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We Study Billionaires - The Investor’s Podcast Network

TIP761: Tesla Stock Deep Dive w/ Clay Finck

Published October 17, 2025
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About This Episode

Host Clay Finck delivers a solo deep dive on Tesla, examining its evolution from a misunderstood EV startup into a trillion‑dollar company and a potential AI, robotics, and energy powerhouse. He covers disruptive innovation, Elon Musk's leadership and controversial compensation plan, Tesla's automotive and energy businesses, emerging bets like Optimus and robo‑taxis, intensifying global competition (especially from BYD), and both the bullish optionality and key bear risks around execution, governance, and valuation.

Topics Covered

Investing Stock market valuation Autonomous vehicles Renewable energy and decarbonization Artificial intelligence Automation Innovation strategy U.S.-China competition Risk and uncertainty

Disclaimer: We provide independent summaries of podcasts and are not affiliated with or endorsed in any way by any podcast or creator. All podcast names and content are the property of their respective owners. The views and opinions expressed within the podcasts belong solely to the original hosts and guests and do not reflect the views or positions of Summapod.

Quick Takeaways

  • Tesla exemplifies disruptive innovation and exponential growth, moving from zero revenue in 2004 to nearly $100 billion in 2024 while reshaping expectations for EVs, energy, and autonomy.
  • Elon Musk's leadership is central to Tesla's story, with a new proposed 10‑year compensation plan tied to extremely aggressive milestones like an $8 trillion market cap, 20 million vehicles delivered annually, and large-scale robo‑taxi and humanoid robot production.
  • Tesla's core auto business benefits from vertical integration and a direct‑to‑consumer model but now faces slowing growth, margin pressure, and fierce competition from legacy automakers and especially BYD in China and other global markets.
  • The company is increasingly positioning itself as an AI, robotics, and automation leader through its Master Plan Part 4, Optimus humanoid robot, and robo‑taxi ambitions, which bulls see as major future value drivers.
  • Tesla's growing energy generation and storage segment has compounded rapidly since 2020 and now carries higher gross margins than the auto segment, with Musk suggesting it could rival auto revenue over time.
  • Robo‑taxis and full self‑driving could massively disrupt mobility economics if regulators approve and the technology matures, but Tesla currently lags Waymo in autonomy levels and faces serious regulatory and competitive hurdles.
  • Clay emphasizes the importance of optionality and an innovative culture when investing in companies like Tesla, contrasting it with mature firms such as Coca‑Cola and Walmart that are unlikely to transform in similar ways.
  • The bear case hinges on Tesla missing its extremely ambitious targets and investors overpaying for a "story stock," compounded by competition, governance concerns, and Musk's long history of overpromising timelines.
  • Tesla's history illustrates the concept of "capacity to suffer"-its survival and growth required Musk to endure repeated crises, extreme work, and near‑death moments for the company.
  • Clay argues that the truth about Tesla likely lies between extreme bull and bear narratives, and that wide ranges of possible outcomes make intrinsic value modeling unusually difficult.

Podcast Notes

Introduction, disruptive innovation, and Tesla as a case study

Framing Tesla's extraordinary performance and ambition

Tesla's stock and Elon Musk's net worth milestones[0:25]
• Since its 2010 IPO, Tesla shares compounded at 47% per year, turning a $10,000 investment into over $3.6 million.
• As Clay prepared the episode, Elon Musk became the first person in history to cross a net worth of $500 billion.
Tesla as more than a car company[0:35]
• Clay describes Tesla as rebuilding the entire automotive stack from the ground up with software-driven vehicles, vertical integration, and a global charging infrastructure.
• Musk's vision extends beyond cars into a broader clean energy ecosystem via solar and battery storage, robo‑taxis, and the Optimus robotics project.
• All of Tesla's efforts are tied back to its mission to accelerate the world's transition to sustainable energy.
Episode scope and goals[1:13]
• Clay plans to break down Tesla's evolution from niche startup to trillion‑dollar powerhouse, discuss its competitive advantages and risks, and explore its energy and AI ambitions.
• He also wants to explain why he believes Elon Musk is one of the most fascinating CEOs of this generation.

Disruptive innovation and exponential thinking

Clay introduces himself and sets up Tesla as a disruptive company

Show introduction and host identity[2:04]
• Clay welcomes listeners to The Investor's Podcast and introduces himself as host Clay Fink.
Why start with disruptive innovation[2:15]
• He says Tesla is a company where disruptive innovation is "the name of the game," so he starts by explaining that concept.

How disruptive companies are perceived early on

Misunderstanding and skepticism[2:26]
• Clay notes disruptive companies almost always start out misunderstood and face skepticism because they don't fit traditional mental models of investors, analysts, or competitors.
• Markets try to evaluate them using traditional metrics and frameworks, but disruption does not follow those rules.
Gap between perception and reality[2:44]
• The mismatch between how disruptive firms are perceived and their actual trajectory creates a long runway of doubt before the reality becomes clear.
• By the time the shift is obvious to most investors, Clay argues it is usually too late to invest and earn outsized returns.

Max Planck quote and paradigm shifts

Science advances one funeral at a time[3:17]
• Clay cites Max Planck's idea that new scientific truths win not by convincing opponents, but because opponents die and a new generation grows up familiar with them.
• He gives the simplified version: "science advances one funeral at a time."
Parallel to business and investing[3:23]
• Clay says this principle also applies to business and investing, where paradigm shifts are rarely embraced by incumbents or the majority of investors at first.
• New ideas look fragile, incomplete, or impractical because they lack scale and proof points, but that's why the payoff can be so large for early recognizers.

Tesla's early years as an illustrative example

What skeptics focused on[3:50]
• For years, skeptics focused on Tesla's quarterly losses, production challenges, missed deadlines, and compared it narrowly to traditional car makers.
• Clay argues this missed the bigger picture that Tesla was rebuilding the entire automotive and energy stack.
Rebuilding the stack with a different model[4:08]
• He reiterates Tesla's software-driven vehicles, vertically integrated manufacturing, global charging infrastructure, and renewable energy focus.
• He notes that in hindsight the disruption is easier to see, but in real time it looks messy and uncertain.

Linear vs exponential thinking

Humans' linear bias[4:31]
• Clay says humans naturally think linearly-expecting the future to be a straight line that's just a bit faster, better, or cheaper.
• Disruptive innovations follow exponential curves, where early progress is slow and invisible, then suddenly takes off and surprises people.
Examples: internet and smartphones[4:53]
• He cites the growth of the internet and smartphones, pointing out that early smartphones were seen as toys before becoming essential.
Investor underestimation of disruption[5:07]
• Clay argues investors overweight short‑term noise and underweight compounding effects over a decade or more.
• By the time exponential growth shows up clearly in data, markets have repriced and early investors have already captured the biggest gains.

Tesla's revenue growth and battery cost declines

Tesla's revenue trajectory[5:31]
• In 2004 Tesla had $0 in revenue, in 2014 about $3 billion, and by 2024 nearly $100 billion.
• Clay says in 2014 an analyst predicting $100 billion of revenue in ten years would have seemed unrealistic.
Battery cost declines and their impact[6:06]
• He explains that batteries were a major input cost and 15 years ago many would have judged an EV company at scale as uneconomic due to high battery costs.
• From 2008 to 2023, battery costs declined by 90%, a change that would have seemed absurd to linear thinkers.
• This cost reduction transformed EVs from a niche luxury product into a mass‑market competitor and enables more affordable models and wider adoption.

Elon Musk's personality, leadership, and compensation

Munger's view of Musk and Tesla's controversial history

Charlie Munger's quote on Musk[7:05]
• Clay quotes Charlie Munger: "Never underestimate the man who overestimates himself," said about Elon Musk.
• He notes overconfidence is usually seen as a weakness, but Munger is highlighting that it can drive people to attempt and sometimes achieve the seemingly impossible.
Parallels to Steve Jobs and world‑changing founders[7:49]
• Clay invokes Steve Jobs' quote: "The people who are crazy enough to think they can change the world are the ones who do."
• He frames Tesla as an example of world‑changing ambition similar to that spirit.

Current Tesla initiatives and persistent skepticism

Recent strategic moves and projects[8:04]
• Clay notes Tesla recently released Master Plan Part 4, proposed a new compensation package for Musk, and is pushing projects like RoboTaxi, Optimus, and full self‑driving.
Past disbelief and Tesla's rise[8:01]
• For years few believed in Tesla; auto incumbents laughed off an upstart EV maker, Wall Street predicted bankruptcy, and legacy automakers dismissed EVs as a niche fad.
• Despite this, Tesla grew from a startup with one sports car into the most valuable carmaker in the world, with a market cap well over a trillion dollars at the time of Clay's recording.
Tesla as a polarizing investment today[8:01]
• Clay says Tesla remains highly polarizing: believers think it will dominate the EV era; skeptics point to competition, regulation, and Musk's unpredictability as threats.
• He highlights Chinese automakers like BYD as perhaps the most pressing competitive challenge, especially with lower‑cost EVs.
• The enduring question is whether Tesla can continue proving doubters wrong or if it has already peaked.

Clay's personal investing history with Tesla and the idea of optionality

Clay's early investment and sale[9:01]
• Clay bought Tesla shares around 2015-2016 early in his investing journey, held for 9-12 months, then sold due to valuation concerns and stagnant stock performance.
• He had read Ashley Vance's Musk biography in college and admits he was a bit of a fan, which influenced his decision to buy.
• He notes Tesla went on to compound revenues at nearly 40% annually in the decade after, which he didn't foresee.
Anecdote about Tesla's growing ubiquity[11:00]
• In 2017 he was amazed to see a bright red Model S in Omaha; now he often can't drive anywhere without passing a Tesla, underscoring how quickly they became commonplace.
Tesla's evolution and new AI framing[11:22]
• He recalls that 10 years ago discussions centered on how many people would want a Tesla, what models they'd sell, and the value of vehicle data-with little mention of AI.
• In the most recent quarterly report, Tesla described Q2 2025 as a seminal point marking a transition from leading EV and renewable energy industries to also becoming a leader in AI, robotics, and related services.

Optionality and innovative culture as key sources of value

Brian Feroldi's concept of optionality[11:52]
• Clay references Brian Feroldi's discussion of optionality: big stock market winners often create unexpected new growth avenues.
• He says an innovative culture that constantly reimagines the future is essential for that kind of optionality.
Contrast with mature companies[12:22]
• He contrasts Tesla with large mature businesses like Coca‑Cola and Walmart, which are unlikely to transform in similar ways.

Tesla's stated priorities going forward

Three main strategic priorities[12:36]
• Clay says Tesla's priorities are: delivering affordable autonomy‑capable models and maximizing their global fleet via rapidly improving software; growing the energy business; and advancing robotics.

Tesla's origins, Musk's stake, and unprecedented compensation plan

Founding history and Musk's role and ownership

Founders and early years[12:56]
• Tesla Motors (now Tesla) was founded by Martin Eberhard and Mark Tarpenning as an electric car company.
• Tesla unveiled its first car, the Roadster, in 2006 and went public in 2010, raising around $226 million.
Musk's entry, CEO role, and equity stake[13:06]
• Elon Musk became a key investor in 2004 and became CEO in October 2008 during the financial crisis; he still serves as CEO.
• Musk owns over 700 million Tesla shares, nearly a 20% stake, making him the largest shareholder with shares worth over $300 billion at the time of recording.

New 10‑year performance compensation proposal

Outline of the proposed plan[14:07]
• Tesla's board proposed a 10‑year performance compensation plan for Musk that could be worth up to $1 trillion in stock if very aggressive milestones are met.
• The proposal will be voted on by shareholders at Tesla's annual meeting later in the year.
Company's rationale and language[14:23]
• Clay quotes an SEC filing stating the company believes Elon's singular vision is vital for navigating a critical inflection point.
• The filing emphasizes the importance of retaining and incentivizing Elon as fundamental to Tesla achieving its goals and becoming the most valuable company in history.

Aggressive performance targets and scale of the grant

Key milestones tied to compensation[15:13]
• Tesla's valuation would need to rise from about $1 trillion to more than $8 trillion.
• Targets include delivering 20 million vehicles, producing 1 million self‑driving robo‑taxis, and manufacturing 1 million Optimus humanoid robots.
Magnitude of the equity grant[15:38]
• The plan would grant Musk over 423 million additional Tesla shares, raising his control to around 25%.
• Clay emphasizes that $1 trillion in potential compensation over 10 years is orders of magnitude larger than prior U.S. CEO pay plans.

Context: prior pay package, lawsuit, and board perspective

2018 pay package and legal pushback[15:58]
• In 2018, investors sued over Musk's $56 billion pay package, alleging breaches of fiduciary duty by him and the board.
• Clay notes that in August, Tesla stated they would grant Musk shares totaling around $29 billion under the prior plan.
Board's stated motives for the new plan[16:32]
• Clay explains the board is trying both to keep Elon engaged for another decade and to focus his attention on Tesla despite his many projects.
• He cites the board's belief that retaining and incentivizing Musk is essential to meeting Tesla's lofty goals.

Musk's role in Tesla's survival and board chair's praise

Near‑death experiences and Musk's sacrifices[16:56]
• Clay, referencing Walter Isaacson's biography, says Tesla almost died multiple times, and without Musk the company likely wouldn't exist in its current form.
• He notes Musk slept on factory floors and "willed" the company to survive and thrive.
Board chair Robin Denholm's statement[17:26]
• Clay quotes Denholm describing Musk as a once‑in‑a‑generation visionary who has created extraordinary growth and value several times.
• Denholm says the 2025 CEO Performance Award is structured so Elon receives zero compensation unless shareholders realize substantial value-"Elon only gets compensated if shareholders win and win big."

Growth slowdown, $8T target feasibility, and Musk's appetite for massive challenges

Recent growth slowdown[18:36]
• After rapid growth up to 2022, Tesla's sales from the U.S. and China are now only modestly higher, indicating slowing growth in major markets.
Implied profits needed for an $8 trillion market cap[18:52]
• Clay assumes a future P/E of 50 and calculates Tesla would need about $150 billion in operating profits to support an $8 trillion valuation.
• He notes Tesla currently generates just under $100 billion in revenue, so reaching that level of profit is an extraordinarily tall task.
Musk's tendency to seek more projects when comfortable[19:34]
• From Isaacson's biography, Clay took away that when Musk becomes comfortable, he takes on more projects than a rational person would assume they could handle.
• Clay views the enormous compensation plan as another example of Musk embracing huge, uncomfortable challenges.

Automotive business model, customer experience, and global competition

Core vehicle lineup and pricing

Model 3 and Model Y as revenue backbone[23:34]
• Clay states that vehicle sales remain Tesla's foundation, with most revenue coming from the Model 3 and Model Y.
• The Model 3 is a more affordable compact sedan starting around $42,000 before tax incentives; the Model Y is a compact SUV starting around $45,000.
• He notes the Model Y is one of the best‑selling vehicles in the world across all categories, not just EVs.
Other models: S, X, and Cybertruck[24:00]
• Tesla also sells the Model X premium SUV, Model S high‑end sedan, and the newly released Cybertruck (late 2023).
• Clay personally can't imagine himself driving a Cybertruck but sees it as proof Tesla still pushes engineering and design boundaries.

Tesla's differentiation vs traditional auto makers

Standing out in a "me too" industry[24:23]
• Clay characterizes U.S. automotive as full of manufacturers copying one another, while Tesla stands out with every vehicle it produces.
• He admires that Tesla questions conventional wisdom and refuses to accept the status quo.
Rumored sub‑$30,000 model and original master plan[25:00]
• There are rumors Tesla will launch a more affordable EV below $30,000, aligning with Musk's 2006 master plan.
• Musk's original plan: start with a high‑end sports car, roll profits into a more affordable luxury sedan, then ultimately into mass‑market vehicles to accelerate sustainable energy adoption.
• Clay sees the evolution from Roadster to S/X to 3/Y and Cybertruck as following that roadmap, and a sub‑$30k car would be a final step.

Price cuts, margins, and the scaled‑economy‑shared debate

Competing interpretations of Tesla's price decreases[25:55]
• Tesla has cut vehicle prices in recent years, and both bulls and bears claim these moves support their thesis.
• Bears see price cuts as evidence of rising competition, post‑COVID demand concerns, and Tesla using margin to maintain revenue growth.
• Bulls argue Tesla is executing a scaled‑economy‑shared model, passing cost savings from scale and vertical integration back to customers while maintaining sustainable margins.
Current margin pressures[26:55]
• Clay notes Tesla's gross profit margins are near their lowest level in the past decade, suggesting competition is indeed impacting results.

Vertical integration and dealership disruption

Vertical integration advantages[26:33]
• Tesla manufactures its own batteries at scale, designs its own software, and controls much of distribution and servicing, bypassing traditional dealerships.
• This integration helps Tesla maintain higher margins than most automakers and gives pricing flexibility.
Personal experience with Tesla's direct sales model[27:35]
• Clay recounts visiting a Tesla showroom in Kansas City in 2018 and test‑driving a Model S.
• He contrasts it with typical dealerships: no sales pressure, a minimalist Apple‑store‑like environment, and a focus on telling the company's broader story.
• He was struck by the premium feel of the seats, the intentional, modern interior design centered around a large touchscreen, and the quiet, instant torque during acceleration.
• He also tried Autopilot, including lane‑keeping and lane changes initiated by signaling, which felt slightly unnerving but impressive.
• Clay concludes that selling directly through showrooms enabled a differentiated customer experience that traditional dealerships would struggle to replicate.

Employee loyalty and Tesla's cultural "cult-like" feel

Encounter with a long‑time Tesla employee[31:26]
• While in Austin (where Tesla moved its headquarters), Clay met a family member of a Mastermind community member who has worked at Tesla for nine years.
• She told him she had never sold a Tesla share she bought and spoke highly of Elon and his vision.
• Clay infers that, alongside cult‑like enthusiasm among Tesla owners and shareholders, similar enthusiasm likely exists among some employees, especially after the stock's past performance.

Competitive landscape: U.S. legacy makers and BYD

Legacy automakers' EV push[32:04]
• U.S. legacy makers now treat EVs as core to their future, with commitments to end internal combustion engine production by 2035.
• Clay cites GM's EV versions of the Silverado and Blazer, Ford's F‑150 Lightning and Mustang Mach‑E, and Hyundai/Kia's sleek tech‑forward EV models.
• Tesla still dominates overall EV sales, but these competitors are chipping away with broader lineups and aggressive pricing; Tesla's U.S. EV share fell from over 70% in 2020 to around 40% now.
BYD as Tesla's key global rival[33:10]
• BYD has overtaken Tesla in EV sales in late 2023 and is also vertically integrated, producing batteries, chips, and other components in‑house.
• BYD's typical Chinese buyer pays around $10,000 or less for a vehicle, with upgraded versions costing $20,000-$35,000-still much cheaper than a typical U.S. Tesla purchase of $50,000-$70,000.
• BYD dominates battery EVs and plug‑in hybrids in China and is expanding aggressively into Europe, Latin America, and Southeast Asia, building factories in countries like Hungary and Brazil.
• The U.S. is relatively insulated because tariffs keep Chinese EVs like BYD out, and BYD shelved plans for a Mexico factory that could have served the U.S. market.
• Clay believes BYD will make it difficult for Tesla to expand in new global markets by undercutting on price and forcing Tesla to keep innovating to protect margins.
Breakdown of BYD's geographic revenue and relative scale[34:29]
• From a Mastermind presentation he mentions, around two‑thirds of BYD's sales are from China, 16% from Europe, and roughly 10% from the U.S.
• In 2020 Tesla's auto revenue was more than double BYD's; by 2024 BYD surpassed Tesla in auto revenue.
Why China allowed Tesla in[35:55]
• Clay asked Mastermind members why China banned many Western tech platforms but allowed Tesla; one theory was China wanted to learn how Tesla produced EVs at scale.
• He compares this to China allowing Apple to manufacture iPhones there, helping develop its local smartphone industry.

Elon's attitude toward competition

CNBC clip on competitors[36:15]
• Clay plays a clip where Musk tells CNBC he doesn't really think about competitors and instead focuses on making Tesla's product as perfect as possible.
• Musk says Tesla aims for "the platonic ideal of the perfect product," believing that focusing on that yields a compelling offering.

Challenges in U.S. EV adoption and charger network advantage

Headwinds for EV adoption in the U.S.[37:14]
• Clay notes U.S. EV adoption has decelerated due to higher EV prices and limited charging infrastructure, making long‑distance travel less convenient.
Tesla's supercharger network as an asset[37:41]
• Tesla built a nationwide Supercharger network early, giving drivers reliable access to fast charging.
• He says nearly every major EV brand is now adopting Tesla's charging standard, positioning it as the default backbone of U.S. EV infrastructure.

Master Plan Part 4 and Tesla's strategic shift to AI and automation

Overview of Master Plan Part 4 and vision of "sustainable abundance"

Timing and central thesis[38:25]
• Tesla released Master Plan Part 4 in September 2025, framing the next chapter as moving beyond sustainability toward "sustainable abundance."
• The idea is that constraints like energy, labor, and resources can be overcome through technological innovation.
AI and automation at the core[38:30]
• Tesla wants to merge its scale and manufacturing know‑how with AI and automation to build new products and services that reshape labor, mobility, and energy.
• In Tesla's own words, Clay quotes, they are "building the products and services that bring AI into the physical world."

Abundance vs zero‑sum thinking

Tesla's rejection of zero‑sum views[38:52]
• Clay explains Tesla rejects the idea that one company's gain must be another's loss, instead embracing the idea of nearly infinite growth through technological abundance.
Thought experiment on abundant food and subscriptions[39:08]
• He imagines a world where energy and labor costs are so low that food is cheap enough for grocery stores to offer subscription access where people can take as much as they'd like.
• Clay compares how crazy Netflix (unlimited movies for a low fixed price) would have sounded in 1990, using it as an analogy for today's seemingly impossible ideas.

Criticisms and philosophical nature of Master Plan Part 4

Lack of concrete operational detail[39:35]
• A notable criticism is that Master Plan Part 4 lacks concrete roadmaps, production targets, and timelines that characterized earlier plans.
• Clay says it reads more like a philosophical manifesto than an operational blueprint.
Shift from cars and charging to AI, robotics, and automation[40:02]
• Earlier plans focused on specific vehicles, scaling EV production, and charging infrastructure; this latest plan focuses on AI, robotics, and automation as new value frontiers.
• Clay notes some see Tesla's alignment with the hot AI theme as a strategic move to ride the AI wave and help support its high valuation.
• In short, Part 4 signals a repositioning from primarily an auto company to a leader in embedding AI in the physical world.

Energy generation and storage business

Rapid growth of the energy segment

Revenue trajectory and CAGR[40:51]
• Since 2020, Tesla's energy generation and storage revenue has grown from $2 billion to nearly $10 billion, a 38% compounded annual growth rate.
Product portfolio and mission alignment[41:03]
• Products include solar panels, solar roofs, and storage products: Powerwall for homes, Powerpack for businesses, and Megapack for utilities.
• This segment supports Tesla's mission by both producing clean electricity and storing it for times when solar or wind aren't available.

Battery innovation, vertical integration, and margins

Challenges of renewable storage and Tesla's response[41:29]
• Clay notes a major renewable energy challenge is high storage cost and historical difficulty scaling batteries.
• Earlier Tesla vehicles struggled with range because batteries couldn't store enough power; Tesla responded by vertically integrating and designing its own cells.
• Tesla invested heavily in battery manufacturing facilities and plans further expansion in China.
Improving economics and link to auto segment[42:48]
• Clay quotes Musk's philosophy: if conventional thinking makes a mission impossible, unconventional thinking is necessary.
• As batteries improve and scale increases, vehicle production costs should continue to decline, benefiting the auto business.
• Energy segment gross margins have recently improved and surpassed the auto segment, and Musk has hinted energy could one day rival auto in revenue.

Optimus humanoid robot and the humanoid robotics opportunity

Optimus concept, design, and intended tasks

What Optimus is designed to do[46:53]
• Optimus is designed to perform tasks humans generally don't want to do-unsafe, repetitive, or boring work.
• Clay lists examples: preparing meals, doing dishes, laundry, and house cleaning, noting how much time could be saved if such tasks were automated.
Physical specs and tech components[47:10]
• Optimus stands about 5 feet 8 inches tall, weighs around 160 pounds, and uses Tesla's expertise in AI, robotics, and manufacturing.
• It's equipped with cameras, sensors, and Tesla's full self‑driving computer for navigation and environment interaction.

Macro thesis: declining birth rates and labor shortages

Filling labor gaps[47:18]
• Clay notes Musk has been vocal about declining birth rates in developed countries and believes Optimus can fill labor shortages and transform industries through automation.

Industry forecasts and potential scale

Morgan Stanley's humanoid robot outlook[47:38]
• Morgan Stanley published a report projecting 1 billion humanoid robots and $5 trillion in industry revenue by 2050.
• Clay acknowledges forecasts are uncertain and vary year to year but views it as plausible that humanoid robots could significantly shape society and quality of life.
Elon's view of Optimus's contribution to Tesla's value[48:07]
• Elon posted on X that roughly 80% of Tesla's value will come from Optimus in the future.
• Clay notes many will be skeptical that so much value could come from a product that doesn't exist at scale yet.
Historical analogies for new markets[48:47]
• Clay references that there was a time when most countries had no coffee shops, yet Starbucks emerged and is now worth around $100 billion.
• Similarly, people once managed without smartphones before Apple's iPhone in 2007 helped create a multitrillion‑dollar market and made smartphones essential.
• He notes truly innovative companies don't just create products but entire markets, generating extraordinary shareholder value.

Demonstrations, cost targets, and Musk's bold claims

WeRobot event and public demo[48:57]
• At a WeRobot event in October, Tesla used Optimus robots to serve drinks, provide entertainment, and mingle with attendees.
• Musk discussed full self‑driving, robo‑taxis, a robo‑van, and then Optimus, after which several Optimus robots walked onto the stage.
Projected unit cost and use‑case breadth[49:21]
• Musk estimated Optimus at full‑scale production would cost less than half a car, around $20,000-$30,000.
• He claimed Optimus could do anything: teaching, babysitting, dog walking, lawn mowing, grocery runs, or serving drinks-"whatever you can think of, it will do."
• Musk said he believes it will be the biggest product ever of any kind, and told CNBC he sees tens of billions of robots in the future with insatiable demand.

Competitive robotics landscape and Tesla's edge

Other humanoid robot efforts[50:01]
• Clay lists competitors like Figure AI, Apptronik (transcribed as AppTool), and Agility Robotics building humanoid robots, with Figure raising major funding and Agility testing robots in warehouses.
• He notes similar firms exist in China as well, and most competitors focus on industrial settings first because they are easier than operating in homes.
Tesla's potential advantages and the key challenge[50:02]
• Tesla's edge lies in scale, AI experience from self‑driving, and manufacturing know‑how.
• However, Clay stresses that the core challenge for all players is making robots reliable, affordable, and capable beyond controlled demos.

Robo‑taxis, ride‑hailing disruption, and FSD competition

Cern Basher's bullish Tesla thesis and robo‑taxi potential

Introduction to Cern Basher[50:51]
• Clay discovered investor Cern Basher's Tesla content and notes his co‑host Preston recently released an episode with Cern.
• He describes Cern as one of the biggest Tesla bulls he has seen.
Robo‑taxi developments over the next 3-5 years[51:40]
• Cern believes substantial developments will emerge from Tesla's robo‑taxi segment within three to five years.

Potential disruption of Uber and ride‑hailing economics

Clay's concern about Uber's terminal value[51:30]
• Clay heard a stock pitch on Uber at TIP Summit and liked it but worried about terminal value given Tesla's robo‑taxi plans.
• He imagines millions of autonomous Tesla robo‑taxis with their own app undercutting Uber's pricing, potentially disrupting Uber's mobility segment.
Speculation about ad‑supported free rides[51:59]
• In Cern's conversation with Preston, he even floated the idea that rides could become free if energy costs plunge and ad revenue subsidizes transport.
• Clay likens this to how Google, Facebook, Gmail, Spotify, or YouTube can be used for free with ads in freemium models.

Tesla's initial robo‑taxi launch and expansion plans

Austin pilot and pricing[51:44]
• Tesla announced its first dedicated robo‑taxi service in Austin, Texas, with pilot programs and plans to expand to other U.S. cities.
• Clay saw snapshots of early Austin rides priced at about one‑fifth the cost of Uber, likely subsidized by Tesla.
Why Austin is a logical starting point[52:52]
• He notes Austin houses Tesla's Gigafactory and headquarters, has supportive local regulators, and a tech‑friendly population open to new technology.
• From there, Tesla expects to expand to cities like San Francisco, Miami, and possibly Phoenix where autonomous testing is already more common.

Regulatory hurdles and comparison with Waymo

Regulations as the main bottleneck[52:08]
• Clay says regulation is the biggest bottleneck for scaling AVs; rules vary by state, evolve quickly, and can reset testing after incidents, adding risk.
Tesla's FSD status vs Waymo's[53:18]
• Waymo has achieved level 4 autonomy in geofenced areas with driverless robo‑taxis, while Tesla's system is still level 2+ and requires human attentiveness.
• Tesla has the advantage of scale and a massive driving data set, but currently Waymo runs cars with nobody behind the wheel.

Size of the robo‑taxi opportunity and unit economics

ARK Invest projections and cost per mile[52:03]
• ARK Invest estimates the global robo‑taxi opportunity could reach trillions of dollars by the 2030s.
• Clay notes that when cars drive themselves, cost per mile drops dramatically, making the economics compelling.
Scale requirements and key uncertainties[53:58]
• Tesla believes its vertical integration can deliver scale and profitability that Uber or Lyft can't match, but low‑cost, large‑scale production is essential.
• Clay says Tesla needs to build at very large volumes (he cites billions of robo‑taxis in the context of price targets) to hit a $25,000 vehicle price and stay profitable, emphasizing this as a huge "if."
• Regulators must approve, and Tesla must prove FSD can safely handle city driving before commercial deployment.
• Waymo and Cruise have already made progress in cities like San Francisco and Phoenix, so competition is forming.
Vision of disruptive impact on mobility[53:53]
• If Tesla succeeds, Clay envisions fleets of Teslas operating 24/7, reducing urban mobility costs and creating major recurring revenue.
• He notes this is why many bulls, like Cern, are so excited about the robo‑taxi vision.

Possible positive scenarios for Uber despite AVs

Platform advantage in a fragmented AV landscape[53:58]
• Clay also outlines a bull case for Uber: if Tesla captures only a small share (e.g., 10%) of the mobility market, Uber could remain the central platform aggregating multiple AV providers.
• In that scenario, Uber and Lyft could still handle most of the market, with Uber taking the lion's share of profits.

Bear case themes, governance concerns, and valuation challenges

Two broad bear themes: execution shortfalls and overvaluation

Missing ambitious goals[56:20]
• Clay says one major bear theme is Tesla falling short of the extremely ambitious goals it has set for the next decade.
Story stock risk and disappointing returns[56:34]
• The second theme is investors overpaying for a story stock, such that even strong company performance might still yield poor returns for shareholders.

Emotional polarization and the truth in the middle

Extreme bull and bear positions[56:36]
• Bulls often think Tesla can do no wrong and that now is always the best time to buy; bears sometimes view it as borderline fraudulent and never worth buying.
• Clay believes reality lies somewhere in between and warns that emotions about Musk's statements can bias opinions about Tesla as a company.

Jim Chanos's criticism and regulatory credits context

Chanos's structural unprofitability argument[57:19]
• Clay summarizes short seller Jim Chanos's view that Tesla's core car business is structurally unprofitable and past profits came largely from selling regulatory credits.
Current scale of regulatory credits[57:32]
• In 2024 Tesla reported $2.7 billion in regulatory credit revenue versus $7 billion in net income.
• Clay suggests that while Chanos's critique may have fit earlier years, it applies less now, especially with Tesla's diversified, fast‑growing segments.

Inappropriateness of valuing Tesla purely as a car maker

Beyond traditional auto comps[57:23]
• Clay criticizes comparing Tesla's valuation purely to traditional automakers, pointing out non‑zero chances of unlocking major value from non‑auto segments.
• He notes that if Musk can land reusable rockets, it's difficult to rule out the possibility of successfully mass‑producing robo‑taxis or Optimus.

Competition intensity and commoditization risk

Legacy makers' advantages[58:42]
• Clay acknowledges legacy car makers wield massive global distribution and supply chains and possess manufacturing know‑how.
• A key open question is whether they can ultimately match or beat Tesla's costs, particularly as Tesla automates.
BYD's pricing edge and commoditization[58:08]
• He sees Tesla as lagging BYD on price competitiveness, since BYD can sell EVs much cheaper.
• Clay thinks EVs overall are becoming more commoditized as more firms center their strategies around them, reducing the likelihood that Tesla dominates market share.
Gap between prior bull hopes and current reality[59:25]
• He says some bulls once envisioned Tesla dominating EVs with over 50% market share and owning the category with affordable models, but reality is far from that.
• In 2024 there were just under 16 million U.S. car sales, and Tesla accounted for about 4% of that volume.
• Tesla's share of the EV-only market has also declined for five consecutive years.
• Clay reminds listeners that auto is a ruthless, low‑margin, highly cyclical industry.

Governance, Musk's overpromising, and credibility of timelines

Examples of overly optimistic FSD predictions[59:27]
• Clay lists multiple Musk statements: 2015 claim that Tesla would have complete autonomy in about two years; 2016 claim of a Tesla driving from LA to New York with no driver input by end of 2017.
• In 2017 Musk said within about two years owners could fall asleep and wake up at their destination; in 2019 he predicted over one million robo‑taxis by 2020.
Implication for assessing Musk's forecasts[1:00:08]
• Clay's point is not whether FSD eventually works but that Musk's repeated "1-2 years away" predictions undermine the reliability of his future timelines.
• He would personally prefer a CEO who under‑promises and over‑delivers and advises taking Musk's future statements with a grain of salt.
• Clay suggests Musk has an incentive to keep investors excited and Tesla's stock price supported with lofty future narratives.

Capacity to suffer, Tesla's near‑death struggles, and valuation reflections

Capacity to suffer as a trait of great companies

Comparing Tesla and NVIDIA[1:00:34]
• Clay introduces the concept of "capacity to suffer"-doing difficult things others won't-as characteristic of the best businesses.
• He cites Tesla and NVIDIA as examples, quoting NVIDIA CEO Jensen Huang: "Greatness comes from character and character is not formed out of smart people. It's formed out of people who suffered."

Musk's pain tolerance and Tesla's survival during the financial crisis

Musk's inclination to seek hardship[1:00:42]
• From Isaacson's biography, Clay concludes Musk is wired to seek pain and hardship, taking on new ambitious projects whenever he gets comfortable.
Roadster unprofitability and desperation financing[1:00:58]
• During the Great Financial Crisis, Tesla wasn't producing the Roadster profitably, and raising capital was extremely difficult.
• Musk went through what he called "manufacturing hell" to cut costs enough to make the cars profitable.
• He eventually entered "desperation mode," asking friends, family, and employees for money to keep Tesla alive.
• Musk has been quoted as saying he was working all day and night in situations where he had to pull a rabbit out of the hat "now do it again, now do it again."

Valuation metrics, volatility, and optionality-driven upside

Current valuation levels and range of outcomes[1:01:53]
• Clay describes Tesla as still something of a story stock; it must achieve significant future feats to justify a roughly $1.4 trillion valuation (about $440/share).
• Tesla's price‑to‑sales ratio is around 15; over the past five years it ranged from 4 to 27.
• He observes recent stock performance has likely benefited from the broader AI theme and interest in AI‑related stocks.
Volatility as a potential opportunity[1:02:26]
• Clay notes Tesla is extremely volatile: in January 2023 the stock was down over 70% from its high, and in April 2025 it was down nearly 50% from its high.
• He suggests it could be a worthwhile investment if bought during major drawdowns, when core businesses might be fairly priced and optionality (Optimus, robo‑taxis, etc.) effectively comes for free.
Core segments vs optionality[1:02:50]
• He posits that perhaps the auto and energy segments alone could justify today's valuation if they achieve large increases in sales and profits over the next decade.
• However, he believes "real money" is likely tied to Tesla's optionality in areas like Optimus and robo‑taxis.
• He emphasizes the wide range of possible outcomes over 10 years, making precise intrinsic value modeling extremely difficult.

Closing reflections on Musk, Tesla, and key quotes

Tesla as a boundary‑pushing company and Musk as a generational CEO

Summary of Tesla's historical impact[1:04:49]
• Clay says few businesses in history have pushed manufacturing and technology boundaries like Tesla.
• He reiterates that through relentless innovation and taking on impossible challenges, Musk has proven himself a generational CEO who redefines industries instead of merely competing within them.
• He expects the road ahead to be bumpy but sees Tesla's story as a reminder that extraordinary results often come from unconventional thinkers willing to suffer.

Elon Musk quotes on investing, entrepreneurship, and life

Quote about concentration in investing[1:05:25]
• Musk quote: "It's okay to have your eggs in one basket as long as you control what happens to that basket."
Quote about entrepreneurship's hardship[1:05:31]
• Musk quote: "Being an entrepreneur is like eating glass and staring into the abyss of death."
Quote about doing hard things when odds are low[1:05:53]
• Musk quote: "When something is important enough, you do it even if the odds are not in your favor."

Clay's final perspective on Tesla's pattern of being underestimated

Past skepticism on EVs and current skepticism on new segments[1:05:51]
• Clay recalls that in Tesla's early EV push, many expected failure: profitability was doubted, short sellers attacked, and legacy makers stayed on the sidelines.
• Now with Tesla moving into energy, robo‑taxis, and Optimus, he feels many people are still waiting for them to fail in these new arenas.
Revisiting the Munger quote[1:06:32]
• He circles back to Charlie Munger's advice to never underestimate the man who overestimates himself as a fitting lens for Musk.

Closing logistics and invitation for listener input

Invitation to bulls, bears, and researchers[1:06:34]
• Clay invites Tesla bulls, bears, or anyone with interesting research or information to contact him via LinkedIn or email at clay@theinvestorspodcast.com.
Show follow and closing notes[1:07:12]
• He thanks listeners and encourages them to follow We Study Billionaires on their favorite podcast app and visit theinvestorspodcast.com for show notes, transcripts, or courses.
• Clay reiterates the standard disclaimer that the show is for entertainment purposes and listeners should consult professionals before making decisions.

Lessons Learned

Actionable insights and wisdom you can apply to your business, career, and personal life.

1

Disruptive innovations and great investments often follow exponential, not linear, trajectories, so relying on straight-line forecasts can cause you to drastically underestimate their long-term impact.

Reflection Questions:

  • • Where in your own career or portfolio are you implicitly assuming linear progress when the underlying process might actually be exponential?
  • • How could you better distinguish between short-term noise and long-term compounding signals when evaluating a new technology or company?
  • • What one investment or project could you re-examine this month using an explicitly exponential framework for adoption, costs, or revenue instead of a straight-line projection?
2

Optionality and an innovative culture can be as valuable as current cash flows, because they enable a company to continuously open new growth avenues that are hard to model but powerful over time.

Reflection Questions:

  • • Which businesses you follow or work in have genuine optionality-realistic paths to launch new, meaningful products beyond their core?
  • • How might your investment criteria change if you explicitly valued a company's culture and track record of reinvention, not just its present-day financials?
  • • What is one way you could increase optionality in your own work or business over the next year, such as by building a new skill, relationship, or product prototype?
3

The "capacity to suffer"-willingness to endure prolonged difficulty, doubt, and setbacks-is often what separates merely good companies from those that survive crises and reshape industries.

Reflection Questions:

  • • In which current challenge are you tempted to quit early instead of enduring the hard work required to reach a breakthrough?
  • • How could you design your goals and routines so you can withstand more discomfort without burning out or losing focus?
  • • What is one concrete commitment you can make this week that deliberately stretches your tolerance for difficulty in service of an important long-term objective?
4

When analyzing visionary leaders and story stocks, you need to separate admiration or dislike for the personality from a sober assessment of execution risk, competition, and valuation.

Reflection Questions:

  • • Where might your personal feelings about a founder or public figure be biasing your assessment of the underlying business or opportunity?
  • • How can you build a checklist or process that forces you to evaluate competitive dynamics and financials independently of the CEO's narrative?
  • • What specific step could you take this quarter-like writing a pre-mortem or comparing to less-hyped peers-to reduce emotion-driven errors in your investment decisions?
5

High-upside opportunities often come with extremely wide ranges of outcomes, so position sizing and entry price matter as much as the quality of the story.

Reflection Questions:

  • • How concentrated are you in ideas with very wide outcome distributions, and does that match your true risk tolerance and time horizon?
  • • In what ways could you use volatility-such as sharp drawdowns-to your advantage instead of reacting emotionally to price swings?
  • • What is one high-uncertainty bet in your portfolio or career where you should either size down, wait for a better entry point, or define clearer conditions for doubling down?

Episode Summary - Notes by Spencer

TIP761: Tesla Stock Deep Dive w/ Clay Finck
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