To The Moon

$Tesla Motors(TSLA)$ IV has dropped to its 52-week low—what does that mean? Has the market’s former focal point started to fade?

Not really. More likely, everyone is fixated on the April Robotaxi milestone. What we’re seeing now is just a temporary IV dip.

We should probably start getting some updates on Robotaxi soon. The flywheel here isn’t actually that complicated: every mile of unsupervised driving data strengthens the FSD model; a stronger model increases FSD adoption among individual users; higher adoption then feeds back into vehicle sales and cash flow. It’s a closed loop. Self-reinforcing. Everything evolves, and eventually returns to its origin.

The issue has never been the logic—it’s execution.

Austin is now the real unsupervised testing ground. In California, regulators still require a safety driver in the front seat, so those few hundred vehicles in the Bay Area are basically just for show. Austin is the real lab. Morgan Stanley estimates the fleet could reach 1,500 vehicles by year-end, with seven new cities launching in 1H26.

Interestingly, Tesla is deliberately slowing down the rollout pace in Austin. The goal is to fully validate the methodology so that, in future cities, the transition from supervised to unsupervised driving can be significantly compressed. Austin took about six months; subsequent cities should be faster.

The biggest technical bottleneck right now is pickup and drop-off. These edge cases aren’t well-covered by existing FSD mileage data—they’re essentially a blind spot. But based on Tesla’s latest commentary, this issue is being addressed.

Beyond that, the real moat in Tesla’s story is its cost structure—arguably the strongest one.

A Model Y operating as a robotaxi has an all-in cost of about $0.81 per mile, compared to $1.43 for Waymo and $1.71 for traditional ride-hailing. Once Cybercab reaches scale production, Tesla is targeting $0.37 per mile by 2035, with a long-term goal of $0.30.

This gap isn’t driven by algorithms—it’s the result of full-stack vertical integration: vehicle manufacturing, charging, insurance, maintenance, refurbishment, all in-house. Waymo can’t replicate this because it doesn’t build cars. Traditional ride-hailing platforms are even further behind—they don’t even own the vehicles.

Cybercab’s manufacturing approach is a story in itself. It uses a modular, unboxed architecture, with five modules assembled in parallel. The outer panels are fully plastic, with color infused directly into the material—eliminating the need for a paint shop entirely. Factory footprint is dramatically reduced. This is essentially redefining how cars are built.

On the energy side, growth is real, but margins will face near-term pressure—lagged tariff impacts and pricing competition. Long-term gross margin targets remain in the mid-20% range. The supply chain is also shifting away from China, with agreements already signed with LG. Solar manufacturing is a potential upside (100GW could generate $25 billion in revenue), but it’s still too early to call—very much speculative at this stage.

As for Optimus, I remain cautious.

And I suspect many investors feel the same.

The Gen 3 release may slip to 2Q26, with SOP targeted for 2H26. But even at scale production, the robots coming off the line in 2026 will likely have very limited functionality. The company itself has suggested building an “Optimus Academy” to continuously collect data and train the model. Most of the added compute in Cortex 2 is being allocated to Optimus training. Musk has also mentioned working on a “Digital Optimus” on X—essentially a scheduling and orchestration system managing both Optimus and Cybercab.

It all sounds impressive. But there’s still a long way to go before it generates real economic value. It doesn’t justify much valuation today.

On cash flow, there’s a reality to acknowledge: 2026 capex is expected to exceed $20 billion, with Morgan Stanley estimating around $8 billion in negative free cash flow for the year. The cash burn is real.

That said, with $44 billion in cash on hand, there’s no near-term concern. Capex is expected to drop to $16 billion in 2027, and with a recovery in EV demand, Tesla could approach FCF breakeven. The key variables are fourfold: the scale of internal Optimus deployment (unit price $250k+), the pace of robotaxi expansion, compute demand for FSD and Optimus training, and total investment in chip manufacturing facilities (estimated at $35–45 billion).

If the auto business doesn’t recover by 2027, capital raising remains a possibility—and that risk needs to be priced in.

So April could bring the first domino to fall. Whether it falls upward or downward, what investors really want to see is how quickly new cities transition from supervised to unsupervised driving, and whether FSD attach rates show a meaningful inflection in 2H26.

Only when those data points come through does the story truly begin.

We ride through long journeys and mountain passes as if flying—but whether we truly make it across, this year will tell.

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