Tesla Stock [TSLA] Is Basically Worth $0 If True Full Self Driving Isn’t Achieved

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The editor side of me that is very focused on using precise language actually disagrees with that statement in the headline, and stating something like that irritates me a little bit because of that, but it’s hyperbole to make an important point. And it captures the key issue I wanted to address in this article following other discussions this past week. Also, it doesn’t come from me. Elon Musk said it (video here) in slightly different words nearly two years ago, in 2022. “The overwhelming focus is on solving full self-driving … it’s really the difference between Tesla being worth a lot of money or worth basically zero.” I was reminded of this by a bullish Tesla follower who posted it on X earlier today.

“The overwhelming focus is on solving full self-driving…it’s really the difference between Tesla being worth a lot of money or worth basically zero”.

– @elonmusk, 2022 pic.twitter.com/6DR1oYSyy7

— Techgnostik 🫶 (@Techgnostik) April 16, 2024

This gets to the #1 issue many of us following the company and the stock [NASDAQ:TSLA] have to start with when discussing these matters. Tesla is a hugely successful automaker, but its future — especially as a publicly traded stock — is being bet on robotaxi-level Full Self Driving, and particularly a specific approach to that goal which is far outside the norm in the industry.

If you follow discussions of TSLA bulls, it’s basically all about this now. It’s all about Tesla FSD getting to robotaxi capability. The funny thing is, that quote above could equally be used by bulls and bears to reinforce their perspective. They both think the quote is perfect to make their case. The side you are on all comes down to faith. I understand there are tech people who don’t think it’s a matter of faith, who think it’s a simple matter of obvious technological progress. I think it’s very obviously a matter of faith at this point. And by “faith,” I mean something that we can’t know via logic right now. People have strong opinions on whether Tesla’s approach will work or not, but no one really knows — it’s all faith and hope and guessing on one side or the other. No one has charted this path, it’s new territory, and so we can’t really say where it’s going. It’s not the same as something like ChatGPT, which has plenty of margin for error without being obviously dangerous/deadly.

Looking at X/Twitter this morning, I saw numerous posts by TSLA shareholders who think anyone who doubts Tesla on the matter of FSD is an idiot or at least totally missing what is about to happen. I know other tech people (including readers) who know far more about tech than me who also have faith in the approach, even if they don’t see its success as so imminent. Personally, I have lost faith in Tesla’s approach. I don’t think the hardware is adequate and I don’t think the theory behind Tesla FSD — or how to achieve robotaxi-level FSD — is the correct one. I used to have faith in it, but the logic I have followed as we’ve learned more has made me change my opinion, so I am probably in a much smaller boat than most. (I think most people who believed in it years ago still believe in it, and most people who didn’t still don’t.) Even if the approach is not going to work, of course, I think Tesla, particularly Elon Musk, has sunk so much into this belief that they won’t let go of it anytime soon, if ever — and as Musk implied, I think that could sink the stock. I definitely do have an open mind about it and would certainly not be upset if Tesla could achieve its goal! Just because I have an opinion on one side or the other doesn’t mean I am not open to being wrong. Unfortunately, for many followers of the company, you have to be “all in” one way or another. You have to fully believe and bet your house on it, or you have to fully deny the possibility that Tesla could have the plan correct and that it just needs a bit more time.

I think the reason for this “all or nothing” style of discussion is both because of how much money has been poured into TSLA and because of how polarizing Elon Musk is. A lot of people have put a large portion of their money into the company — whether that’s a few thousand dollars for a “normal” person or billions of dollars for a billionaire or a fund managing billions. Because so much is on the line, you get massive arguments, seemingly religious divides, and grandiose statements like the one above (that Tesla is “worth basically zero” if FSD doesn’t pan out). As I noted the other day, Tesla still has a market cap as large as several other larger automakers’ combined. If FSD doesn’t work as intended, it’s extremely hard today to make an argument that Tesla shouldn’t have a P/E ratio similar to those other companies, so it’s hard to say the stock won’t implode.

It’s all about FSD robotaxis working or not. What has perhaps changed on the surface lately is that this has become more obvious. Any distractions, pretending, or rationalizations that the stock price is about other things — like fast-growing sales that aren’t dependent on robotaxis — have fallen by the wayside. Any “serious Wall Street professional” who has complicated spreadsheets justifying TSLA being a “buy” has to cut the crap and come to grips with the fact that whether TSLA is a buy or a sell is dependent on Tesla’s FSD approach to robotaxis being right or wrong. Either the emperor has no clothes, as they say, or people don’t understand what is coming with FSD in short order, soon, maybe this year.

So, money in the market, discussions around the company and the stock, and feelings about the future of Tesla have all gotten more volatile, more lively, and much more heavily waited. People have to focus on this one key matter and pick a side — is Tesla worth half a trillion dollars (its market cap today), 3 trillion dollars, or zero (or, with a little less hyperbole, perhaps something like $50 billion)?