Musk looks past Tesla sales slump, says 80% of value will come from Optimus
News Summary
Tesla CEO Elon Musk has predicted that Optimus humanoid robots, which are not yet commercially available, will eventually account for more than three-quarters of the company's value. He posted on X that "~80% of Tesla's value will be Optimus." This follows a mid-2024 prediction where Musk stated Optimus could make Tesla a $25 trillion company, surpassing half the S&P 500's total value at the time. Currently, Tesla is experiencing a multi-quarter sales slump due to competition from lower-cost Chinese rivals, an aging electric vehicle lineup, and Musk's incendiary political rhetoric and involvement with the Trump administration. Musk is attempting to shift Wall Street's focus to Tesla's future vision, centered around robotaxis and AI-powered humanoid robots. However, Tesla faces significant competition in these nascent markets. In robotaxis, Alphabet's Waymo is operational in numerous markets and has completed 10 million paid trips, while Baidu's Apollo Go is live in China, with Tesla only recently commencing tests in Austin and San Francisco. For humanoid robots, competitors include Unitree, Boston Dynamics, and Agility Robotics. Adding to the challenges, Tesla's VP of Optimus robotics, Milan Kovac, recently departed the company.
Background
As of 2025, Tesla's electric vehicle business is contending with a sales slump, driven by intensifying market competition (particularly from Chinese manufacturers), an aging vehicle lineup, and controversies surrounding CEO Elon Musk's public statements and involvement with the Trump administration. Despite the fierce competition and margin pressures in the EV market, Tesla's valuation has long been predicated on its potential in AI and autonomous driving technology, rather than solely as an automotive manufacturer. Musk has a history of making ambitious predictions to rally investor confidence, often related to the full self-driving (FSD) capabilities and the broader potential of AI. His latest assertion about Optimus contributing 80% of Tesla's value is another attempt to position Tesla primarily as an AI and robotics company rather than a traditional automaker. However, in both robotaxis and humanoid robotics, Tesla faces established and advanced competitors like Waymo, Baidu, and Boston Dynamics, who have demonstrated significant progress in technology and commercialization.
In-Depth AI Insights
Why is Musk so aggressively promoting the future value of Optimus at this particular juncture? - This can be interpreted as a strategic narrative shift, designed to divert investor attention from Tesla's current struggles in EV sales and intensifying market competition. - By emphasizing the immense potential of future AI and robotics ventures, Musk aims to reignite market imagination for Tesla's growth prospects and provide a rationale for valuing the company beyond traditional automotive manufacturing metrics. - It also signals that despite current business challenges, Tesla's core competency has pivoted towards more disruptive technological domains, thus justifying its premium valuation as a high-tech company. Can Optimus robots realistically make a substantial impact on Tesla's valuation in the short to medium term, and what are the core challenges? - A substantial impact in the short term (1-3 years) is unlikely. Humanoid robotics technology is still in early development, and the path to commercialization and cost-effective mass deployment remains unclear. - Core challenges include: technological maturity (reliability, autonomous decision-making), scalable manufacturing (Musk's 5,000 unit projection is still pilot-scale), cost control, regulatory frameworks, and intense competition from experienced players like Boston Dynamics. - Investors will require clear commercial use cases and viable revenue models, rather than just technological demonstrations, to genuinely integrate Optimus into their valuation models. What are the long-term implications for Tesla's valuation and market position if the commercialization of the Optimus project significantly underperforms expectations? - Should Optimus fail to deliver on its promises, Tesla's valuation premium as a "tech company" would be severely eroded, potentially leading the market to re-evaluate it primarily as a traditional automotive manufacturer based on EV sales. - This would result in a significant multiple compression, as the "AI disruptor" component of its growth story would be called into question. The company could face higher capital costs and a decline in investor confidence. - Furthermore, if Tesla's investments in AI and robotics do not yield returns, it could divert resources and focus from its core EV business, further impacting its position in the highly competitive electric vehicle market.