Elon Musk provides Tesla’s peak margin estimates after reaching full autonomy

June 9, 2023

Elon Musk provided an estimate on Tesla’s potential peak margin after reaching full autonomy with Full Self-Driving (FSD).

During the Q&A portion of the 2023 Annual Shareholders’ Meeting, Musk was asked to estimate Tesla’s projected peak margin in its automotive and energy business. Musk emphasized that the question was in highly speculative territory but did provide a potential estimate. 

“…obviously if you’ve got a car that costs the same and has, say—I don’t know—a 20 or 25% margin, and suddenly is able to be used five times as much then you might have 80% margins and the revenue would increase several folds,” estimated Musk. “That’s why I say it’s probably going to be the biggest asset value step change in [the] history of Earth.”

Musk’s 80% peak margin was an estimate for Tesla’s automotive side only. He estimated that Tesla Energy’s peak margins would be around 20-25%, up to 30%. 

Elon Musk and Tesla believe that the key to achieving such high margins in the auto business is Full Self-Driving (FSD). Musk explained that FSD would increase the usability of a vehicle, increasing its value. The same can not be said for energy products, which is why Musk estimated that the energy business’ peak margin would probably reach up to 30%

Elon Musk and Tesla have teased the development of a robotaxi fleet for a few years but are closer now than ever to bringing it into reality. The company’s robotaxi business would allow Tesla owners to add their FSD-equipped vehicles to the fleet anytime, providing them an additional income stream. With FSD, the cars would function like any other rideshare service–albeit without a driver. 

Full Self-Driving is still being developed but has significantly improved over the years. Beta testers have reported taking FSD drives with very little to zero interventions, showing the software’s capabilities. Tesla recently started rolling out v.11.4.1 to customers. FSD version 12 is expected to be fully AI from video to control out. 

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Elon Musk provides Tesla’s peak margin estimates after reaching full autonomy