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Elon Musk has told investors that Tesla “should be thought of as an AI or robotics company” that is going to “solve autonomy.”

We’ve debated before whether, indeed, Tesla is a car company, and how it should be valued.

What seems more clear after Tesla’s latest earnings report is that for now, Tesla is primarily a car company, and the more successful a car company it is, the more runway investors will give it to transform.

The numbers help tell the story: Tesla’s automotive revenue was $20.02 billion last quarter, a full 79% of the total. Auto services accounted for 11%, and energy generation and storage about 9%.

It was profitability that really encouraged investors last quarter, coming in at 17.1% for the auto segment ex-regulatory credits. That, plus Musk’s prediction that deliveries will rise this year and growth will be “something like 20% to 30%” next year, sent the stock soaring 22%, marking the biggest single-day gain since May 2013.

It also sent Tesla shares back into the green for the year after what’s been a bumpy road. In the two weeks since the company’s robotaxi event, the stock had slumped by 11%. Even Tesla bulls like Adam Jonas of Morgan Stanley were nonplussed at the lack of specific details for the company’s robotaxis and cybervans, and they raised eyebrows at demo robots that were reportedly remote-controlled rather than governed by AI.

The tech world has given us many examples of moguls steering their companies toward moonshots and being slapped down by Wall Street if their existing businesses suffered. Meta’s a case in point: After Mark Zuckerberg’s name change from Facebook and spending spree on the metaverse, he course-corrected with a “year of efficiency” that not only saw cuts to spending but a reacceleration in sales. In this case, Tesla’s profitability improved in part due to a focus on cutting the cost to make vehicles.

My colleague Hamza Shaban wrote in yesterday’s Morning Brief that the cult of Musk is fueled by his supposed distractions, including campaigning for Donald Trump and nonstop X posting. That may be true for the fanboys and true believers. For the number-crunchers and institutions who buy his stock, it helps to make more money.

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