RBC's Narayan: Mathematically, Tesla Not An Auto Company

Core Viewpoint - The company is transitioning from being perceived as a traditional car manufacturer to focusing on autonomy and robotics, indicating a shift in its business model towards robotaxis and humanoids [1][3][10]. Market Valuation - The company's market capitalization is currently $1.4 trillion, while the total addressable market for new car sales is estimated at $2.7 trillion, suggesting that the company is not primarily a car manufacturer [3][4]. - The automotive segment is projected to generate $86 billion in revenue by 2026, with energy generation and storage contributing over $17 billion [4]. Future Growth Potential - The potential market for robotaxis and humanoids is in the multiple trillions, and capturing even a small percentage of these markets could justify the company's current valuation [6][7]. - The company is expected to evolve significantly by 2035 with robotaxis and by 2040 with humanoids, although it may take until 2050 for these innovations to substantially impact earnings [12]. Business Model Transition - The company is encouraged to focus on developing fleets of robotaxis and advancing autonomy, rather than solely selling cars to consumers [9][10]. - The data collected from current vehicles is essential for developing the software that powers robotaxis, creating a feedback loop that supports both car sales and autonomous vehicle development [9]. Investment Perspective - The current price-to-earnings ratio is extremely high at 345 times current earnings and nearly 200 times future earnings, indicating that the market has high expectations for future growth [11]. - Analysts suggest that the company needs to align its reality with its valuation over time, emphasizing the importance of market penetration in the robotaxi and humanoid sectors [13].