One reason Tesla (TSLA -1.38%) stock commands such a premium valuation relative to its peers is the company's ability to convince investors that it's much more than just an automaker. Tesla is aiming to improve its vehicle software in the coming years and to profit from those enhanced capabilities -- and investors are buying into the story.

Not only does the company plan to increase the price of Autopilot over time as it moves closer to fully self-driving capabilities, but it also eventually wants to make its vehicles capable of deploying into an autonomous "robotaxi" ride-sharing service. Autopilot, however, is still far from demonstrating this level of intelligence. Sure, it's improved over the years, but only in small, incremental ways -- not enough to put the technology within a fighting chance of driving autonomously in a robotaxi service.

But is Tesla about to give investors a reason to take the company's autonomous driving ambitions more seriously? CEO Elon Musk is now saying that Autopilot will soon see a step-change improvement.

Interior of a Model 3 sedan

Model 3. Image source: Tesla.

Autopilot is about to get a total rewrite

"The [full self-driving] improvement will come as a quantum leap," Musk said on Twitter on Friday, "because it's a fundamental architectural rewrite, not an incremental tweak."

This architectural rewrite for Autopilot will be deployed as part of a "limited public release in 6 to 10 weeks," Musk said. Of course, Musk has repeatedly overpromised when it comes to self-driving technology, so investors shouldn't count on the company sticking to this timeline. Nevertheless, this tweet gives investors insight on why Musk has said Tesla could potentially begin deploying a robotaxi fleet where regulation allows as early as this year. A "quantum leap" improvement in Autopilot could demonstrate technology that is much closer to full self-driving.

"I drive the bleeding edge alpha build in my car personally," Musk said on Twitter. "Almost at zero interventions between home & work."

Interior of Model S sedan

Model S. Image source: The Motley Fool.

Justifying Tesla's frothy stock price

Why does all of this matter? If Tesla can demonstrate a "quantum leap" improvement in its Autopilot software, investors can give more weight in their analysis to the potential monetization of this rapidly improving technology when deciding how much the stock should be worth today.

Following a huge run-up in Tesla's stock price, the company now has a market capitalization of approximately $350 billion, despite generating less than $1 billion in trailing-12-month free cash flow. Without improved Autopilot features and higher monetization levels of its vehicle software, the growth stock seems fairly valued if not overvalued at this level. But if the company's robotaxi service and the potential for higher Autopilot prices in the future start to look like realistic expectations, it will become easier for investors to justify Tesla's current share price.