Tesla: Solving the Real World

Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. It operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits; and non-warranty after-sales vehicle, used vehicles, retail merchandise, and vehicle insurance services. This segment also provides sedans and sport utility vehicles through direct and used vehicle sales, a network of Tesla Superchargers, and in-app upgrades; purchase financing and leasing services; services for electric vehicles through its company-owned service locations and Tesla mobile service technicians; and vehicle limited warranties and extended service plans. The Energy Generation and Storage segment engages in the design, manufacture, installation, sale, and leasing of solar energy generation and energy storage products, and related services to residential, commercial, and industrial customers and utilities through its website, stores, and galleries, as well as through a network of channel partners; and provision of service and repairs to its energy product customers, including under warranty, as well as various financing options to its solar customers. The company was formerly known as Tesla Motors, Inc. and changed its name to Tesla, Inc. in February 2017. Tesla, Inc. was incorporated in 2003 and is headquartered in Austin, Texas.

Executive Summary

Tesla (TSLA) is not a car company. It is a robotics company disguised as an auto manufacturer. The thesis hinges entirely on "Solving Real-World AI." While LLMs (ChatGPT) solve "Digital Intelligence" (text/code), Tesla is solving "Physical Intelligence" (movement/planning). The value of the Robotaxi fleet and Optimus (humanoid robot) dwarfs the value of selling electric sedans.

1. The Data Engine

Tesla has millions of cars on the road collecting video data every second.

End-to-End Neural Net: FSD (Full Self-Driving) v12 is the breakthrough. It replaced 300,000 lines of C++ code with a single neural network trained on video. It learns to drive by watching humans driver, not by following if/then rules.
Data Lead: Waymo has ~1,000 cars. Tesla has ~6 million. In the "Data is Oil" era, Tesla has the biggest reserve.

2. Optimus: The Labor Market

If Tesla solves autonomy for cars, it solves it for robots.

Shared Brain: Optimus runs on the same inference computer (AI5) and the same FSD software stack as the Cybertruck.
TAM: The market for a humanoid robot that can do laundry, fold boxes, and cook dinner is effectively infinite.

3. Energy Storage

The "forgotten" business is growing faster than the car business.

Megapack: Grid-scale battery storage is essential as the world adds renewables. The backlog for Megapacks stretches for years. Margins are approaching software levels.

Risks to the Thesis

Key Man Risk: Elon Musk. His attention is divided (SpaceX, xAI, Twitter/X). His public behavior alienates the core buyer demographic (liberal, affluent, EV buyers).

Tesla: Solving the Real World

Executive Summary

1. The Data Engine

2. Optimus: The Labor Market

3. Energy Storage

Risks to the Thesis

Conclusion

TSLA Valuation Model

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