“We’re really moving into a future that is based on autonomy,” Tesla (TSLA) CEO Elon Musk said on the company’s Q4 earnings call last night.
Musk’s sentiments essentially indicated a crossing of the Rubicon, laying the groundwork for Tesla’s departure from being a car company into an embodied AI future.
Gone are some of the company’s most famed EVs, and in their place are more self-driving cars, robotaxis, and, of course, robots.
“Forget the Tesla you knew. The Tesla of yesterday is gone,” Canaccord Genuity analyst George Gianarikas wrote in a note on Thursday. “We believe Elon Musk has reached a definitive burn-the-ships inflection point, a total commitment to a vision that leaves no room for retreat.”
“The company is burning the boats, pinning its future on autonomous cars and robots,” added Piper Sandler’s Alex Potter.
‘A symbolic baton pass for Tesla’
Part and parcel to Tesla’s future growth story is the creation of six new production lines to make new products such as the Cybercab robotaxi and its Optimus robots.
But that also means retiring two of the company’s most important products — the Tesla Model S and Model X.
“It’s time to basically bring the Model S and X programs to an end with an honorable discharge … It’s part of our overall shift to an autonomous future,” Musk said on the call.
The Model S, the high-end premium EV sedan, changed the game for EVs and put Tesla on the map back in 2012.
“While Automotive remains Tesla’s core business for the time being, we believe the end of S/X marks the symbolic baton pass for Tesla from Automotive and into Physical AI,” said Barclays analyst Dan Levy in a note to investors.
Lars Moravy, Tesla vice president of vehicle engineering and one of Musk’s top lieutenants, said it’s a shift from autos to services. “You have to start thinking about us as moving to providing transportation as a service more than the total addressable market for the purchased vehicles alone.”
FSD and robotaxi growth is the future
Basically, driving a car like the Model S isn’t the future, but a car driving you is. In a first for the company, Tesla revealed it has 1.1 million paying subscribers for its full self-driving (FSD) business.
“FSD subscriptions are tied to Musk’s performance package and are now a reported metric, standing at 1.1 million active subscriptions with 38% year-over-year growth, outpacing cumulative vehicle deliveries at 22%,” William Blair analyst Jed Dorsheimer wrote in a note.
Tesla is essentially going all in on FSD and getting the software active in as many vehicles as possible. It also means offering it only as a subscription, as Musk revealed earlier this month, and selling cheaper vehicles, like the standard Model 3 and Model Y, to expand its reach.
And those vehicles could eventually end up in Tesla’s robotaxi network, a dream of Musk’s.
Musk said Tesla has around 500 robotaxis circling around Austin and the San Francisco Bay Area. The process of removing the safety driver has been slow, but Musk said it will ramp up.
“Tesla has in this space to jumpstart our infrastructure build-out needs to get ahead of robotaxi and autonomous vehicle demand. And we expect that because of this network, we are the only company capable of scaling at the rate that is needed for the tsunami of autonomy that is coming,” Tesla’s Moravy added.
The company plans to add seven new operating areas this year and has aggressive plans to double its number of robotaxis every month.
“By April, Tesla will catch up with and quickly surpass Waymo’s 2,000 vehicle fleet,” Blair’s Dorsheimer predicted, highlighting Tesla’s massive growth plans for the year.
Even the Cybertruck, Tesla’s newest (and most polarizing) vehicle, may become a fully autonomous delivery truck.
“We will transition the Cybertruck line to just a fully autonomous line. And there’s obviously a market there for cargo delivery, like localized cargo delivery within a city … There’s a lot of cargo that needs to move locally within a city, and an autonomous Cybertruck could be very useful for that,” Musk said, a notion that would have been unthinkable when Musk revealed his cyberpunk vision of the truck in late 2019.
All in on Optimus
Autonomous Cybertrucks making local deliveries is one thing, but Tesla’s humanoid robot, Optimus, is truly Musk’s big bet on Tesla’s future.
“Trading S and X for Optimus is an 8x Revenue Multiplier,” Blair’s Dorsheimer claimed, calculating that while those cars brought in around $3 billion in revenue, Optimus sales would be much larger.
“If we [halve] Elon Musk’s million Optimus per year capacity to 500,000 and assume a $50,000 ASP [average selling price], that’s $25 billion. It’s clear to us why the company is making this trade,” he said.
Tesla and Musk are looking for the long-awaited Optimus Gen 3 model reveal this quarter, with production of the robot planned before the end of 2026 and eventual capacity of 1 million robots per year.
Audacious? That’s Elon Musk for you.
Musk’s lofty goals are based on the idea that labor will be essentially free, and all those robots toiling could benefit everyone.
“I think with the advent or with the continued growth of AI and robotics, I think we actually are headed to a future of universal high income. Not universal basic income, but universal high income,” he said on the call.
Tesla Uber bull Dan Ives of Wedbush laid out what’s ahead for investors, whether “universal high income” is achievable or not.
“We continue to believe Tesla could reach a $2 trillion market cap in early 2026 and $3 trillion in a bull case scenario by the end of 2026 as the golden AI chapter takes hold at Tesla,” Ives said.
Musk’s visions aside, the goal for Tesla shareholders is growing the company and the stock price.
And that’s why Tesla’s future is no longer cars, and autonomous and robots are what’s next.
