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Never bet against Elon Musk.
Investors who followed this “rule” are smiling after Tesla's (TSLA) Wednesday earnings report.
Tesla achieved its largest quarterly profit in over a year and forecasted 30% growth next year. Its stock jumped double digits.
Here's what you should know…
1. What EV slowdown?
You’ve probably seen headlines suggesting electric vehicles (EV) were just a government-subsidized fantasy and that sales were crashing.
EV sales just hit another record in America. Roughly one in 10 new cars sold is now battery-powered. And Tesla is lapping the competition.
It sold more EVs than GM… Ford… Honda… Nissan… Volkswagen… Toyota… and BMW combined! Tesla alone accounts for nearly half of all EV sales in America.
EVs are winning because they're just better cars. Last week, a San Francisco taxi driver who switched to electric told me he'd never go back. Many such cases.
No oil changes, cheaper to run, barely any maintenance, whisper-quiet ride, and your "gas station" is in your garage.
As EV prices keep dropping, EV dominance isn't a question of if, but when.
2. Robotaxis are about ready for prime time.
Nearly 1 million Tesla owners in North America already pay for its “full self-driving” (FSD) mode. Take your hands off the wheel, and the car drives itself.
These cars are racking up 15 million self-driven miles every single day. That's like circling Earth 600 times.
What fascinates me is how Tesla revolutionized the approach to autonomous driving.
Until recently, Tesla's cars were like students memorizing a massive rulebook.
See a yellow light? Slow down. Spot a cyclist? Give them space. It memorized 300,000+ of these individual rules.
But real-world driving isn't that simple. Try writing a rule for every situation you've ever encountered on the road.
Tesla threw out the rulebook. Its latest V12 update replaced all that human code with an artificial intelligence system like ChatGPT. Instead of following rules, the car now thinks like a human driver.
The improvement in performance has been remarkable.
Elon revealed on the earnings call that Tesla’s self-driving software has gotten 100X better since January, measured by how often humans need to take over the wheel.
A 100X improvement in 10 months is unheard of! At this rate, expect Tesla’s self-driving mode to be safer than any human driver within 12 months.
Tesla employees in San Francisco are already testing a robotaxi service, with plans to launch next year.
Tesla has overpromised on self-driving before. But this time feels different. The technology has finally caught up to the vision.
I'm not an Elon fanboy. Until recently, I never owned any Musk-related stocks. But the evidence is clear: Tesla's self-driving technology is about ready for prime time.
And when the rest of the world figures this out, Tesla’s stock will leap higher.
I think Telsa will become the most valuable company in the world by 2030.
3. RIP Uber?
Every time I travel for business, I think I should own more Uber (UBER) stock.
Press a button anywhere in the world, and a car appears to take you where you need to go. Magic. I happily spend thousands with Uber each year.
But after taking my first ever robotaxi ride in San Francisco last week, I’m not sure if I should load up on UBER or short it.
Waymo (Google’s robotaxi wing) works just like Uber. You download an app and request a ride. Except when the car pulls up, nobody’s behind the steering wheel.
My first Waymo experience was magical. I slid into the backseat and a friendly screen greeted me with, “Good afternoon, Stephen. Heading to The Interval at Long Now... This experience may feel futuristic... We'll do all the driving.”
The steering wheel turned itself, navigating through San Francisco's busy streets. Real traffic, real pedestrians, but no human driver. Like being on a Disney ride, except this was happening on city streets.
Waymo has already launched its own Uber competitor in San Francisco. Tesla will have its own app within a year. That’s bad for Uber.
But don't count Uber out just yet. It’s built something incredibly valuable: a network of 160 million users making 1 million trips every hour. The average wait time is just four minutes.
Tesla and Waymo might need Uber. Instead of building their own networks from scratch, they could partner with Uber to access its massive user base. Uber would collect a fee on each ride. Less money per trip, but zero driver costs.
Will Uber adapt and thrive in the robotaxi future, or will it get left behind? Drop me a line at stephen@riskhedge.com with your thoughts.
Stephen McBride
Chief Analyst, RiskHedge
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