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

Revised Update.

Market Misreads Tesla Again, but the Strategy Is Working

Investor sentiment around Tesla has taken a hit recently, driven by headlines about Elon Musk’s political fallout and concerns over potential changes to US EV subsidies. But the reality behind these stories is far less dramatic than it seems.

The idea that the US government might stop offering EV subsidies is not new. In fact, Musk has consistently said Tesla doesn’t need them. As early as 2017, he told CNBC he would prefer to eliminate all subsidies, and he has repeated this view in multiple interviews since (Quartz, Politico, Teslarati, , Reddit).

The political drama, including the recent fallout with Donald Trump, is also overstated. It might generate headlines, but I don’t believe it has any material implications for Tesla’s business. As investors, we should stay focused on what matters: execution.

More importantly, my valuation model never relied on government support. These risks were known well in advance and already priced into the long-term thesis. Anyone reacting now is responding to noise, not fundamentals.

The Real News: Robotaxi Is Live and It Works

On June 22, Tesla launched its first paid robotaxi service in Austin, Texas. While still early, it was a clear success.

The fleet currently operates within a geofenced area using modified Model Ys. Rides are priced at $4.20, require an invite, and include a front-seat safety monitor. Early user feedback suggests the system is smooth, reliable, and rapidly improving.

This is more than just a pilot. It is proof of concept for Tesla’s vision: software-powered, scalable autonomous mobility with zero marginal labor cost.

What makes this rollout different:

• While Tesla’s initial deployment is geofenced, it is designed to scale beyond fixed zones. Unlike Waymo’s lidar-based approach, which relies on high-definition maps and pre-mapped areas, Tesla is building toward generalised autonomy using AI.
• Tesla’s entire stack is vertically integrated: hardware, software, chips (Dojo), and data
• No lidar, no reliance on HD maps. Just vision, neural nets, and billions of miles of driving data
• Tesla’s vehicle cost is roughly one-seventh that of a Waymo robotaxi, which uses a Jaguar base vehicle layered with expensive external sensors. This makes Tesla’s model far more scalable and profitable in the long run.

If Waymo wants to seriously compete, it may eventually need to design and manufacture its own purpose-built robotaxi. But by the time they do, Tesla could be too far ahead.

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Tesla Is Executing

Tesla’s recent Q2 production and delivery results are another clear sign of solid execution. With over 410,000 vehicles produced and a meaningful recovery from Q1, the company continues to deliver at scale despite tough macro conditions. The energy segment, typically volatile, held steady at 9.6 GWh deployed, flat year-over-year but a sign of growing consistency. Tesla also delivered more vehicles in Australia in one month than Lucid did globally across the entire quarter, highlighting its dominance. Meanwhile, the robotaxi pilot in Austin has likely already completed over 1,000 rides. Tesla is now quite literally transporting paying customers with autonomous vehicles. While competitors like Ford scale back their EV efforts and startups like Rivian and Lucid remain far behind, Tesla is quietly doing the hard work, executing at scale and pushing toward autonomy and robotics.

Institutional conviction is also starting to shift. William Blair recently projected Tesla will capture one third of the 1.4 trillion dollar robotaxi market, estimating annual revenue of 250 billion dollars from autonomy alone. In their model, 300 dollars of Tesla’s valuation per share comes purely from the robotaxi business, with energy and auto accounting for just 60. Analysts at Canaccord also highlighted the vulnerability of incumbents like Uber and Lyft, noting that Tesla’s ability to scale robotaxis overnight, thanks to 2.8 million compatible vehicles already on the road, is a unique strategic advantage. And while the current pilot in Austin is small, Tesla's use of supervised FSD shows that the core technology is functional and improving rapidly. Elon Musk expects to move to a 3 to 1 vehicle to operator ratio within months, and Dojo is scaling fast with over 60,000 H100 equivalent GPUs already active.

Wall Street is beginning to understand the scale of the opportunity, but I believe many analysts still underestimate the timing. Most see Tesla’s transformation into a robotics and AI company as a 2030s story. I think it will happen much sooner. Based on my valuation model, the robotaxi rollout, combined with Tesla’s ability to scale autonomy quickly and deploy Optimus into factory operations, points to an acceleration that will surprise the market. The real alpha lies not in recognising what Tesla will become, but how quickly it will get there.

At this point, it's less about whether the thesis is real and more about timing. Many institutional investors are already convinced of the destination but remain cautious about the timeline. If Tesla moves from 11 to 1,500 or more robotaxis in the next few quarters, that inflection point could arrive fast, unleashing the wall of institutional money waiting on the sidelines. In that case, the shift from auto to autonomy will not only be real, but also fully recognised by the market.

Tesla’s True Nature: A Robotics and AI Company

Tesla is not just disrupting cars. It is quietly building a robotics company hiding in plain sight.

Dojo is being scaled to train both autonomous driving and robotic control systems.

Optimus, Tesla’s humanoid robot, is already performing real-world factory tasks. A Gen 3 version is expected by year-end. Musk recently stated that Optimus could be Tesla’s most valuable product line, eventually surpassing auto and energy in revenue and impact.

This convergence of hardware, AI, energy, and automation is what positions Tesla alongside companies like Nvidia, not Ford or GM.

One Word of Caution

While the long-term thesis remains intact, and is in fact playing out as planned, it is important to acknowledge that much of this is already priced in.

The market does believe in Tesla’s future. So from a valuation perspective, it is not the screaming bargain it once was.

If you believe in the Tesla vision, it makes sense to hold or accumulate on weakness, but this is not the time to chase rallies.