Elon Musk Says One Thing May Make or Break Tesla

Seven companies are behind the rise of Wall Street this year. 

Experts have dubbed them the formidable seven. 

These are Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Tesla. Speaking of Tesla, the electric vehicle maker's stock is up nearly 112% this year, translating into a market value increase of $436 billion. 

The market capitalization of the company led by Elon Musk is nearly $826 billion at last check. Tesla is once again approaching the symbolic threshold of $1 trillion in market capitalization, which it first reached in October 2021, before falling back.

No other automaker is close. Toyota has a market value of nearly $224 billion, while Volkswagen has a market capitalization close to $80 billion. Ford' market value is $58 billion and General Motors' is $53 billion.

Autonomous Cars

The colossal gap between the automotive disruptor and the legacy carmakers, who sell millions more vehicles a year, is due to the fact, experts say, that Tesla is seen more as a tech company than just a vehicle manufacturer. This has just been confirmed by Musk, the Techno King, whose mere presence at the head of the group reassures investors betting on Tesla  (TSLA) - Get Free Report.

According to the billionaire, the market value and stock market future of Tesla depend on the ability of the group to develop autonomous vehicles. Basically, investors are convinced that the Austin, Texas-based automaker will do what no other automaker has done so far: sell self-driving cars.

"Valuations are a strange thing,” Musk told Antoine Arnault, the son of french tycoon Bernard Arnault, at the Paris Viva Tech innovation conference on Jun. 16. "Sometimes I’ve said, 'Hey, I think the stock price is too high at Tesla,’ and then the stock price goes up. I’m like, 'okay.’”

Arnault had mentioned in the conversation with Musk the staggering market value of Tesla.

"Really the value of the company is primarily on the basis of autonomy,” Musk said. "That's really, I think, the main driver of our value."

Musk explained that, for example, "if you look at our total vehicle output, it’s almost 2 million vehicles this year or something like that. But that’s still only 2% of total vehicle production.”

"The potential for autonomy is that the value of autonomy is so high, that even if you have a discount, a percentage probability of autonomy happening, that is so incredibly valuable,” he argued.

Last year, Tesla produced 1.37 million vehicles and delivered 1.31 million units.

"Although I've said this before, I think we will solve autonomy soon," the serial entrepreneur said.

Musk's Promises

Musk thus confirms comments he made last month during an interview with CNBC in which he hinted that Tesla cars could be fully autonomous as early as this year.

"Tesla will have sort of a ChatGPT moment, maybe if not this year, I'd say no later than next year," the tech mogul asserted, referring to the conversational chatbot that has become the face of the progress made by artificial intelligence. "Three million cars will drive themselves with no one. And then 5 million cars and then 10 million cars.

The billionaire entrepreneur, whose ambition is to turn the car into a living room on four wheels, thinks that Tesla has a weapon that no competitor can match. That weapon is Full Self Driving (FSD), Tesla's advanced driver assistance system.

FSD is a $15,000 feature in North America and a major source of revenue for Tesla.

In addition to capabilities like assisting the car with steering, accelerating and emergency braking to avoid other vehicles and pedestrians within its lane, collision warning and blind-spot monitoring offered by the classic driver assistance systems Autopilot and Enhanced Autopilot, FSD, for instance, identifies stop signs and traffic lights and automatically slows the car to a stop on approach, Tesla says.

But the advanced feature doesn't make Tesla cars autonomous. 

FSD, which is under investigation by U.S. regulators for its involvement in numerous incidents, "require[s] active driver supervision and do[es] not make the vehicle autonomous," the automaker warns. "Full autonomy will be dependent on achieving reliability far in excess of human drivers, as demonstrated by billions of miles of experience, as well as regulatory approval, which may take longer in some jurisdictions."

Musk's critics will say that this isn't the first time he's made the promise of self-driving Teslas.

In 2016, he promised that we'll have driverless Tesla vehicles.