Tesla Self-Driving Robotaxis Will Justify Valuation Says Elon Musk

Tesla CEO Elon Musk recently became the world’s richest person from Tesla’s (TSLA) major gains in 2020, though analysts are quick to speculate whether the company is overvalued or not.

At Tesla’s earnings report on Wednesday, Musk shared that the company had a “roadmap to potentially justify” the company’s market capitalization and current valuation, according to CNBC.

The justification, according to Musk, may be in the company’s use of robotaxis, in addition to its subscription-based updates in the months and years to come.

The rationale is that once Tesla reaches consistent sales between $50 and $60 billion per year, based on a 50% increase in sales on average moving forward, and as the company’s Full Self-Driving (FSD) improves, they can expect to see vehicles become self-driving robotaxis, working up to 60 hours a week.

In addition, Tesla could charge additional fees for these robotaxis, which would allow them to capitalize on each particular robotaxi.

Musk also announced a change to the FSD package, which will become subscription-based as soon as the first quarter, allowing Tesla to receive ongoing revenue from the system, rather than charging a flat rate of $10,000.

Regarding the potential for a historic $1 trillion valuation, Musk said, “If you made $50 billion worth of cars, it would be like having $50 billion of incremental profit, basically because it’s just software.” Musk continued, “and the company’s still in high-growth mode.”