Elon Musk’s Boldest Prediction Yet

Tesla’s new invention is set to disrupt the global workforce economy...

Posted January 31, 2022

Dear Outsider,

Elon Musk’s made some bold predictions over the years, most of which haven’t come true.

He’s made a name for himself as the boy who cried wolf.

In 2017, he launched Neuralink, a company that creates brain implants to help repair and reverse severe brain and spinal cord injuries. Musk predicted the brain microchips would be widely available by 2021. But the company’s not even close to mass-producing the technology. It’s already 2022 and experts are expressing concern over human trials. It’s a bold idea, but it remains to be seen whether this tech will ever be available in the future.

We’ll give him a pass on that one since he’s not a brain surgeon. But cars? Now that’s something Musk should know about.

In 2019, Musk marketed his Tesla Cybertruck as having bulletproof glass. According to the company’s website, the patented Tesla Armored Glass is an “ultra-strong glass and polymer-layered composite [that] can absorb and redirect impact force for improved performance and damage tolerance.” At the big reveal of the truck in 2019, things didn’t go as planned when an employee tested the rigidity of the glass by throwing a heavy steel ball at it... twice for good measure.

cyber

Back to the drawing board for Musk. After all, there’s no such thing as true bulletproof glass. As for the internals of Teslas, you’d at least expect the electronics to be top-of-the-line... but you’d be mistaken.

Most infamously, Musk predicted that by 2019, the world would have self-driving cars on the road that would be so sophisticated that the driver could sleep while letting the car do its thing. He also said Tesla would have one million autonomous “robotaxis” on the road in 2020. But on August 16, 2021, the National Highway Traffic Safety Administration (NHTSA) opened a formal investigation into Tesla’s autopilot system. The NHTSA has identified 12 crashes linked to the flawed system so far. Needless to say, you don’t want to get caught sleeping behind the wheel of a Tesla.

But Musk’s a businessman, an entrepreneur... so he should be able to predict forward revenues for his own company, right? Unfortunately, that hasn’t been the case either.

In a 2015 investor conference call, Musk claimed Tesla would overtake Apple’s market cap:

If you take this year’s revenue, around $6 billion or thereabout, and if we’re able to maintain a 50% growth rate for 10 years and achieve a 10% profitability number and have a 20 price-to-earnings ratio, our market cap would be the same as Apple’s is today.

As of this writing, Tesla’s market cap sits at roughly $850 billion, while Apple’s is more than $2.6 trillion. Tesla’s got some more work to do to...

musk 2

In fact, Tesla only just began operating in the black. Up until July 2021, the company wasn’t even selling enough cars to turn a profit.

You see, the state of California requires automakers to sell a certain percentage of zero-emission vehicles. If they don’t meet that quota, they have to buy regulatory credits from an automaker that does, e.g., Tesla. In 2020, Tesla received $1.6 billion in credits with a net income of just $721 million, meaning it would have lost money had it not been for those credits.

But not all of Musk’s predictions are moonshots. He did disrupt the entire automotive industry, after all.

By now, you’ve surely noticed a pattern from the richest man in the world. Make bold predictions, throw ideas out there, and see what happens. And with a net worth of nearly $250 billion, he can afford to get away with it. He’s able to create hype around a new technology as well, something I call the “Musk effect.”

And this year, he’s making his boldest prediction yet. Musk is taking a step back from car manufacturing and focusing on something he calls his “most important product,” which he believes will streamline not only Tesla’s business but the world economy as a whole.

This is something we need to pay attention to...

Tesla's Most Important Product

Musk’s latest prediction is that robots will soon be a part of our everyday lives. But not just any robots...

In Tesla’s fourth-quarter earnings call, Musk said the company’s developing a “humanoid robot.”

Here’s what he said in the meeting:

So, in terms of priority of products, I think actually the most important product development we’re doing this year is actually the Optimus humanoid robot. This, I think, has the potential to be more significant than the vehicle business over time. If you think about the economy... the foundation of the economy is labor. Capital equipment is distilled labor. So what happens if you don’t actually have a labor shortage? I’m not sure what an economy even means at that point. That’s what Optimus is about. So very important.

It looks like Musk’s going all-in on this.

Believe it or not, the company’s delaying production of its Cybertruck, Semi electric truck, and sporty Roadster until at least 2023 so it can bring this robot to life. That’s just one year!

So if you thought this kind of technology wasn’t coming for years down the road, think again. Musk plans to test the Optimus bot at Tesla factories to move parts around.

It’s exciting but also a bit terrifying. Take a look...

bot

I wouldn’t want to be alone in a room with that thing...

But it’s a powerful idea, one that could reshape our entire economy. It’s why Musk is working so hard on its development.

Senior reporter James Vincent from the Verge brings up a good point in that these sorts of comments from Musk froth up Tesla-friendly headlines while obscuring the fact that the cars it produces to make money are struggling to make it out of the factory.

Not to mention the entire EV market is on shaky ground right now for a couple of important reasons. First, microchip shortages have stalled the production of new vehicles. And second, the cost of lithium — one of the primary metals used in EV batteries — has skyrocketed, up 400% in the last year. Musk is most likely waiting for the price of lithium to cool off before producing more ambitious vehicles. In the meantime, he’ll refine his Optimus robot and hype up that sector of the economy.

The New Workforce

Like it or not, the robot economy is here, and it’s growing fast.

Musk is betting that artificial intelligence (AI) and robots are the future, albeit a scary one if we’re not careful, saying, “AI will be the best or worst thing ever for humanity.”

But don’t worry, because a robot workforce won’t replace humans yet. It remains to be seen whether AI will be sophisticated enough to overtake us.

Until then, robots will work alongside humans to make our jobs easier. In many industries, it's already happening.

So even though Musk’s latest robot prediction seems far-fetched, it might actually come true... and sooner than we originally thought.

Now, we already know the big money’s been made on Tesla stock, so it’s not worth buying it as a bet on the robot workforce.

That's why today, our senior tech analyst Keith Kohl wants to share with you his three best stocks to play the burgeoning robot industry.

As automation reshapes our economy this year, you can position yourself before the trend really takes off.

Stay free.

Stay free,

Alexander Boulden
Editor, Outsider Club

After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. Check out his editor's page here.

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