Elon Musk just said that Tesla has a $200 trillion opportunity in front of it. Here’s what it would take to get there.

Marketing is one of the most difficult things to do in business. At its core, marketing is a form of storytelling. If brands fail to create compelling stories, then it’s hard to resonate with consumers.

However, a company that, in particular, does not rely on strong advertising is adze (TSLA 0.58%). Despite the intense competition, Tesla has one thing that none of its competitors do. And no, I don’t mean more sophisticated technology or lots of intellectual property (IP).

I’m talking about the company’s outspoken CEO, Elon Musk. Very few business leaders have the same kind of presence as Musk. Regardless of the context, it seems the world listens almost every time Musk opens his mouth.

Recently, Musk posited the idea that Tesla is looking at a $200 trillion opportunity called Optimus. The best part? It has nothing to do with the company’s core electric vehicle (EV) business.

Let’s dig into Musk’s remarks and explore just how real the opportunity is.

What is Tesla Optimus?

Most people are familiar with Tesla because of the company’s electric vehicles. But what you may not know is that Tesla has even more ambitions in the field of artificial intelligence (AI).

One of the company’s biggest AI projects revolves around humanoid robotics, which it calls Optimus. Essentially, Tesla uses machine learning to train human-sized robots on how to perform basic tasks.

The vision is that Optimus robots will become useful enough to supplement human workers in Tesla factories.

Image source: Getty Images.

A $200 trillion market?

During Tesla’s second-quarter earnings call, Musk doubled down on his bullish outlook for Optimus when he proclaimed, “As I’ve said before, I think Optimus will be more valuable than everything else combined.”

In the video below, Musk explains his vision for Optimus and its potential to be a $200 trillion business:

ELON: THE OPTIMUS NUMBERS ARE SO AMAZING, IT DOESN’T SEEM REAL

“The Optimus numbers are so amazing that you say to yourself, is this true?

In fact, I believe the market for humanoid robots exceeds 10 billion units, more than the number of humans.

Because… pic.twitter.com/EjyqHab4Zi

— Mario Nawfal (@MarioNawfal) July 31, 2024

The bottom line

While Musk’s comments may inspire some excitement, there are some important caveats to review here.

First, Tesla is far from the only company pursuing humanoid robotics. One of Tesla’s biggest competitors in the space is Figure AI, a start-up backed by Nvidia, Inteland Microsoft.

According to its website, Figure AI envisions a future where humanoid robots are fully integrated into society, playing a major role in logistics, warehouse labor, retail, and even elderly care. The AI ​​figure estimates that manual labor disruption at scale could be an approachable $42 trillion market.

Beyond Optimus and Figure AI, other major players in humanoid robotics include Boston Dynamics, 1X, and a litany of Chinese start-ups. Given this level of attention, it’s not entirely surprising that Goldman Sachs points to humanoid robotics as a $38 billion market by the next decade alone.

The second point investors need to realize is that the total addressable market for humanoid robotics is all over the place, ranging from tens of billions to hundreds of trillions. While no timeline has been revealed for Optimus scaling to 10 billion units, I think having more humanoid robots than humans on Earth is a pretty bold idea.

However, investors should not get too caught up in the specifics of the forecast. With Optimus commercialization just two years away, investors may know sooner rather than later how demand is starting to look.

It is too early to tell if the humanoid robots will be successful and if Optimus will be a leader in space. But like Tesla’s other products, Musk has done an excellent job of promoting the opportunity around Optimus and getting investors excited about the road ahead.