Tesla (TSLA 5.46%) inventory is expensive. There’s no doubt about it. Shares trade at 14.2 times sales. In the meantime, Rivaans (RIVN +3.08%) – another popular EV stock – trades at just 3.3 times sales.
I think Rivian’s reduced valuation makes it a buy. But make no mistake: Tesla can pursue growth opportunities that EV competitors like Rivian can only dream of right now. The company has a huge capital advantage over the competition, plus an existing infrastructure advantage that will potentially allow it to dominate an artificial intelligence (AI) market with an estimated future value of up to $10 trillion.
Image source: Tesla.
Today’s change
(-5.46%)$-20.81
Current price
$360.45
Key data points
Market capitalization
$1.4 tons
Day range
$359.04 -$370.25
Range of 52 weeks
$214.25 -$498.83
Volume
3.9 million
Avg. full
62M
Gross margin
18.03%
Robotaxis is made possible by artificial intelligence
We’ve been promised self-driving vehicles for decades. Full autonomy often takes ‘just a few years’, yet we are still waiting. The long wait could finally be over thanks to AI.
In the past, autonomous driving largely used cameras and sensors to collect external data. But turning these complex data sets into actionable insights in real time, every fraction of a second, proved difficult and expensive. This is where AI and deep learning can help the most. AI is an incredible tool for turning complex data sets into real-world insights – the key challenge facing autonomous vehicles today.
“Rules-based systems have been the foundation of decision-making in automated vehicles,” according to a report from the World Economic Forum. “However, while they provide predictability and transparency, they fall short in dealing with the complexities of real-world driving.”
In short, rules are helpful in achieving a minimum level of autonomy. But full autonomy involves more than just rules, given the countless permutations of events that can occur during real-world driving experiences. “AI can be an important factor in overcoming technological barriers to vehicle autonomy,” the report concludes. It’s no wonder that Tesla recently completed a $2 billion investment in xAI, Elon Musk’s AI startup.
Tesla’s AI capabilities are perhaps unparalleled
If Tesla can achieve full autonomy through its increasing investments in AI, it has the opportunity to take the global robotaxi market by storm. Cathie Wood, CEO of ARK Invest, thinks this market alone could ultimately be worth as much as $10 trillion.
Tesla isn’t the only well-funded company investing heavily in AI and robotaxis. Many other major technology and ride-sharing companies are doing the same. But Tesla has the unique advantage that it can already produce its own vehicles at scale, potentially allowing it to generate real-world driving data faster than the competition.
“In the quest for robustness in autonomous driving, one of the biggest challenges is acquiring comprehensive real-world data, on which the effectiveness of autonomous systems largely depends,” concludes a research paper published by several leading universities in China. “However, collecting large-scale real-world data is resource-intensive.”
Tesla’s capital advantage, combined with its ability to generate real-world driving data, could prove unparalleled in the robotaxi market. So while analysts and retail investors alike are already optimistic about Tesla’s prospects, we may still be underestimating the company’s true potential, making it an unlikely “hidden gem” despite its high valuation.
