In 2020, Tesla achieved its first annual profit, a significant milestone for a company that started in 2003 and entered the challenging electric vehicle market. Despite the difficulty of launching a new car company, Tesla succeeded where many others, including tech giant Apple, did not. This success is largely attributed to Tesla’s innovative approach, like using laptop battery cells for its cars and creating a reliable fast-charging network. Yet, Tesla’s CEO Elon Musk now claims Tesla is more of an AI company, stating, “We are an AI, robotics company; if you value us otherwise, the right answer is impossible to the questions being asked.”
Tesla’s financial records show heavy investments in AI, specifically in GPUs from Nvidia. However, these investments have sometimes been redirected to Musk’s social media company, X. The focus on AI has led to more demonstrations of humanoid robots than new car models, causing concerns about Tesla’s aging product lineup and shrinking profits.
The Challenges of the Robotaxi Dream
Tesla’s high valuation relies on the potential success of a robotaxi business, which is expected to generate significant profits with minimal costs. However, experts like Sam Abuelsamid from Guidehouse Insights argue that this is unrealistic. Removing the driver reduces some costs, but it introduces many others, such as maintaining, charging, cleaning, and insuring a large fleet of vehicles.
Historically, companies like Uber and Lyft failed to make money with human drivers, and the shift to robotaxis didn’t change that. Autonomous vehicle companies face high expenses in developing and maintaining the necessary technology and infrastructure. Tesla’s strategy, shared with Mobileye, involves funding R&D through current profits. While Musk suggests that the data collected from their vehicles could be used for other AI applications like humanoid robots, the extent of this potential is still uncertain.
Despite these challenges, Tesla’s vision of integrating AI into its business model represents a bold and innovative direction, albeit one fraught with risks and uncertainties.
