Elon Musk has never been one to shy away from outlandish bets on his company’s products. After all, it is this hyped-up persona that allows Tesla to trade at around a 10x premium to its peers. Now, it seems that the CEO of Tesla is endorsing wildly exaggerated views about the newly revealed Optimus robot, trying to create a social media phenomenon around what otherwise has been largely panned by experts as an underwhelming AI Day presentation. As a refresher, Tesla held its much-anticipated AI Day event on the 30th of September, providing iterative updates on the company’s ongoing improvements to its Autopilot ADAS and the enhanced Full Self-Driving (FSD) functionality, as well as the ongoing work on the Dojo supercomputer, which the company uses to train its Autopilot neural network by feeding visual clips captured by millions of Tesla vehicles already on the road. However, Tesla’s Optimus robot was inarguably the star attraction of the AI Day 2022 event. The bi-pedal robot is intended to closely resemble human physiology, eventually allowing the automaton to perform menial, repetitive tasks at scale and with efficiency. In order to lower the cost, Tesla is utilizing synergies from its EV business by incorporating the battery pack, cooling system, etc. Tesla aims to start retailing these robots at around $20,000 in 3 to 5 years. Readers should note that we had praised Tesla for partially realizing its vision of the Optimus robot in under a year, with the company going from a spandex-clad person dancing on stage last year to a functional, self-mobile robot. At the current pace of development, Tesla has a fair shot of commercializing this tech by the end of the decade. This is all the more striking given the lack of viable competition in this field. Honda has already discontinued its Asimo robot. Boston Dynamics’ Atlas robot is the only other major competitor to Optimus, but the Hyundai-owned company has yet to provide an update to Atlas’ commercialization ramp. Meanwhile, Boston Dynamics continues to retail its Spot robot for $74,500, but that’s not a bi-pedal machine.
Tesla’s Optimus Robot Has a $40 Trillion Market Opportunity?
— Rick Bomstein (@BomsteinRick) October 5, 2022 The Twitter account @Gfliche tweeted out a few insane numbers based on a back-of-the-envelope calculation, computing a $40 trillion Total Addressable Market (TAM) for Tesla’s robot based on a projected retail price of $50,000 and 800 million in sales – roughly equating to 1 Optimus robot for every 10 humans on the planet. Normally, this would have been ignored as the musings of a wildly excited Tesla fan. However, Elon Musk then tweeted “good analysis” in reply to the video posted by @Gfliche, effectively endorsing those views. Readers should note that @Gfliche’s Twitter account has been suspended. Consequently, Elon Musk’s endorsement is no longer publicly visible. However, a few Twitter users did manage to capture a screenshot of this exchange.
— Gordon Johnson (@GordonJohnson19) October 5, 2022 So, is this analysis even remotely feasible? As of 2011, just 7 percent of the global population was considered to be part of high-income countries, defined as ones where the annual average income was over $50 per day or $18,250 per year. This simple analysis immediately negates a TAM of 10 percent of the global population for the Optimus robot. Moreover, in many cases, including warehouses and production lines, a bi-pedal robot is not very efficient as it is encumbered by human physiology aspects. This further limits the TAM for Tesla’s Optimus. Is there a place for Tesla’s Optimus in the grand scheme of things? Certainly. Does it constitute a $40 trillion market opportunity? Most probably, no.
