Elon Musk has always been something of a maverick in the technology industry. Tesla ( TSLA -1.71% ) was a major win, with Musk essentially creating the electric vehicle industry (EV). The CEO is currently making another big call, shifting toward autonomous tech, and Tesla is a big part of the story. But the Optimus humanoid robot the company is building needs particularly close monitoring.
Optimus is not a logical progression
One part of Musk's shift toward autonomous technology is building a taxi service atop the Tesla vehicle platform. Self-driving cars are really just a small step away from what the EV maker already does. While there's material competition in the robotaxi space, and Tesla is playing catch-up, investors should see this as a logical progression for the company.
Elon Musk is known for making big, bold leaps. Which is where the company's Optimus autonomous robots come in. To be fair, a high-tech manufacturing business like Tesla building robots isn't outlandish. In fact, Toyota has been building robots for years. The Japanese automaker developed a humanoid robot capable of mimicking a controller's movements in 2017. Still, robots are definitely not the same product as cars.
That's the big issue investors need to wrap their heads around as Tesla begins mass-producing Optimus robots at its Fremont plant in Texas. Notably, the carmaker switched production lines from building cars to building robots. That's a huge capital investment and means that there's no easy way to backtrack on this effort.
If Optimus robots don't turn into a successful business, Tesla will be in trouble. At the very least, a setback here would probably require large write-offs. And at this point, there's no way to know how well the product will be received. So, the Optimus robot has gone from an exciting idea to a major financial bet for Musk, Tesla, and Tesla shareholders.
Elon Musk is leaping in with both feet again
Nobody should be surprised to see Elon Musk making bold decisions. It is pretty much par for the course for the CEO. However, as an investor, you need to view Optimus robots for what they are: An entirely new product category. Mass-producing Optimus robots today could be a prescient move, which puts Tesla at the forefront of a new industry. Or not...
Keep a close eye on both the company's production success and the market acceptance of the Optimus. Tesla needs to see wins on both sides if it wants to turn this wager into a business win.