Image source: Roadshow/YouTube
During the Q4 2020 Earnings Call, Tesla CEO Elon Musk said that the company's current valuation is justified, and Tesla could double its revenues when it develops a network of self-driving Robotaxi. That could potentially lead to a valuation of around $1 trillion, but that will hinge on major improvements in Tesla's autonomous driving technology.
Musk came up with the idea of creating a network of Robotaxi that can drive, park, and connect to each other using Tesla's self-driving technology. To this end, the company plans to develop its own app, in which customers can call a car or add their car to the network.
This means that cars in the Robotaxi Network will be used for about 60 hours a week, rather than 12 hours as if a car is used for private purposes, according to Musk. This in turn brings about five times more utility, and Tesla could charge more, which would bring in a new stream of revenue. According to Musk, even if their use only doubled, it would still double Tesla's car revenue, which is almost entirely gross margin.
"So it would mean, it would be like if you made $ 50 million - $ 50 billion worth of cars, it will be like having $ 50 billion of incremental profit basically from that because it's just software. So - it's like $ 1 trillion and the company is still in high-growth mode. 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 FSD. And I suspect at least some number of investors are taking that approach."
© 2021, Eva Fox. All rights reserved.
We appreciate your readership! Please share your thoughts in the comment section below.