Few companies can polarize bulls and bears faster than Tesla (NASDAQ: TSLA). Shares are up more than 1,100% in the last five years, which is certainly in the bulls’ favor. But bears question the high valuation and worry about the unpredictability of CEO Elon Musk.

Sentiment is certainly strong on both sides. But what’s a neutral, level-headed investor to do with Tesla stock today? Well, one could start by listening to the company’s leader himself. Musk has straight up said who shouldn’t be investing in Tesla stock, and that’s what we’ll explore.

The key to Tesla’s future, according to Musk

Tesla makes and sells electric vehicles (EVs), installs solar-energy products, and has products and services for power storage. But in the first quarter of 2024, Musk didn’t mention these things when talking about who should or shouldn’t be investing in Tesla.

In the Q1 earnings call, Musk said, “If somebody doesn’t believe Tesla is going to solve autonomy, I think they should not be an investor in the company.” In other words, Tesla’s future is all about autonomous driving.

In context, Musk was referring to autonomous taxis, or “robotaxis.” With the robotaxi vision, someone who owns a Tesla vehicle can add it to the robotaxi network. The company will also have its own dedicated robotaxi vehicles. People will just use the app to request a ride, and a driverless Tesla taxi will navigate to the user.

In theory, the benefit of the robotaxi system will be twofold. First, it will incentivize people to buy a Tesla vehicle. In 2019, Musk said that owners who add their vehicles to the network could make between $10,000 and $30,000 per year, offsetting the cost of ownership.

But the bigger theoretical benefit to Tesla will be the money it makes directly from robotaxis. Even if it’s someone else’s car being used, Tesla will still take a cut of the robotaxi fare. Moreover, it will have its own cars on the road autonomously making money.

Fund manager Cathie Wood is the founder of Ark Invest, which is notoriously bullish when it comes to Tesla stock. In 2023, the investment firm put a stake in the ground, expecting that Tesla stock could hit $2,000 per share by 2027 — that would be mind-blowing gains from the $190 per share it trades at now. But many investors might not realize how much of this upside is riding on robotaxis.

By 2027, Ark Invest suggests the robotaxi business alone could account for two-thirds of Tesla’s enterprise value. To frame these numbers differently, Ark Invest is saying that 74% of the upside for Tesla stock today could be from the robotaxi vision. Elon Musk is thinking in the same general direction, and that’s why he said investors shouldn’t buy Tesla stock unless they believe the company can solve autonomy.

What should investors do now?

To reiterate, Musk said one should only invest in Tesla stock if they believe it can solve autonomy. Here are my thoughts on this.

First, in a manner of speaking, autonomy has already been solved from a technological standpoint. GM‘s Cruise unit and Alphabet‘s Waymo have already been operating in major U.S. cities. Cruise is currently suspended due to a safety review following an accident. But Waymo is still on the road and has even partnered with Uber Technologies to find more riders. Uber’s ride-hailing rival Lyft is also experimenting with autonomous driving.

Tesla itself has demonstrated compelling autonomous capabilities as well. Therefore, autonomous driving can be done. Since this is true, why isn’t Tesla stock racing higher toward Ark Invest’s price target? Well, there’s simply more to it.

At Tesla’s Autonomy Day presentation in April 2019, Musk said he was confident there’d be robotaxis on the road in 2020. But he did hedge this statement by mentioning regulatory approval. That’s a tough nut to crack and outside Tesla’s control.

For example, Cruise already had approval and took a victory lap in April 2023, citing that it had gone 1 million driverless miles with 54% fewer collisions than a human driver. But even with a tangible safety record such as this, it lost approval after an accident with a pedestrian in October.

It’s hard to imagine that Tesla could quickly achieve a better track record than Cruise’s. But even Cruise’s track record wasn’t enough to keep it on the road after something went wrong.

Moreover, Musk has talked about having a million robotaxis transporting passengers for around 100 hours per week. Many investors think this scale can be achieved almost overnight once it clears regulatory hurdles. Therefore, these investors are already factoring in the robotaxi network when valuing the stock today.

The first part of this assumption is reasonable — there are more than a million Tesla vehicles on the road already, and they could all be robotaxis with a software update and owner opt-in.

But 100 hours a week assumes Tesla vehicles will be in use more than half of the day, and that’s before considering the owner driving anywhere or taking time out to charge. Maybe some high-traffic areas could demand something like this. But I find it hard to believe there are 100 million hours of weekly taxi demand across the U.S. for Tesla.

In conclusion, I don’t necessarily doubt that Tesla can solve autonomy because it’s already been solved. The real issue is finding enough demand from users after retaining regulatory approval, assuming it does. I don’t personally believe all this will happen on a wide scale before the end of the decade. Considering its valuation already factors in the upside from the robotaxi vision, this is one reason I’m not a buyer of Tesla stock today.