Tesla had an excellent start to the week, with share prices rising over 10% between Monday and Wednesday. Factors such as India’s reported EV tariff reduction have boosted positive sentiment. However, one Wall Street bank believes Tesla’s non-automotive pursuits could also be attractive to investors in the long run.
In a report titled “Contextualizing Tesla’s AI and FSD opportunities,” Goldman Sachs updated its assessment of the market potential for software products and services, including hardware, AI, and data.
Notably, the bank estimates that Tesla is already making $1 billion to $3 billion per year from its Full Self-Driving (FSD) software, despite it still being in beta testing. According to Yahoo Finance, Tesla currently offers its FSD software at an upfront cost of $12,000 or as a monthly subscription at $199.
Goldman is optimistic about FSD because Tesla has an extremely deep talent pool in software engineering and data science.
Goldman suggests that the market opportunity for software like FSD could reach $10 billion to $75 billion in annual revenue by 2030, driven by Tesla’s expanding fleet of vehicles. This is a remarkable figure considering Tesla’s total revenue for 2022 was $81.5 billion.
Delaney’s projections encompass low, mid, and high revenue estimates for Tesla’s various businesses by 2030. The model suggests that these businesses could be valued at $315 billion to $625 billion.
However, not all financial experts share Goldman’s rosy outlook. Hedge fund manager Jim Chanos has stated that Tesla FSD adds almost no value to a car when it’s traded in. Chanos’s statement has been confirmed by Tesla service advisors.
According to Chanos, it will be extremely difficult for Tesla to realize massive profits on a software that adds very little value to customers. As Chanos and many others have noted, FSD doesn’t actually enable a Tesla to drive itself.
Chanos is famous for correctly predicting the downfall of Enron in the early 2000s.
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