Here's the Secret Weapon That Will Boost Tesla's EV Business

Core Insights - The future approval of publicly available unsupervised Full Self-Driving (FSD) technology is expected to significantly strengthen Tesla's position in the automotive market despite current declines in automotive revenue and EV deliveries [1][4]. Market Valuation - Tesla's stock is not solely valued as an electric vehicle (EV) manufacturer; the market is pricing in potential long-term recurring revenue from its robotaxi business, which includes both dedicated Cybercabs and vehicles converted into robotaxis using unsupervised FSD technology [2]. Current Limitations - Tesla currently lacks fully autonomous robotaxis and publicly available unsupervised FSD, which are critical for justifying its high valuation [3][4]. Demand Drivers for Tesla EVs - The approval of unsupervised FSD will enhance the value of existing Tesla vehicles, allowing them to be converted into robotaxis, which could drive demand as many current owners are unaware of the existing supervised FSD offering [5]. - Increased adoption of FSD is anticipated, as the release of newer versions has already shown improved take-up rates, indicating that the benefits of FSD are still being communicated to potential users [6]. - New Tesla owners may be incentivized to purchase vehicles with the intention of using them as robotaxis, further boosting demand [6]. - If unsupervised FSD approval leads to higher sales volumes, Tesla can achieve economies of scale, reducing vehicle costs and making EVs more affordable compared to internal combustion engine vehicles [7]. Implications for Investors - The potential for robotaxis is crucial for Tesla's investment case, but unsupervised FSD could also significantly enhance Tesla's EV sales and reinforce its dominant position in the EV market [9]. - Elon Musk has suggested that unsupervised FSD could be available for personal use by the end of the year in certain regions, although this timeline may be overly optimistic [10].