Transcription
We have to talk about Tesla and the greater state of the market today because Tesla has its earnings call tomorrow and everyone is talking about the stock, how disappointed they are, and how everyone is mad at Elon. And so, as you probably know, we see a lot of progress objectively with Cyber Cap scaling all over the place, especially the production of Cyber Cap.
We had this big discussion today about, are there actually steering wheels in there? Are they all Fads, meaning Cyber Caps with the steering wheel and so on and so forth? You know, the whole argument about, is Tesla going to change the world? Are they going to actually roll out FSD and robo taxis, or will they be delayed again? People are incredibly frustrated, and that's because of the stock. The stock is not going anywhere. Today, it's a little bit up. Of course, with the market, we see a lot of things actually happening, but in general, we have been flat for a very long time, and that is very depressing for a lot of people.
So, it's time to take a little bit of a bigger picture look here. Here's the stock up 3.11%. But that doesn't help at all because we were there here just one trading day ago. We are on this downtrend for five days and for a very long time. Year to date, we are totally down 15%. Five years, we are not up much. Oh, five years, we are actually up now because there was a total crash in 2021, but five and a half years, we would be down. So, why is everyone so frustrated, and what does it all mean? And I posted about this today in the context of a much bigger thread about the state of the market. And I just want to read you this and then explain what I mean by that.
My big picture take on the state of the best AI stocks, starting with Tesla. I said robo taxi will make between $20,000 and $50,000 per robo taxi per year in margin at scale. Let that sink in. A Model Y makes roughly $6,000 bucks on a lucky day in margin once when it's being sold. A robo taxi, a Cyber Cap at scale, will make between 20 and 50. It's still a wide range, but we are approximating $45,000 our base model at scale in the next five years for robo taxi. So, every single robo taxi that's being deployed is the equivalent of seven Model Y's sold every single year.
By the way, 1 million robo taxis means $50 billion in EBIT, 10x the current Tesla EBIT. So, the earnings of the entire Tesla corporation go to $50 billion at a million robo taxis, roughly maybe at 1.5 million, who knows in the beginning, but that's a lot of money. That's a 10x growth of the entire earnings profile of Tesla at 1 million robo taxis. And the market for robo taxis exceeds 100 million robo taxis globally deployed by far, by the way, closer to probably 300 million, but that would include the entire world. So, in addition, there's robo tracking, tracking that probably doubles this entire market. Autonomous trucks that make enormous amounts of money. So, you of course, you don't need 100 million trucks, semi-trucks that Tesla is now in the process of ramping up, and it's just a question of time and these trucks become autonomous, probably next year.
Okay, that's the bigger state of things. That's why everyone is so used to be so bullish on Tesla. Currently, there's no competition. Waymo is a joke, as you know, way more work to be done before they become a competitor. No light at the end of the tunnel in my opinion. Maybe some Chinese can figure it out in the next couple of years. You never know with China. They're surprising on the upside. I think by 2029, they probably have figured it out too.
So, the question for this entire depressing situation about Tesla stock is this: When will Tesla achieve true FSD? Meaning the ability to remove the limits to sending Cyber Caps to work. In other words, when can we actually use these golden Cyber Caps and deploy them? Okay, I mean, they're being produced by the thousands at this point. I told everyone repeatedly in July, which is right now, they will produce over 1,000 Cyber Caps. They have a run rate of over 1,000 Cyber Caps production. That is my estimate based on the pictures we are seeing and triangulating this. Here's 250 in one batch in one day. So, what are the odds they're producing four of these batches a month? Extremely high. What are the odds we are hitting 2,000 per month by September? Extremely high. We are in the middle of a ramp rate that can only be explained that Tesla is very confident about this.
But I want to give you a bigger picture perspective on the stock. It doesn't even matter who is exactly right. Okay, I think it's going to be this year. I think it's going to be in the next three months that we see that inflection point. But people point out, Joe, you have been wrong because you said May, then you said June, now it's July. You said we will see some scaled rollout of Cyber Cap in May and then June. I was wrong on both counts. Even though we are scaling them, but we are not rolling them out. So, people argue, what if you continue, what if Joe continues to be wrong and we just don't roll it out and everyone stays depressed? I don't think that's possible. I think the worst case is next year. If I'm totally wrong, it's going to happen in 2027. Okay, once Cyber Cap is being rolled out, it will be able to just scale because Tesla's strategy is clearly to wait with a rollout. Otherwise, they could do it now. We know they can have unsupervised robo taxis on the street. They're doing this every day, hundreds of these things all over the place. Okay, they could do it with Cyber Cap. Clearly, they're not doing it. Clearly, they are waiting for the point when they have enough confidence that they can actually roll them out in a scaled way into the thousands, tens of thousands, hundreds of thousands.
So, that means whenever this point comes in time, they will very quickly scale this to a million. That is what the analysts do not understand, including Morgan Stanley. Unfortunately, Morgan Stanley says 30,000 Cyber Caps by 2030. I think that's a complete impossibility. Either we are at 100 Cyber Caps in 2030 because they failed, or we are at millions. You cannot be at 30,000. If you're at 30,000, you can scale this the next month to 300,000 if you're Tesla. So, 30,000 is a nonsensical number. It's either one or zero, and if it's one, you can scale them into the demand, and the demand will be extremely enormous, as we can model out from here to Timbuctoo. You know, it's easy to model this out because people need transport. Once you offer transport at that price, there will be tens of millions of people wanting that. Then it's just a question of rolling it out.
So, that is the big picture, and we get a little lost in this because maybe you guys watch too much Tesla influencers or read too many Tesla exp posts, whatever it is that we forget, you know, while we are watching the stock price and getting angry all day long. This is not how Tesla operates. Tesla wants to get this stuff done. They are making progress. They're systematically putting it in, and they will roll it out when the time is right, and that time will come very soon.
So, the question is, is it worth waiting for? That's the big question, the mother of all questions. So, if this can happen next week, or in two months, or in three months, or in six months, but if I'm wrong, it can happen in 12 months. Should we wait for it? Should we have our capital deployed in Tesla stock? And there's a very clear answer to that. And the answer is right here. The answer is, it depends. Okay, it depends.
If you are an institutional investor, meaning, let me explain what institutional means, effectively, it means you're full-time and experienced with a focus on the greater AI story. If you're either an institution and therefore full-time doing this as a job, or you're not an institution but you are doing it full-time as a job and you're very experienced, here's the answer. It's probably not worth waiting for this because you don't have a reason to wait for it. You can deploy your capital in more attractive opportunities if you know how to do that while you're watching Tesla and just switching back when the time is right.
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You can make a lot of money every month on other things. For example, I, in the meantime, by the way, Micron is my largest position. Tesla is still the second largest position now, but Micron, very tactically right now, is my largest position, mostly in short puts. By the way, I have nearly no Micron shares. It's all short puts because the premiums are just too tempting. But my net exposure to Micron is now bigger than my net exposure to Tesla. Even though my net exposure to Tesla is relatively large. I toned it down for earnings. I do not like playing earnings. I have my core position, of course, and a little bit of short puts because I think we're just too low. And if Tesla drops to $360 or whatever, I don't mind. I lose a little money. But I am not big risk on Tesla throughout earnings.
So, yes, I tactically shifted to Micron. We are not going to discuss it in this video. We will have another video on Micron coming this week, um, because Micron is my most attractive alternative to Tesla right now. It's very dangerous to play Micron because we are up 10% today. Once we get into the $1,000 range, we have to be very cautious because that can be a fake, a head fake. We can drop back. Micron is not out of the woods in my opinion. It was a total buy when I went all in around $850. Now I'm not scaling back yet, but I'm not doubling down a lot. So, I have these short puts, mostly $900, $850, $880 strike prices, weekly runtime. Maybe end of next week, some. So, I am not chasing this. But of course, it was vastly more profitable than Tesla over the last today, yesterday. Uh, but that is only true if you are a full-time investor and you know exactly what you're doing, you're good in analysis, you're spending your whole day and you're full-time on this and you know how to execute the trades. Okay, if you're very talented and have very good research and keep a close eye on robo taxi, because of course, Tesla is a good investment in my opinion for everyone else.
And here's the key sentence: Tesla remains a great long-term bet, better than SpaceX right now. Just as a little side note, I think SpaceX is still too high and Tesla is relatively too low. And so that's my takeaway here. We have to take a step back and understand that the crazy progress that Tesla is making, independent of the stock performance, which is atrocious, is just a fact.
And before or to wrap it up, I have one last comment. Okay, one last comment. There is a person out there and his name is Elon Musk. And there's a lot of discussions right now about Elon. A lot of people are actually hating on Elon. Okay, they hate on Elon. They say, "Elon, you betrayed us. You were playing tricks. You were delaying robo taxi so you can merge with SpaceX. Elon told us the wrong numbers." And now we are all very mad at Elon. Elon Musk also has a Twitter account. He has 240.9 million followers. And I want to just give you, I will have a deeper dive into that. I want to have an extra video just on Elon's mindset and what's happening because I think I have a very good understanding of what Elon is actually thinking. Don't ask me why. I just can explain his behavior very well. And I know it's very well because I make predictions and I'm right about it. So, it seems to be the right mental model.
Put yourself into Elon's shoes. Do you really think Elon is sitting there looking at your stock account and says, "Oh, how can I screw this guy over?" No. Elon is busy. He has a master plan for himself. I have a master plan for myself. Maybe you have a master plan for yourself. So, he's just like us, only with more money and a lot of skills. And Elon's little master plan is, you know, the whole thing. He wants to have a Kardashev civilization. He wants to have fun. He wants to see that he's the most amazing engineer ever. He wants to build all that stuff. We know exactly what stuff it is. It is Optimus. It is Robo taxi. It is Starship. It is the AI satellites. It is Grok. That's his big picture thing. He's doing little side gigs on Boring Company, uh, on X. But you take a step back. That is your Elon universe.
We know two things. Two things. Elon cannot work on all that stuff at once. He cannot. He is just human. Despite what some people think, Elon is just smart, very smart, but he's a human. He has limited attention and time. He has to focus on what's most important. What is most important in his master plan? The answer is very simple. At any given point in time, what is most important for him is what delivers the highest return on attention, on his attention. And when you look at it, the highest return on his attention, his management and engineering attention is clearly not Robo Taxi. Right now, Robo Taxi is being handed out off to a shock. There is nothing to do here for him. Roboaxi is chugging along, no pun intended. It's doing its little thing. The team is on it, is optimizing it. It is boring for Elon. There's nothing to add. The team does its job, and all the exciting stuff is already done. From time to time, he might look at the model. It's in the hands of this team.
What about Optimus? Optimus is a little more interesting for Elon, but again, he put a lot of effort into that last year, revamping the program, firing everyone, and he said it was a mess. Now it's on track. They're doing their thing. They, whatever, optimizing the little hands of the robots or the large hands, who knows? Uh, boring, if you ask me. Boring for Elon. There's nothing to do. It's now in the hands of the hand robot designers, robot hand designers. There's a little embodied AI models. This is all like known stuff. You just ask a bunch of Nvidia engineers, bunch of Chinese. There's nothing exciting here for Optimus. It doesn't mean Elon doesn't take a look every week for two hours on Optimus, maybe one hour on Robo Taxi. But that's not where the money is.
Where is the money? Big picture, the money and the interesting thing about the money is in two things in the larger Elon universe, right? It's also not X. It's not X money. All that stuff can be run by other people right now. The central key lever for Elon's universe are three pieces. Number one, Starship, because if Starship can reland, it's just game over. Here's his feet by the. So, if they can reland Starship, it's game over. But also, also, and you see, by the way, here is the rocket. Here's the satellite. He's a little focused on SpaceX. Starship has to reland. I don't, I think Elon is very involved there, but it's also in the hands of the engineers.
Number two, it is the AI satellite. And I think that is something Elon is spending a lot of time secretly behind the scenes because it's not the hardest thing to solve. But if you solve that in time and get that AI satellite commercially up and running next year, right when Starship becomes reusable and all these things, you're ready for full-blown space AI compute build out in 2028. And that will be the biggest thing that ever happened in humanity, much bigger than Robo Taxi. That is my prediction. Elon will focus on that until it's solved. I think it will be solved, by the way, very soon, this year for sure, and then his attention is somewhere else.
The second big piece, so it's three pieces, but two of them are Starship and AI satellites because they unlock the biggest thing that ever happened, which is space compute short-term and long-term mega earnings. The second thing he is very focused on is Grok, because with xAI, he's suddenly at the frontier. The merger with xAI was absolutely decisive. So, now he's with Grok and xAI developing AGI, and that is worth his time and it's extremely exciting. And that is my prediction if I had to make a bet. These are the highest yielding returns for Elon right now. Just objectively, if you look at everything, it is Grok and AGI, and it is, of course, Starship and the AI satellites. And that means not too much focus on Tesla. That doesn't mean nothing happens at Tesla, but it means we're chugging along. This is all systematized. Roboaxi is completely understood. It's completely planned and will chug along. And from time to time, Elon's going to look at it and say like, "What the hell? Why is it so slow?" That is the mindset he's in, and that's why he's saying sometimes stupid things about robo taxi. He's not paying enough attention.
Tomorrow, we'll see if I'm right. How engaged is he on the Tesla earnings call? My prediction is not much. So, I hope that was interesting. We'll see tomorrow how Elon behaves. Maybe I'm wrong, but we'll see you tomorrow in the earnings call. I hope that was interesting. See you very soon.