Mike Blake/Reuters
- Tesla can double its revenues if it develops a network of self-driving robotaxis, its CEO Elon Musk said Wednesday.
- This could potentially lead to a valuation of around $1 trillion, he said.
- But this would rely on major improvements to Tesla’s self-driving technology.
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Tesla has a massive market cap of more than $800 billion, making it the fifth-most valuable company in the S&P 500.
And robotaxis can be part of the “roadmap” to help justify that value by boosting revenues, its CEO Elon Musk said Wednesday.
Musk has envisaged a robotaxi network with vehicles that can park and plug in themselves using Tesla’s self-driving technology. Tesla plans to develop its own ride-hailing app where customers can summon a car or add their own vehicle to the network.
By using Tesla vehicles as robotaxis, the vehicles would be in full-time use, Musk explained at a quarterly earnings call Wednesday.
This means they would be used for around 60 hours a week, rather than 12, he said, which is “roughly a five times increase in utility.” Tesla could therefore charge more for the vehicles by adding self-driving technology. Even if their usage only doubled, this would still be doubling Tesla’s revenue for the vehicles, he said, “which is almost entirely gross margin.”
If Tesla produces $50 billion worth of cars, "it will be like having $50 billion of incremental profit basically from that because it's just software," Musk said.
And, if market cap is 20 times earnings, this would lead to a valuation of around $1 trillion, he said.
"And the company is still in high-growth mode," he added.
"So I think there is a way to sort of like justify the valuation of the company where it is using just the cars and nothing else, the cars with full self-driving," Musk said. "And I suspect at least some number of investors are taking that approach."
Tesla now trades with a trailing price-to-earnings ratio of more than 1,600x, making it among the most highly valued stocks in the world, Insider's Ben Winck reported.
In April 2019, Musk outlined ambitious plans to launch the robotaxis, saying there was potential for 1 million robotaxis to be in circulation by mid-2020.
Musk has since scaled down his ambitions, saying in April 2020 "we could see robotaxis in operation with the network fleet next year [2021], not in all markets but in some."
Currently Tesla offers customers its "full self-driving" system as a $10,000 add-on, but this does not give the cars the full autonomy required to operate robotaxis, as the driver must keep their hands on the wheel at all times.
At Tesla's earnings call Wednesday, Musk announced that fourth-quarter revenues were up 46% year-on-year to $10.744 billion, allowing the company to record an annual profit for the first ever time.
During the call, Tesla also unveiled both a refreshed Model S and the new Model X Plaid, a high-performance SUV costing $119,990. Musk also said deliveries of Tesla's Cybertruck may start this year "if we get lucky."
Tesla stock has risen more than 650% in the past year, helping mint Musk as the world's richest person.