Coming to America

I’m off to Austin, Texas tomorrow for a variety of meetings… including a tour of a company that builds tech for small nuclear reactors (SMRs).

Then I’m heading to San Francisco for a private gathering of innovators and entrepreneurs. I plan to catch a ride in a self-driving car, too.

If you live nearby, reach out!

1. Tesla’s (TSLA) robotaxi is the coolest car I’ve ever seen.

The “Cybercab” has no steering wheel or pedals… doors that open upward like a Lamborghini… and its battery charges wirelessly.

It’s the world’s first truly driverless car, built to ferry passengers around without human intervention. Take a look at this manmade beauty. “I’m from the future, and I’m here to drive you.”

Source: WIRED

On stage at the launch party last week, Elon also teased Tesla’s robotaxi app. Think Uber (UBER), but for self-driving cars.

And he announced anyone will be able to buy a Cybercab for personal use and earn extra money renting it out.

My take: Great demo, but we’re at least two years away from it generating meaningful revenue for Tesla. But I still think Tesla’s stock surges higher over the next year.

2. Tesla’s ChatGPT moment is coming.

Nearly 1 million Tesla owners in North America already pay for its “full self-driving” (FSD) mode.

It costs $8,000 up front, or you can pay a subscription price of $99/month.

These folks are now driving roughly 15 million miles on FSD per day. Take your hands off the wheel, and the car drives itself.

This feature isn’t perfect, but it’s improving rapidly.

A friend who owns a Tesla told me the latest self-driving upgrade (V12) is a gamechanger. “I used the last version every now and then. With this upgrade, I use it every time I drive and don’t want another family car without it.”

Until recently, Tesla’s autopilot system ran on “human-coded rules.” Programmers told the car’s brain that when it sees a green light, it must drive. Unless there’s a pedestrian… or a cyclist… or a car blocking the road. You get the drift. It’s impossible to programmatically prepare for every real-life situation.

Tesla’s autopilot had tens of thousands of these rules, which degraded performance. The V12 update eliminated all human code. It now runs 100% on an artificial intelligence (AI) system, like ChatGPT.

V12 basically squeezed a whole decade’s worth of progress into a few months.

The tech is getting so good so fast, self-driving skeptics will be converted in the next year.

You don’t have to make wild predictions about how many Cybercabs Tesla will sell in the future to believe this is a multitrillion-dollar stock in the making.

Tesla is mastering self-driving tech. That’s the biggest reason its stock is going much higher.

3. Earlier this year, General Motors (GM), Ford (F), and others adopted Tesla’s charging standards for electric vehicles.

“Tesla’s chargers are so good, why bother trying to build our own?”

The same will happen with self-driving. It’s so far ahead of other automakers, they’ll have no choice but to license its tech. This will become a multibillion-dollar business for Tesla.

Did you know Teslas can be “updated” like an iPhone? Cars can download some computer code over the internet and instantly become better.

During Hurricane Irma, Tesla boosted the range of some Florida vehicles for drivers so they could escape. Impressive… and that was seven years ago!

It’s wild that your car can improve. Never been possible before.

4. Over 40,000 Americans were killed in car crashes last year.

Robotaxis have literal electronic eyes in the back of their heads… never break the speed limit… never drink and drive... and never send a text message. They should save tens of thousands of lives each year.

This is a trillion-dollar disruption nobody has fully grasped yet. It will reshape cities… real estate values… where we live… work… and send our kids to school.

While most big tech stocks are near all-time highs, Tesla is down 40% over the past three years. I’m calling an end to the underperformance.

Over the next year, it’ll become clear Tesla is the leader in “physical” AI. In other words, AI-powered self-driving cars and robots that can reinvent American factories.

It can become a $10 trillion company by 2030.

Sounds crazy… but so did the idea of Nvidia (NVDA) becoming the world’s largest company a few short months ago.

5. Today’s dose of optimism…

Flying is 39 times safer than it was 50 years ago.

Technological innovations like autopilot have transformed airlines into (very safe) air buses. Did you know on-board AI now helps planes fly around turbulent air?

A new study by MIT researchers found the risk of dying from flying is now 1 per every 13.7 million passengers:

Source: Our World in Data

Score another one for innovators who make all our lives better and safer.

Are you a member of the Rational Optimist Society yet? I hope so.

Go here to join if you’re not. You might be our 10,000^th member!

Stephen McBride
Chief Analyst, RiskHedge

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