Tesla's Ambitious Leap to $1,500 by 2027

Tesla's recent operational shift represents a massive pivot away from its previous identity as solely a car company.

The new strategic direction focuses on establishing the company as a leader in real-world AI and robotics, a transformation that has been underway for the last two years.

Larry Goldberg suggests that a prior stock price drop to $130 already factored in the significant spending and inherent uncertainties associated with this extensive corporate restructuring.

Elon Musk initiated the company's strategic reorientation towards AI and robotics without formally announcing it, even keeping his management team uninformed, according to Larry Goldberg.

During this period, internal discussions and pressure centered on the development of a 'Model 2' or a smaller, more affordable car.

Although Musk outwardly agreed to the concept of a smaller vehicle during a dinner, his long-term strategy remained unchanged, prioritizing substantial investment in compute and AI development over the low-cost consumer car.

Tesla's decision to shift to using Nvidia chips instead of its own proprietary designs impacted the timeline for its AI strategy.

The current AI-focused approach demands substantial capital infusion, with estimated requirements potentially ranging from $30 billion to $50 billion.

These significant capital expenditures have been a primary factor contributing to the drag on Tesla's stock price, as the market currently lacks confidence in the company's long-term AI strategy.

By 2027, Larry Goldberg anticipates a significant 'rerating' of Tesla's stock, driven primarily by the expansion of its Robotaxi fleet and the integration of Cybercabs.

Increased visibility of Tesla Semi trucks on roadways will serve as a tangible indicator of their operational success, bolstering investor confidence.

Optimus will act as a critical catalyst through its initial industrial use-case trials within factories, rather than immediate mass-market sales, proving its viability to Wall Street.

As these core technologies demonstrate their business models, Goldberg expects their impact to become increasingly apparent to the market throughout 2026 and 2027.

Before the end of next year and certainly prior to the next U.S. election, Larry Goldberg anticipates that NHTSA guidance will transition into a formal legal standard for unsupervised FSD, moving away from the current geo-fencing containment strategy.

The current geo-fencing approach, which restricts FSD operation to defined areas, is characterized as a temporary containment and management strategy.

The removal of these geographic limitations, once regulatory standards are in place and Tesla declares FSD unsupervised, is expected to serve as a major catalyst for the company's growth.

He notes that Tesla's proprietary data is the most reliable source for assessing the system's progress toward full autonomy.

The transition to unsupervised driving also entails Tesla assuming liability for insurance claims, a significant step that underscores confidence in its technology.

Tesla has recently introduced automatic collision avoidance through new software updates, now available to all FSD-equipped vehicles.

These enhancements are making the system more robust, specifically addressing concerns about vehicles veering off course or exhibiting confusion during operation.

By June of next year, Tesla's Robotaxi service will likely see most operational constraints removed, enabling expansion across the 75% of travel miles located outside city centers, Larry Goldberg predicts.

He notes that the majority of travel miles, approximately 75%, occur outside of major city centers, highlighting the potential for widespread adoption once geofencing is removed.

Tesla's FSD and Robotaxi aim to replace human-driven vehicles, tapping into a market significantly larger than existing ride-sharing services.

Goldberg anticipates that most operational constraints for the Robotaxi service will be lifted by June of next year, facilitating its broader rollout.

The Cybercab is considered the most suitable vehicle within Tesla's offerings to achieve this cost efficiency.

Approximately 70% of all rides involve a single occupant, making them ideal candidates for cost-effective autonomous transportation.

This target cost includes the economic benefit of replacing a personal vehicle that remains unused for most of the day, contributing to overall savings.

Larry Goldberg asserts that Tesla's operational decisions are not driven by a need to appease Wall Street or placate retail shareholders.

The company remains singularly focused on executing its long-term mission and expanding its market reach as rapidly as possible, rather than optimizing for short-term share price fluctuations.

He argues that achieving mass market penetration quickly will ultimately maximize the company's long-term value, irrespective of current stock volatility.

Tesla has expanded its overhead infrastructure specifically to support long-term, high-growth projects like Robotaxi and Optimus.

The energy and Semi businesses are expected to generate substantial cash flow and are already covering their fixed costs.

The speaker highlights that reaching a run rate of 50,000 Tesla Semi units will significantly boost the company's gross margins.

Elon Musk is projected to continue implementing overhead reductions, aiming to maintain a high level of operating leverage across the company's various ventures.

Robot trucking is not considered a short-term catalyst, with an estimated timeline of two to three years away.

Tesla's 'Fab' project is categorized as a 2028 story, although it could generate positive sentiment as early as 2027.

The 'Terra fab' is identified as an even longer-term development, projected for around 2030.

Tesla currently lacks excess compute capacity, as its resources are fully dedicated to supporting FSD and Optimus development.

The absence of V15 FSD is cited as an indicator of these ongoing compute capacity constraints.

The transition to AI5 hardware is considered vital for alleviating these bottlenecks and enabling future advancements.

Building general-purpose data centers for external leasing differs significantly from constructing infrastructure tailored for internal specialized needs.

Tesla is currently facing capital constraints due to its aggressive build-out of internal infrastructure.

The company is simultaneously engaged in developing a large solar factory in Texas and three new factories in Austin.

Diversifying into data center leasing for external clients would have necessitated raising additional capital from the market earlier than planned.

Following this training phase, subsequent units are expected to be distributed to Tesla's internal factories and key suppliers for further integration and use.

These corporations are likely to enter into long-term agreements to secure their positions in the robot rollout pipeline.

Corporate procurement processes will probably involve

Embodied AI, which integrates AI into physical forms like humanoid robots, is described as significantly more difficult and complex than purely software-based AI.

The process of scaling robot production to tens of thousands of units will require considerably more effort compared to scaling software models such as GPT-2.

Expectations for rapid deployment must therefore account for the inherent physical constraints and complexities of manufacturing and integrating real-world robots.

Larry Goldberg considers a $1,500 stock price target by 2027 to be feasible, driven by future profits from vehicle sales, FSD, and emerging businesses.

He argues that market confidence will grow as Tesla delivers tangible progress and milestones in its new ventures.

While political and market sentiment currently pose headwinds, operational success is expected to drive a significant revaluation of the company's stock.