Tesla's $1 trillion autonomous era begins, says Wedbush's Dan Ives

Key Concepts:

• Autonomous driving (Level 4)
• Cyber cabs
• Tesla's autonomous strategy (Austin launch)
• Scale and scope in autonomous driving
• Transportation as a Service (TaaS)
• AI monetization
• IBM's turnaround and AI strategy
• Install base monetization

Tesla's Autonomous Driving Opportunity

• Main Point: Dan Ives believes Tesla's autonomous driving initiative, starting with the launch in Austin, represents a $1 trillion opportunity and the beginning of Tesla's biggest growth chapter.
• Comparison to Waymo: While Waymo has a head start, Ives argues that Tesla's advantage lies in its potential for scale and scope, contrasting Waymo's limited deployment in four cities with expensive vehicles.
• Cyber Cabs: Ives envisions Tesla scaling cyber cabs to 25-30 cities within the next year, achieving true Level 4 autonomy.
• Market Share: He predicts that autonomous vehicles will account for 20% of the transportation industry in the next 6-10 years, with Tesla leading the market.
• OEM Potential: Ives suggests that other automakers will eventually need to OEM autonomous driving technology from Tesla.
• Historical Moment: Ives believes the Austin launch will be a historical moment for Tesla, demonstrating their ability to achieve true Level 4 autonomy.
• Risk Factor: While acknowledging the need for near-perfect execution to achieve rapid scaling, Ives remains confident in Tesla's approach.
• Tesla Owners: Tesla wants Tesla owners to offer up their cars as well.
• Undervalued: Ives considers Tesla the most undervalued AI play in the market, as the market is not fully valuing its autonomous driving potential.
• Vehicle Production: Tesla produces 1.7 to 2 million vehicles per year. Cyber cab production could reach 300,000 to 500,000 units.

Competition in the Autonomous Vehicle Market

• Room for Multiple Players: Ives acknowledges that there is room for multiple players in the autonomous vehicle market, including Waymo, Uber, and Amazon-backed Zoox.
• Tesla's Advantage: Despite the competition, Ives believes that Tesla's scale and scope give it a significant advantage.

IBM's Turnaround and AI Strategy

• Price Target: Ives has raised the price target for IBM to $325 per share, citing the company's turnaround and potential for further growth.
• Microsoft Playbook: He compares IBM's turnaround to Microsoft's, suggesting that IBM could reach $400-$500 per share.
• Install Base Monetization: Ives emphasizes the importance of IBM's install base and its ability to monetize AI.
• Arvind Krishna's Leadership: He credits Arvind Krishna's leadership for the "magic" happening at IBM.
• AI Adoption: Checks indicate increasing adoption of IBM's AI solutions.

Conclusion:

Dan Ives is highly optimistic about Tesla's autonomous driving prospects, viewing the Austin launch as a pivotal moment. He believes Tesla's scale and scope will allow it to dominate the autonomous vehicle market. Ives is also bullish on IBM, citing its successful turnaround, AI monetization strategy, and potential for further growth.