Elon Musk vows Bill Gates will be ‘eradicated’ if he doesn’t stop shorting Tesla

Elon Musk warned Bill Gates ahead of time on Tuesday not to mess with him anymore. The Microsoft co-founder faces destruction if he tries to bet against Tesla again.

Musk believes he will transform the automaker into an AI giant worth as much as $30 trillion once Tesla makes the transition from selling electric cars to operating a lucrative fleet of robotaxes and humanoid robots.

“Once Tesla has fully solved autonomy and [its droid] Optimus in volume production, anyone still short will be wiped out,” he posted on social media Tuesday. “Even Gates.”

The rivalry between the two became public after a leaked report in 2022 revealed that the world’s richest entrepreneur refused to support Gates’ charity work after it emerged that Gates had still put half a billion dollars at stake on a bet that Tesla’s stock price would fall.

“Sorry, but I can’t take your climate change philanthropy seriously when you have a massive short position on Tesla, the company doing the most to solve climate change,” Musk wrote in the undated text messages.

By the time those reports were leaked, Gates had already regretted his bearish call on Tesla. It’s unclear whether he still has a position in the stock, and he could not be reached by Fortune for comments.

However, Musk’s warning that shorts will be “wiped out” is a bold claim for someone whose company was the worst-performing name in the S&P 500 this year.

Tesla vehicle sales fell 6.6% in the first half of the year; its Cybertruck struggled to meet lofty expectations; and it ultimately buried Tesla’s goal of increasing the number of electric vehicles it sold from 1.8 million last year to 20 million by 2030.

Musk has been building a bottom under stocks since April

But Musk is not one to give up easily when faced with adversity. He has beaten other famous Tesla shorts, such as David Einhorn and Jim Chanos, who made fortunes betting against Lehman Brothers and Enron, respectively.

In fact, Tesla’s CEO has been on the rebound since he put a floor under the stock price in April.

First, he hinted at the unveiling of a new “CyberCab” robo-taxi model, implying he would finally solve autonomy. Then he announced that 2025 could see a return to EV sales growth with new low-cost models, marking the bottom for the stock.

The story continues

Longstanding concerns that the CEO could quit the company altogether after losing his 2018 compensation deal, now worth a staggering $70 billion at current stock prices, were all but quashed last month when the second-largest investor, Vanguard, joined others in backing him.

Finally, Tesla revealed on Tuesday that it had averted an even steeper drop in vehicle sales in the second quarter by liquidating excess inventory. By cutting electric vehicle production to its lowest level since the third quarter of 2022, it had spare battery cells that it could now deploy into its stationary energy storage business, more than doubling its already record first-quarter volume to an unprecedented 9.4 gigawatt-hours deployed.

Tesla has reached a market cap of $100 billion in the past two days.

It trades at 70 times next year’s earnings, a high multiple even for a growth stock, let alone one whose revenue and earnings are both expected to shrink in 2024 — the most forward-looking period.

But if you’re among the investors who believe Musk will do for robot butlers what he did for electric cars, that’s a piece of cake.

According to him, there will be a robot not only in every company or home, but for everyone – from toddlers to seniors.

He therefore expects demand for 1 billion droids per year to reach 1 billion, with Tesla cautiously controlling a tenth of the global market.

Is Tesla Worth a Third of Current Global GDP?

He would sell these Optimus robots, which are currently still in the prototype phase, for a price of $20,000 each, even though the production cost per unit is only $10,000. This gives him a 50% margin per robot.

The total annual profit in that scenario would be $1 trillion. Combined with a fairly standard profit multiplier of 25, that gives a market cap of $25 trillion.

Add a measly $5 trillion to the robo-taxi fleet once it launches, and you’re talking real value for investors jumping in at the current $740 billion market cap.

The problem with these kinds of quick calculations is that Musk’s assumptions can be way off.

Musk predicts that the market will be much closer in volume to smartphone demand, which won’t be anywhere near the $20,000 he expects. Cars are a better proxy here, and they tend to produce a maximum of 100 million new vehicles per year, partly because of their much higher price.

For example, Chanos suggested that Musk’s latest prediction means Tesla would have a market capitalization equal to nearly a third of the entire world’s annual economic output.

Take, for example, his calculation of Tesla’s now-defunct annual volume target for 2030. Most companies with serious targets do a bottom-up macroeconomic analysis of their markets and the expected demand over time for the product categories in which they compete.

For comparison, Musk based his sales figure of 20 million electric cars, a figure larger than that of the world’s two largest automakers combined, on the assumption that Tesla could replace 1% of the world’s installed fleet of 2 billion cars on the road each year.

No wonder it was buried long before 2030.

Unless Musk can come up with concrete numbers to back up his claims this time, Gates may make his bet.

This story originally appeared on Fortune.com