Elon Musk issued a stark warning to Bill Gates and other Tesla short sellers on Tuesday, cautioning that they will be “obliterated” if they continue to bet against the company. Musk’s confidence stems from his belief that Tesla will soon transform into an AI powerhouse worth $30 trillion, driven by its shift from primarily selling electric vehicles (EVs) to operating a profitable fleet of robo-taxis and humanoid robots.
Musk took to social media to declare, “Once Tesla fully solves autonomy and has [its droid] Optimus in volume production, anyone still holding a short position will be obliterated. Even Gates.” This statement underscores Musk’s long-standing disdain for short sellers, who profit from a company’s decline, a practice he views as antithetical to the principles of investing.
The rivalry between Musk and Gates became public in 2022 when leaked messages revealed that Musk refused to support Gates’ charitable efforts upon learning that Gates had a $500 million short position against Tesla. Musk’s message to Gates was clear: “Sorry, but I cannot take your philanthropy on climate change seriously when you have a massive short position against Tesla, the company doing the most to solve climate change.”
By the time these messages surfaced, Gates was already regretting his bearish stance on Tesla. It remains unclear whether Gates still holds a position in Tesla stock, as he could not be reached for comment. Musk’s bold claim that short sellers will be “obliterated” comes despite Tesla’s recent struggles, including a 6.6% decline in vehicle sales in the first half of the year and challenges in meeting expectations for the Cybertruck.
However, Musk has a history of overcoming adversity and has previously dispatched other notable Tesla short sellers like David Einhorn and Jim Chanos. Since April, Musk has been on a rebound, putting a floor under Tesla’s stock by teasing new developments such as the “CyberCab” robo-taxi model and announcing potential EV sales growth in 2025 with new low-cost models.
Concerns about Musk potentially resigning from Tesla were alleviated last month when Vanguard, Tesla’s second-largest investor, joined others in supporting him. Additionally, Tesla revealed that it had mitigated a steeper decline in Q2 vehicle sales by liquidating excess inventory and redirecting spare battery cells to its stationary energy storage business, doubling its record Q1 volume to 9.4 gigawatt-hours deployed.
Tesla’s market capitalization has surged by $100 billion in the past two days, trading at 70 times next year’s earnings. While this is a steep multiple even for a growth stock, investors who believe in Musk’s vision for robot butlers may find it justified. Musk envisions a future where there is a robot for everyone, from toddlers to seniors, with Tesla controlling a significant portion of the global market.
Musk predicts that Tesla will sell its Optimus robots, currently in the early prototype stage, at $20,000 each, with production costs at $10,000, yielding a 50% margin per robot. In this scenario, annual profits could reach $1 trillion, resulting in a market cap of $25 trillion. Adding $5 trillion from the robo-taxi fleet, Tesla’s market cap could reach $30 trillion.
However, Musk’s assumptions have been questioned. Critics argue that his predictions are overly optimistic, comparing the potential market for robots to the demand for smartphones, which are much cheaper. Cars, a more comparable product, max out at 100 million new vehicles per year due to their higher price.
Musk’s previous ambitious targets, such as the now-defunct 2030 annual volume target of 20 million EVs, were based on optimistic assumptions rather than rigorous market analysis. Unless Musk can provide solid figures to back up his claims, Gates and other short sellers may continue to bet against Tesla.
Despite the skepticism, Tesla remains a leader in semi-autonomous driving technology, with its Autopilot and Full Self-Driving systems logging significant miles to improve performance. Tesla plans to unveil its Robotaxi on August 8, marking a significant step toward solving autonomy.
Tesla shares have risen over 9% on strong quarterly delivery figures and are up nearly 30% in the past month. Over the past five years, Tesla stock has surged by over 1,300%. Musk’s warning to short sellers, including Gates, is clear: those betting against Tesla may face significant losses as the company continues to innovate and grow.
Source: Fortune, Teslarati, Benzinga
