The Rundown - Deep Dive: Tesla’s Evolution from Pure-Play Automaker to AI Juggernaut

Episode Date: February 2, 2025

Elon Musk says we’ll look back on 2025 as the most important year in Tesla’s history—not because of car sales, but because it will be the year Tesla morphs into an AI and robotics powerhouse. In this episode of The Rundown, we break down Tesla’s high-stakes transformation, including the state of its auto business, the battle for robotaxis, and whether Optimus could really become a $10 trillion business. Can Tesla deliver on these bold promises, or is this just another round of hype?The content of the video is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures.Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Welcome back to the rundown for a weekend deep dive. This week, we are digging into Tesla's future as more than just a car company. Elon's been making big promises for years now, and this lady's earnings call was no different. Elon Musk said when we look back on 2025, it will have been the most important year in Tesla's history, not because it'll be a big year for car sales, but because it'll represent when Tesla finally morphed from being a pureplay car company into an AI robotics company. Elon talks a big game. We've been hearing about the promise of full self-driving for quite some time now. Elon even called himself out on the earnings call, but there's more urgency than ever now to make self-driving and robotics business a reality. The auto business is losing steam, global competitors are gaining momentum, and there's just not as much demand from consumers for pure play electric cars as initially expected.

So in today's deep dive, we're digging into Tesla's automotive business and how Tesla plans to revive its core business. Then we'll talk about why Musk thinks that Tesla will be the world's least. leading AI company and the high stakes raised for making Robotaxies a reality. Got a good episode for you today. Let's get into it. Let's start this video by talking about what Tesla is most known for. Their cars. Cars are still Tesla's core business.

They make up 80% of the company's revenue, but it's becoming an increasingly smaller part of their narrative. People have been saying for years that Tesla is becoming more than just a car company. In fact, it's become a meme at this point. But that's starting to become reality. Almost none of their latest earnings calls focused on cars. Part of that is their AI ambition and the hype around AI, but there's also just not much to brag about right now when it comes to their auto segment. What we learned from the recent earnings report on Wednesday is that their total quarterly revenue increased by just 2%.

In fact, it was weighed down by an 8% year-over-year decline in their automotive sales. Now, that wasn't a total surprise because Tesla had previously disclosed their delivery numbers for the quarter. In fact, in 2024, Tesla's global vehicle delivery slipped by 1%, marking the first annual decline in over a decade. But on the earnings call this week, Tesla said they expect their automotive business to return to growth in 2025, but they did backtrack on the 20 to 30 percent growth target that they had previously stated. But look, it's not like Tesla is in trouble or anything. Elon Musk made sure to share that the Model Y was the best selling vehicle of any kind in 2024. And also, Tesla is still the world's top EV seller.

The problem is that it's getting a lot more competitive out there, especially in the critical Chinese market, where BYD has become a real threat. back, BYD only sold 30,000 fewer pure EVs in 2024 than Tesla. So the competition is neck and neck right now. Now, one catalyst that could jumpstart automotive growth is a new lineup of cheaper EVs. This is something that Tesla's been talking about for a while now, but it just hasn't happened yet. That will change in 2025, according to Elon Musk.

Tesla says the new models will be here in the first half of 2025, so they're on the clock right now. And I think it's enough car talk for today because I think we talked more about cars on this episode than Elon did on the Arding's call. So let's talk about Tesla's businesses that he hasn't gotten bored of. Actually, before you move on to the robots and the self-driving cars, I want to mention Tesla's energy business. It doesn't get much hype these days, but it was a bright spot from their latest quarter. The Energy Division focuses on developing, manufacturing, and selling products related to solar energy generation and battery energy storage. And that segment

of their business has more than doubled revenue to $3 billion, delivering record gross profits, along the way and easing some of the pressures from Tesla's slowing EV business. But even though it's a growing business, it's still not really what drives excitement for the stock. Essentially, the energy division is a nice side business for Tesla that's helping them buy time as they try to ramp up their robotaxy business. And that's what investors are really eager for. So let's finally talk about that. Now, with auto sales slowing down, Tesla is leaning further into self-driving technology as a key selling point for investors.

On the earnings call, CEO Elon Musk said the company will be launching unsupervised full self-driving as a paid service in Austin by June of this year. So that was kind of a pleasant surprise to everyone, and they got investors hype. Tesla also said in a post on Exit that it expects to launch robotaxy services in parts of the U.S. later this year and continue to work on launching FST supervised in Europe and China in 2025. So they got big plans for this year. I think this news helped disguise the fact that Tesla's earnings really weren't that great. They reported a 70% drop in profits and their margins missed Wall Street expectations.

So now the pressure to get self-driving cars on the road is intensifying, not just because Tesla's core auto business is slowing, but also because of rising competition from Google's Waymo and Uber. I want to start with Uber first, because the market is increasingly treating Tesla and Uber as direct competitors. And that's evident on how their stocks react. Like every time Tesla makes a big announcement about their progress in self-driving efforts, Uber's stock takes a hit.

But then on the flip side, when Tesla falls short of expectations in that department, Uber stock rallies. I mean, just look at what happened following Tesla's Robotaxy Day when investors were left extremely disappointed by the lack of details. Tesla's stock dropped 9% the next day and Uber stock rallied 11%. But then on the flip side, Uber's stock dropped this week following Tesla's earnings call and their announcement about the rollout of their robo taxi service. The market is treating Uber and Tesla as competitors. Now, Uber knows that the robotaxy threat is looming, but they're not just sitting on the sideline. Even though Uber abandoned their own self-driving ambitions years ago, it's aggressively pivoting

to become the platform for robo rides. And that explains Uber's partnership with Waymo. Uber has an exclusive deal to be Waymo's sole provider in Austin and Atlanta, and they also recently announced a partnership with Nvidia to collaborate on autonomous driving. But the bigger threat to Tesla, in my opinion, maybe Waymo. Just one day before Tesla's earnings this week, Waymo announced its exceptional. expanding their self-driving testing to more than 10 new cities, including Las Vegas and San Diego this year. I mean, I don't think people realize how popular Waymos have gotten.

They already provide 150,000 trips per week across Austin, L.A., San Francisco, and Phoenix. And in 2024 as a whole, they delivered over 4 million fully autonomous rides. My friends that live in San Francisco or L.A. talk about how Waymos are everywhere. And investors are excited about the economic opportunity of Robotaxi. But I wonder if consumers are really ready to hop on a vehicle driven by an AI. In fact, in a recent survey by AAA, only 9% of respondents say they trust autonomous vehicles. That's actually down from 14% in 2021. So the public is becoming less trustworthy of them.

So even if Tesla, Uber, and Waymo are racing towards a self-driving future, the biggest obstacle might not be technology or regulation. It might be the trust from the public. Now, while much of Wall Street's attention is getting Tesla's car business back, on track and getting their self-driving taxi fleets on the road, Elon Musk made it clear that he sees Optimus, which is Tesla's humanoid robot, as the company's biggest long-term value driver. Listen to what he said on the Arnings Call. I see a path.

I'm not saying it's an easy path, but I see a path for Tesla being the most valuable company in the world by far, not even close. I mean, there is a path where Tesla is worth more than the next top five companies combined. There's a path to that. and that is overwhelmingly due to autonomous vehicles and autonomous humanoid robots. I mean, he said he thinks Optimus has the potential to do $10 trillion in revenue.

And just to put that into perspective, that is 50-time what Apple made from their iPhones in 2024. So I guess that just goes to show you how bullish Elon is. Elon has high expectations for these robots. He thinks they'll be able to do a lot of things. Here's another soundbite from Elon on the call. Optimus will be also like play the piano. and be able to thread a needle.

I mean, this is the level of precision no one has been able to achieve. And so it's really something special. Yeah. And my prediction long term is that optimist will be overwhelmingly the value of the company. You know, I feel like there's going to need to be a more impactful use case for humanoid robots than just playing the piano.

Personally, I think robots will have their biggest impact on manufacturing. In fact, I think it's already starting to happen. A lot of manufacturing facilities are, becoming increasingly autonomous. But Elon seems to be bullish on the future that looks like the movie I-Robot from 2004, where everyone has a robot in their homes, which acts as their cleaner, their chef, a babysitter, and I guess a piano player. Now, I feel like that future might be really far away, but Tesla plans to produce thousands of robots this year, and they have plans to ramp up production to 50,000 to 100,000 by 2026. So again, bold promises from Mr. Musk, but investors are

expecting him to come through. So there you have it. Tesla's transformation into an AI and robotics company is packed with bold promises, high expectations, and serious competition. Whether it's Tesla's self-driving cars, their robot taxis or optimists, humanoid robots, the stakes have never been higher. But as always with Tesla, the big question is, will it actually happen? And when will it happen? Elon thinks that 2025 will be the year that changes everything for Tesla. And we're going to be watching it closely and covering every step along the way here at the rundown. So if you want to learn more about Tesla or if you're a Tesla investor, it's a great time to get subscribed.

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