Advice shared by Tesla Inc (NASDAQ: TSLA) CEO on Tuesday could help illustrate exactly how big of an opportunity the electric vehicle company has to expand into other verticals and how tough it is to value the company as a vehicle maker.
What Happened: Tesla CEO Elon Musk took to Twitter Inc (NYSE: TWTR) Tuesday to share advice with his over 98 million followers.
“Don’t build moat, build tech trees,” Musk tweeted.
Don’t build moats, build tech trees
— Elon Musk (@elonmusk) June 14, 2022
Tesla influencer and frequent poster Sawyer Merritt took the opportunity to share a document that highlights the many areas that Tesla currently operates in or could in the future.
The document prompted a response from Musk.
“The Tesla tech tree is insane,” Musk said in response.
Why It’s Important: The document from Merritt breaks down the Tesla company into different areas, each representing massive market opportunities. The large segments are:
Each category also is broken down into several smaller segments. For example, the hardware and software segment lists items like Appstore, chips, autopilot, FSD, insurance, robotaxis and Tesla Bot. Many of the items are given a market size potential by the year 2025.
Among the largest segments from Merritt are automotive worth $500 billion, chips and FSD worth $1 trillion, insurance worth $500 billion, energy worth $500 billion and batteries worth $500 billion.
Robotaxis are listed with a market size of $2 trillion. Robotaxis have been one of the biggest future catalysts for Tesla called out by Ark Invest CEO Cathie Wood and among the reasons why Tesla is one of the largest holdings in Ark Innovation (ARCA:ARKK) and Ark Next Generation Internet ETF (ARCA:ARKW).
In total, the segments listed by Merritt have a market size opportunity of $5.5 trillion.
While Tesla might not dominate each industry it is in, the breakdown of its areas of operation, which could grow over time, shows that Tesla is much more than a vehicle manufacturer, making it hard to assign valuation metrics to the company.
