In a recent analysis, esteemed Goldman analyst Mark Delaney has projected that Tesla’s Full Self-Driving (FSD) suite may potentially yield billions of dollars in annual revenue by the close of this decade. This assessment comes on the heels of Tesla’s stock (NASDAQ: TSLA) enjoying a remarkable week, having surged by nearly 14 percent in the past five trading days.
Despite a remarkable 912 percent surge in Tesla’s stock over the past five years, unwavering enthusiasts and steadfast believers in Elon Musk’s vision remain resolute in holding onto their shares. Their confidence is rooted in the expectation of monumental growth on the horizon, driven by various factors, including the expansion of electric vehicle (EV) sales, the imminent introduction of an affordable $25,000 EV into multiple markets, and the monetization of FSD through licensing. Furthermore, the revenue stemming from Tesla EV buyers opting to include the FSD suite in their purchases contributes to this anticipated growth.
Tesla is already eyeing its next Gigafactory location, with several highly attractive candidates under consideration. While production scale-up is a given, the true catalyst for exponential growth could lie within the FSD suite, a technology poised to revolutionize passenger transportation. Beyond merely ferrying passengers to their destinations autonomously, FSD has the potential to transform privately-owned cars into revenue-generating “Robotaxis,” enabling car owners to capitalize on a ridesharing service that operates even while they sleep.
Mark Delaney succinctly underscores the financial implications of FSD on Tesla’s balance sheet by the end of this decade, emphasizing the role of software-related revenue in this trajectory:
“We believe that Tesla’s software-related revenue could be tens of billions of dollars per year by 2030 (mostly from FSD). These scenarios suggest that in an upside case FSD could account for tens of billions of revenue per year (and more if we consider licensing of Dojo or selling FSD to other OEMs).”Mark Delaney, Goldman Analyst
In addition to its core automotive and energy divisions, Tesla’s potential move toward selling or licensing its FSD software positions it as a formidable software company. This development underscores the growing importance of FSD and its data management capabilities.
On the upper end of the spectrum, Tesla could feasibly attain $625 billion in annual revenue from a synergy of vehicles, software, energy, and services, with a more conservative estimate pegged at $315 billion. Delaney’s revenue breakdown delineates a substantial portion attributed to auto sales, followed by services, energy, software, and robotics.
Nevertheless, it’s important to acknowledge that Tesla faces certain challenges on its path to realizing these ambitious revenue projections. These include the prospect of steeper price reductions over the coming years, which could exert pressure on margins and overall profitability. Additionally, potential product delays, including those related to FSD development, might impact the achievement of these revenue milestones.
As Tesla continues to steer the automotive industry into the future, the environmental benefits of driverless cars are poised to become an integral part of the discussion, further fueling the company’s growth prospects.