ED’S LETTER

“It’s obvious to anybody with a brain that Elon Musk is not a checkers player. He’s a chess player.” Sandy Munro, Founder & CEO of Munro & Associates

A “singularity” refers to a Black Hole or the advent of Artificial General Intelligence (AGI) and is generally indicative of a point of no return that is uncontrollable and irreversible. In the case of Black Holes, singularity refers to infinite density, and in the case of AGI, it refers to infinite intelligence.

The advent of autonomous cars and their eventual application in humanoid robots do not imply a singularity, but the market trauma these technologies may cause is practically as unpredictable as that of a singularity. Consider the implications of a future where personal car ownership and human labour become optional.

In a Tesla earnings call last month, Elon Musk once again set the cat amongst the pigeons when he announced that Tesla would prioritise the development of its Full Self-Driving (FSD) software and its humanoid robot, named Optimus, over the introduction of new car models in 2022.

In his typically hyperbolic style, Musk proclaimed that FSD would become Tesla’s most important source of profitability. “It’s not like some little feature,” said Musk. “It’s the most profound software upgrade, maybe in history. With millions of cars suddenly having about four or five times the utility, everything pales compared to the value of such a robotaxi or FSD network. I don’t know how to quantify that financially except that it’s some big number. I think this might end up being the biggest increase in asset value of any asset class in history.”

Furthermore, Musk identified the Optimus humanoid robot as potentially becoming more significant than Tesla’s vehicle business over time. “The foundation of the economy is labour, and capital equipment is distilled labour. So, what happens if you don’t have a labour shortage? I’m not sure what an economy even means at that point. That’s what Optimus is about, so it’s very important.”

There are numerous other auto and tech companies currently developing autonomous driving, and significantly more who are presently developing AI and robotics, so why are Musk’s comments important, and what are the implications of Tesla’s apparent change of course, pivoting from making cars to making self-driving cars, robotaxis and humanoid robots?

Cathay Wood of ARK Invest provides an indication. Based on ARK Invest’s extensive research, Wood estimates that autonomous taxis could generate roughly $10 trillion in revenue within the next ten years, with platform operators capturing approximately $4 trillion in net revenues. If earnings were to reach half of the net revenues, autonomous platform providers could scale from nil today to roughly $40 trillion in enterprise value in the not too distant future.

These are substantial numbers anticipated by ARK Invest and an order of magnitude greater than the entire auto industry if they materialise. You don’t have to be a rocket scientist like Elon Musk to realise that these numbers will pale in comparison to that of a humanoid robot set free in the labour market, not just on earth, but also on extra-terrestrial bodies like the Moon and Mars.

This is where autonomous cars and humanoid robots begin to sound more like a technological singularity since it becomes near impossible to predict the implications of an exponential decline in the cost of transportation and labour, not to mention the fate of the current human labour force.

As the teardown expert Sandy Munro reminds us, Elon Musk is playing chess while others are playing checkers. May the chess players not become the oppressors!

Drive safe (while you still can),

Wilhelm