we'll likely see significantly increased launch cadence. This creates a positive signal for Tesla from its deep connection with Elon. There are countless investors often raising the following point: "Tesla CEO lands rockets". This SpaceX "nimbus" bestowed upon Tesla via Elon should not be underestimated.

22. Various 'soft' benefits from Elon's friendship with POTUS: f***ing with Elon will be viewed in many ways as f***ing with POTUS. This should significantly reduce Tesla headwinds and material lawfare will be dramatically reduced. Anyone with significant political ambitions will think twice before they pick a fight with Elon/Tesla.

Tesla is primed to emerge as a defining company of the second half of this decade similar to Google in the late 2000s, Apple in the 2010s, and Nvidia in the first half of this decade.