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Al Root

Tesla is using artificial intelligence to build self-driving cars and humanoid robots. Wall Street assumes the cars will arrive before the bots. That might not be right.

Wednesday evening, CEO Elon Musk gave a video interview at the Consumer Electronics Show in Las Vegas.

"I don't want to blow your minds, but AI is going to be big," Musk told Stagwell CEO Mark Penn. "AI will do anything you want and even suggest things you never thought of."

For Tesla, and Tesla investors, AI means self-driving cars and humanoid robots. The company plans to launch an AI-trained self-driving robotaxi service by the end of 2025.

The basis of Tesla's self-driving tech is its Full Self Driving driver assistance product, which is constantly improving with the help of AI. Musk said recently that FSD will drive better than humans in early 2025.

These days, FSD and robotaxis are the AI products Tesla analysts and investors are most excited about. Musk might be more excited about AI-trained robots, though.

"I think most people, if not everyone, would probably like to have their own personal C-3PO or R2-D2," added Musk. "Humanoid robots [can] be the biggest product ever in history by far."

Eventually, he sees the robot-to-human ratio at three-four to one. That's tens of billions of robots. "It's not even clear what money means at that point," said the Tesla CEO.

(Musk is saying, essentially, that the economy is labor and capital. If robot labor were cheap and unlimited, then everyone could have a higher standard of living.)

Tesla is planning to produce several thousand robots in 2025, multiply that by 10 times in 2026, and by 10 times in 2027, according to Musk. That implies 2027 robot production of some 500,000 units.

That's faster than investors expect — and speaks to the pace of AI development.

Deutsche Bank analyst Edison Yu took a stab at sizing the humanoid robot market in a recent report. He estimated Tesla might sell 200,00 a year by 2035. He valued the Tesla robot business at $22 a share, or about $70 billion.

Musk's estimate is far more aggressive.

It's too early to know exactly how the business will develop. It's looking like a safer bet that the robot business can be big, and arrive sooner than the early estimates contemplated.

Through Wednesday trading, Tesla stock was down about 2% year to date. The S&P 500 was up less than 1% early in the new year. Shares were still up about 65% since the company's Oct. 10 Robotaxi Day.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Tesla directors received court approval for a settlement of up to $919 million to resolve claims they overpaid themselves, Reuters reported Wednesday, citing an attorney and a shareholder.

The settlement requires board members, including Chair Robyn Denholm, to return about $277 million in cash and $459 million in stock options, and to relinquish stock options worth $184 million, the report said. Other directors named in the case included James Murdoch and Oracle co-founder Lawrence Ellison.

The Delaware judge also granted law firms that brought the case $176 million in fees and costs, the report said. The directors did not admit wrongdoing, Reuters added.

Tesla did not immediately reply to MT Newswires' request for comment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Vaibhav Taneja, Chief Financial Officer, on January 06, 2025, sold 7,000 shares in Tesla for $2,894,918. Following the Form 4 filing with the SEC, Taneja has control over a total of 108,965 shares of the company, with 108,965 shares held directly.

SEC Filing:

www.sec.gov/Archives/edgar/data/1318605/000177134025000001/xslF345X05/edgardoc.xml