The "We Robot" Event and the Misconception About Tesla ($TSLA)

The autonomous CyberCab to be launched in 2026/2027 according to Tesla. There are no pedals nor a steering wheel in this car.

So while myself and most other Europeans were soundly asleep on the night between Thursday and Friday, one of the most anticipated corporate events in a long time was taking place at the huge Warner Bros Studios set in Los Angeles, California.

I'm referring, of course to the "We Robot" event held by Tesla, more commonly known and referenced as the "Robotaxi" event. You can watch the entire event for yourself here if you're interested. It starts at around 53 minutes in. If not, please have a look at the shorter video below which summarizes the key parts of the event. In short, Elon Musk introduced their fully autonomous "Cyber Cab" and a fleet of robo-taxis with no drivers or controls. He highlighted how autonomous vehicles could make transportation cheaper, safer, and free up urban spaces like parking lots for parks. Musk also talked about Optimus, Tesla's humanoid robot that could help with everyday tasks like walking dogs or getting groceries. The event painted a picture of a more efficient and futuristic world where robots and autonomous cars are part of daily life.

The General Reaction to the Event

For many investors, it was a major disappointment due to a lack of tangible news and specifications. For some others, it was exciting and ground-breaking, a glimpse into the future. As is often the case, I'd say the "truth" lies somewhere in the middle. To summarize the general feeling I'll put it like this; anyone who had a positive and bullish view of Tesla before the event has a similar feeling after the event and anyone who had a negative and bearish view of Tesla has a similar feeling after the event. It was either brilliant or an hour of nothingness.

I think the investors who expected to hear detailed implementation roadmaps, profitability prospects and so on, had the wrong mindset going into the event. It was always going to be a show and about selling a vision. I had the latter mindset so I was not disappointed like many others because my expectations were in line with the type of event that it actually was.

The Misconception About Tesla ($TSLA)

Is Tesla today strictly speaking, based on the revenue earned from electric vehicle (EV) sales, a car/EV company? —Yes, since the vast majority of its revenue comes from the sales of electric vehicles. Is Tesla, if looked at solely a car company, overvalued compared to peers? —Yes, definitely.

Is Elon Musk a highly controversial individual and one who divides (very strong) opinions and is this probably a net negative for the company?

—Yes and probably yes. But always focusing on Elon and saying everything is terrible is a way of letting me know that you haven't actually done due diligence on Tesla, the company.

Does Elon Musk and thus Tesla have a terrible track record when it comes to keeping promises in general and specifically with regards to time frames?

—Yes and yes.

Will Tesla's revenues in the future continue to be dominated by B2C EV-sales like it is currently?

— No.

Is Tesla a company that pushes the envelope for what is possible, both in the minds of people and technologically speaking? — Yes.

Is Tesla, applying a long-term investment perspective, then simply a car company? — No. Tesla is a transportation- and robotics company.

Clearly, Tesla has some flaws and there are a number of legitimate concerns and objections. These are not from out of thin air and many of them have some merit. However, when looking at Tesla as a (-n autonomous) transportation- and robotics company that is just starting out, I feel relatively confident in saying there is no clear outright competitor today. I see tremendous potential. One needs to be able to hold two schools of thought in their head at the same time.

Competition in Segments Such as Fully Automated Ride-Sharing

Is there a competitor when it comes to specific segments such as autonomous ride-sharing taxis? Certainly. For example, Waymo actually already have their fully autonomous-driving vehicles on the public roads in certain select cities in California and Texas so Waymo are clearly ahead of Tesla here. Nonetheless, Waymo doesn't build its own cars.

Tesla do.

Waymo employs expensive lidar sensors compared to Tesla, allowing its vehicles to better perceive and interpret their surroundings.

In contrast, Tesla takes a different approach by gathering real-world driving data from its customers through a neural network, aiming to train its software to manage various road and weather conditions. Unlike Waymo, Tesla relies solely on cameras as sensors for its passenger vehicles. This method is more cost-effective and utilizes the massive amount of data collected daily by its car fleet on the roads, but it will require much more effort to get it right. Both companies race towards autonomy but differ in approach. Tesla has scalability and synergies with other parts of the business in mind. Waymo will not produce millions of cars with AI vertically integrated throughout. Tesla will.

Waymo is limited to ride-sharing only.

For Tesla, ride-sharing simply will be one business segment in addition to many others as a company.

Perhaps I might do an extensive in-depth note on Tesla in the future, similar to what I've already done on Palantir (which you can read here), in order to dive into some interesting details and share my full thoughts on the company. Let's see.

A Holistic Perspective on Tesla

One of the things I like most about Tesla is that they wholly, internally develop and combine hardware and software within their products, similar to Apple. Because their hardware (the vehicle) is software-based, they can simply send software updates to the hardware when needed, similar to how it works for an iPhone. As a company, they have a wide range of capabilities combined with a clear and broad vision for the future. I mean, they are even building advanced humanoid robots (Optimus) which is kind of crazy to be honest. What other current "car company" even tries to do that?

This is the fundamental misconception about Tesla. In a very short-term and narrow-minded perspective, Tesla is simply a car maker with a controversial guy as a CEO who is constantly too optimistic and cannot keep promises, leading one to think the stock is very overvalued. If you think like this, you're certainly buying a perceived value at a very high price. However, Tesla has to be looked at using a much longer perspective, or else you're missing the boat entirely. The company's value as a future leader in transportation and robotics is immense. What's encouraging now is that Tesla is beginning (key word here) to showcase this potential in concrete, real-world applications, moving beyond just theoretical concepts.. This is where the true long-term potential of Tesla lies so lets see how it goes. It's risky, but I think it will go well. All the rest is, quite frankly, short-term noise.

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By J