Tesla’s Nvidia Moment – The AI & Robotics Inflection Point

Overview

Founded in 2003, Tesla Inc. (NASDAQ: TSLA) began as an ambitious EV startup led by engineers Martin Eberhard and Marc Tarpenning. Elon Musk joined as an early investor in 2004, spearheading Tesla’s first major funding round and later taking over as CEO. Under his leadership, Tesla introduced the Roadster in 2008, followed by Models S, X, 3, and Y—bringing electric vehicles into the mainstream.

Today, the dominant media narrative paints Tesla as an automaker in decline—citing Elon Musk’s political controversies, rising Chinese competition (BYD, Nio, etc.), and anti-Tesla activism. At first glance, these concerns seem like major headwinds for investors.

However, Tesla is not just an automaker—it is in the process of evolving into a technology company spanning AI, robotics, and mobility services. This transformation, much like Nvidia’s shift from GPUs to AI computing, is unlocking new revenue streams that could redefine Tesla’s valuation. The real question is: Is Tesla struggling, or is this an opportunity to invest in a tech giant in the making?

If successful, this evolution could position Tesla as one of the most valuable companies in the world within the next decade.

The Tesla Transformation: More Than Just an Automaker

Tesla is undergoing a transformation that extends far beyond its roots as an EV manufacturer. The company is methodically constructing an ecosystem that spans AI, robotics, energy, and autonomous mobility—creating an entirely new paradigm for technology-driven industry disruption.

Elon Musk highlighted Tesla’s ambitious vision for sustainable abundance, where AI and robotics revolutionize productivity. He emphasized that Tesla is not just improving transportation but enabling an era where "any good or service can be available at will." This vision rests on three major pillars:

1. AI & Automation – Tesla’s AI advancements, driven by Dojo, position the company as a major AI player. Musk noted that Tesla’s Cortex One training cluster, alongside Dojo, is scaling rapidly, with over 50,000 GPUs active today and set to double soon.
2. Autonomous Mobility – With 10 million Tesla vehicles on the road by next year, Tesla can activate autonomy overnight, turning a massive fleet into an on-demand robo-taxi network.
3. Robotics – Optimus is set to scale, with Tesla targeting 5,000 units this year and 50,000 next year. Musk believes humanoid robots will be Tesla’s biggest product ever, dwarfing the auto business.

Current Business Model

Tesla operates a vertically integrated model across multiple industries:

• Automotive
  • Sales – Direct-to-consumer EV sales through Tesla’s online platform, eliminating traditional dealerships and increasing margin control. In 2024, automotive sales generated approximately $77 billion, accounting for 79% of Tesla's total revenue.
  • Automotive Services – Tesla operates its own service centers and mobile repair units, ensuring control over the after-sales experience and reducing long-term maintenance costs for owners. In 2024, this segment generated $10.5 billion, accounting for 11% of Tesla’s total revenue.
  • Full Self-Driving (FSD) & Software – Tesla generates recurring revenue through its FSD subscriptions and one-time purchases, with a long-term goal of monetizing autonomous mobility services.
  • Regulatory Credits – Tesla earns revenue by selling regulatory credits to other automakers that need to comply with environmental regulations. Over the past year, this segment contributed $2.5 billion, equivalent to about a fifth of Tesla’s total operating cash flow.
• Energy Generation and Storage
  • Tesla’s energy division encompasses the production and sale of solar panels, solar roofs, and energy storage solutions like Powerwall and Megapack. In 2024, this segment experienced significant growth, with revenues increasing by 67% to $10 billion, representing 10% of Tesla’s total revenue.

Growth Catalysts

Robo-Taxi Expansion (2025-2030+)

Tesla’s first paid robotaxi service is set to launch in Austin, Texas, in July 2025. Unlike Waymo’s hardware-intensive, geofenced model, Tesla’s approach relies on scalable software and an expanding fleet of self-driving customer vehicles.

• Musk has projected that within five years, 50% of all miles driven will be autonomous, though a more realistic tipping point is in the early 2030s.
• Texas’ favorable regulatory stance provides a low-friction entry point, making it an ideal first market for Tesla’s autonomous ride-hailing service.
• If Tesla successfully scales its robotaxi network globally, it could disrupt traditional car ownership models and become one of the largest mobility providers in the world.

FSD & Licensing (2027-2028 Revenue Impact)

Tesla’s Full Self-Driving (FSD) software is now approaching the point where interventions are "extremely rare," per Musk. He reiterated that FSD will be 10 times safer than human driving. Tesla is actively working toward regulatory approval for full autonomy, which Musk believes will happen within five years globally.

Tesla’s Dojo-powered FSD improvements may open the door to licensing agreements with legacy automakers, similar to how Nvidia monetizes AI chips.

Energy & Infrastructure (2024-2030+)

Tesla’s Megapack energy storage business has become one of its fastest-growing segments, with demand driven by utilities seeking grid stabilization solutions.

• Tesla’s energy division grew 90% YoY, now surpassing automotive gross margins.

Robotics & Optimus (Long-Term Disruption, 2030s)

The Optimus humanoid robot is in early-stage deployment within Tesla factories, reducing labor costs.

• Musk revealed that the 22-degree-of-freedom Optimus hand and forearm are now in production.
• The Optimus factory is being built in Austin, and Musk expects humanoid robots to become Tesla’s largest product line.

Risks

Brand Damage from Musk’s Political Affiliation

Elon Musk’s controversial political statements and affiliations have created polarization among consumers and investors. However, the narrative that Tesla’s brand is in decline due to Musk’s politics may be overstated. While some surveys suggest potential declines in Tesla’s brand perception in certain markets, there has also been a surge in interest from previously skeptical demographics, particularly conservative buyers. Google Trends data shows a spike in searches for “buy Tesla” following endorsements from prominent figures outside of Tesla’s traditional customer base. The real impact on demand remains uncertain, but Tesla’s brand loyalty and tech-driven appeal continue to attract a broad customer base.

FSD Not Being Ready or Approved for Full Self-Driving

Tesla’s robo-taxi ambitions and broader AI strategy hinge on FSD achieving full regulatory approval. Delays in government approvals, safety concerns, or legal setbacks could significantly impact Tesla’s ability to scale autonomous ride-hailing, delaying or reducing expected revenue from this segment. Musk has stated that Tesla is “in a race against regulators,” acknowledging that legal hurdles are one of the biggest risks to Tesla’s AI-driven future. Most analysts agree that Tesla's full autonomy timeline is too aggressive, and widespread regulatory approval could take until at least 2027-2028.

BYD and Chinese Competition

Chinese EV manufacturers like BYD have become increasingly competitive, both in pricing and technology. Tesla’s market share in China is at risk as domestic manufacturers continue to scale production and reduce costs, potentially forcing Tesla into price wars that could hurt margins. However, Tesla’s global brand, advanced software, and deep FSD data moat still give it a strong advantage, especially in Western markets.

Market Manipulation & External Risks

Tesla is one of the most shorted stocks on the market, making it a frequent target of misinformation campaigns and stock price manipulation. The transcript suggests that competitors and short sellers actively attempt to influence media narratives and regulatory decisions against Tesla. Additionally, traditional automakers facing disruption from Tesla’s dominance may lobby for regulatory delays to slow Tesla’s progress in AI and autonomy. Investors should be aware of external efforts to suppress Tesla’s valuation, which could impact short-term stock performance despite strong long-term fundamentals.

Valuation

Tesla’s business model is shifting from one-time car sales to AI-powered software and service-based recurring revenue models.

To estimate Tesla’s intrinsic value over the next 10 years, we model:

• Automotive Growth – Continued expansion of Model Y sales and new models, with projected annual revenue growth of 15%.
• Robo-Taxi Monetization – Gradual deployment and scaling of robotaxis, contributing to high-margin, recurring revenue.
• FSD Licensing – Tesla monetizing self-driving technology by licensing FSD to other automakers.
• Energy Business Expansion – Increased Megapack and Powerwall adoption, adding further revenue stability.
• Optimus & Robotics – Potential long-term revenue stream that revolutionizes labor-intensive industries.

If Tesla executes on these high-growth, high-margin opportunities, it could reach a multi-trillion-dollar valuation by 2035, making today’s sentiment-driven sell-off an attractive buying opportunity.

you can view my valuation model and assumptions here: https://docs.google.com/spreadsheets/d/1VsYZE6TRMpp_j7ba9NDZCNqBBRGYYlJa1w7D9WTLvY0/edit?usp=sharing