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Elon Musk’s Tesla (TSLA-0.55%) may have an easy way to save a lot of cash, according to analysts — just replace a bunch of workers with robots.
Tesla has been working on its Optimus robots for years, infamously, debuting its project in 2021 with a person dancing in a costume. Musk has said the humanoid robots will enter limited production for internal usage next year.
By the end of 2024, he expects more than 1,000 robots will be working at Tesla. Two robots are already on the factory floor, although Tesla has not said what duties they perform.
Musk in April described a hypothetical that could see the product add $20 trillion to the company’s market capitalization. The robots aren’t expected to go on sale until the end of 2025 and are expected to eventually sell for between $20,000 and $30,000.
Deutsche Bank (DB+2.75%) on Tuesday said it expects the robots to cost between $27,000 and $76,000 to make, although analysts expect the robots to generate “meaningful cost savings by the end of the decade.” Some of those “cost savings” would come in the form of replacing its people with robots.
Assuming that a manufacturing worker is on the clock for 40 hours a week and gets paid $62,400 in 2027, Tesla could save $31,900 by replacing them with a robot. Replacing 10% of those workers would save $141 million per year, according to Deutsche’s model.
If that same worker was still at the company in 2030 and making $72,800 a year, Tesla could save $57,550 by putting a robot in their place. Do that again and again until 20% of workers are replaced, and Tesla could save as much as $509 million annually, Deutsche says.
Those robots are also expected to be sold to other companies and for consumer use. Musk has said Optimus could serve as a babysitter, teacher, or even a bodyguard if necessary.
Deutsche has a $295 per share price target for Tesla, based on its expectations for the development of its robotaxis and Optimus divisions. It also factors in improvements in Tesla’s under-looked energy business and 4 million annual electric vehicle deliveries by 2030 at a price of roughly $35,000 each. The auto business accounts for $195 of that target, followed by $53 for energy, $22 for Optimus, $24 for robotaxis, and $1 for Tesla’s other divisions.
Tesla stock climbed 4% in morning trading Tuesday. The stock is down by more than 9% year-to-date.