Tesla's (TSLA -1.11%) position as the leader of the electric vehicle (EV) industry is undeniable, as it consistently sets new records in production, sales, and revenue nearly every quarter. However, while these achievements make Tesla an ideal growth stock, it's time to start considering Tesla as more than an EV company.
Although less well-known than its best-selling vehicles, Tesla generates revenue from its expansive charging network, energy storage solutions, and proprietary batteries. Even though these all help to contribute to Tesla's diversified technological revenue model, there is one aspect of its business that has yet to produce any profits, but when it does, CEO Elon Musk believes it could be the catalyst that propels Tesla into a "10-trillion [dollar] company."
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The future of driving
Arguably, the most transformative technological advancement in the last decade is the progression of artificial intelligence (AI). When applied responsibly, AI holds the potential to revolutionize industries like healthcare, agriculture, and, of course, transportation.
Tesla is well aware of the benefits of AI. With autonomous driving, companies can make roads safer, eliminate unnecessary deaths, and ease commutes for millions of drivers worldwide. But once Tesla's self-driving software becomes more capable, Musk plans on taking things a step further by launching a new robotaxi business.
Citing "quasi-infinite demand," Musk and Wall Street analysts agree that a self-hailing ride service would not only change the world, but also dramatically improve Tesla's revenue. Musk is on record saying that the successful launch of the robotaxis will be a moment talked about a hundred years from now.
It isn't easy to project just how lucrative the business will be, but some estimates put total revenue north of $600 billion. More conservative projections are around $450 billion -- still a dramatic increase from its $80 billion in revenue today.
Considering that Tesla is investing nearly $1 billion into research and development of autonomous driving and recently achieved a major breakthrough with its software, it's becoming clear that the robotaxi launch is less of an if and more of a when.
Tesla's secret weapon
Currently ranked as one of the most powerful computers in the world, Tesla's supercomputer, Dojo, may hold more potential than the prospective robotaxi business. Not only is the supercomputer providing cost-saving benefits as Tesla pursues autonomous driving, but it's slowly evolving into its own source of revenue.
Supercomputers play an integral role in developing AI applications, yet they are much less common than your average laptop. In recognition of Dojo's capabilities and the scarcity of supercomputers, Musk has hinted at opening up Dojo's use cases beyond only training its self driving software in various live streams. By providing access to Dojo for companies looking to train their own AI models, Tesla could tap into another fruitful endeavor by creating a unique software-as-a-service (SaaS) model.
Similar to the robotaxi business, projecting the profits that Dojo could produce is a bit challenging. To date, the most plausible forecast comes from a recent report from Morgan Stanley, which estimates that the formation of an AI-as-a-service business could add $500 billion to Tesla's market value as companies in sectors such as manufacturing, robotics, and aviation begin to explore the possibilities of AI.
An opportune moment
Over the course of Tesla's history as a publicly traded company, there is one clear trend -- investors who remained resilient and patient through the initial phases of groundbreaking innovation were rewarded handsomely. Investing during the delayed launch of the Model 3 in 2015, the premature announcement of the Cybertruck in 2019, and even the initial development of Dojo in 2021 required a bit of faith and understanding that game-changing technologies take time to materialize. While they faced delays and at times missed optimistic deadlines, ultimately, Tesla delivered.
Today's developments in AI are remarkably similar yet present an even more transformative opportunity as the fusion of AI with Tesla's existing innovations could revolutionize not just how we drive but how entire industries operate. Investors who recognize this potential and endure through Tesla's AI-journey could witness the next chapter in a remarkable success story.
