Why you're undervaluing TSLA

Tesla isn't just a car manufacturer

In the realm of technological innovation, Tesla has long been a front-runner, redefining the EV space. However, a significant, yet perhaps underappreciated, frontier of its innovation lies within its robots—named Optimus. The potential upside for TSLA to dominate the robot market (as they’ve dominated the EV market) is possibly greater than their EV upside.

Comparative Analysis: A Leap Beyond the Present

Tesla isn't alone of course. Let's look at their competition. Boston Dynamics' Atlas (remember all those videos from years ago?), known for its 5.5 mph mobility and (noisier) hydraulic power, has applications leaning towards robust tasks, potentially in search & rescue and military contexts. Unitree’s H1, with a record breaking faster pace at 7.3 mph and a price range between $90,000 to $150,000, eyes deliveries by mid-2024. However, Tesla’s Optimus, despite its current 1.3 mph speed, distinguishes itself through unmatched durability, energy efficiency, maintenance ease, and quieter operation, gearing it towards everyday factory and residential use.

Efficiency Over Agility: The Real Value Proposition

Optimus prioritizes efficiency over agility, focusing on the perfection of repetitive tasks. With 11 degrees of freedom in its arms and the capacity to fold clothes—with aspirations to thread a needle within the year—its utility in residential settings is unmatchable. Musk has stated that the price goal is $20,000. He's missed estimates on price in the past so don't hold your breath, but even if its was $40k--if it could clean, cook, do laundry--wouldn't you own one?

Technological Superiority and Future Enhancements

The real kicker is that this is the robot that gets to use Tesla's Full Self-Driving (FSD) technology, including 8 cameras and several radar sensors. This gives it a tremendous head start over the competition. Plus they're prioritizing speed improvements, with recent updates achieving a 60% speed boost, and a reduction in weight from 160lb to 138lb. With this pace of improvement, an eventual goal of reaching 5 mph, powered by 28 electric drive units emulating muscles, seems within reach.

Energy efficiency is also a priority. Telsa is targeting practical mass market use. Optimus has a 2.3kWh battery, maintaining a 100W idle and 500W walking power consumption. The likely path of adoption is first using it in factories before transitioning to residential. The goal is to launch in 2025.

The Market Outlook and Beyond

Goldman Sachs's projection of a $38 billion market by 2035, with estimates of 250,000 robotic units by 2030, underscores the incredible demand for robots. Plus we already see robots like Agility Robotics in Amazon performing highly specialized tasks.

The Unseen Potential

Tesla’s Optimus represents a leap towards a future where technology enhances human life by taking over tasks ranging from house cleaning to elderly care. Its unique approach to efficiency, combined with advanced technological integration, positions it as a disruptive and likely dominant force in both residential and commercial sectors.

Investors underestimating Tesla's foray into robotics may not be fully accounting for the transformative potential of Optimus robots. Today we’re talking about the Gen 3 robots, but imagine down the road, Gen 10, or 20. And while the competition is fierce, why wouldn’t you bet on the man who made full self driving a reality and perfected reusable rockets that could land vertically?

Our guess is that eventually every home will have at least 1 robot, and every business will have multiple. As long as we can avoid a dystopian nightmare of the robots taking over, our money is on TSLA to dominate the space, and that portion of its upside is extremely undervalued at its current market cap.