Tesla Analyst Predicts Growth Driven by FSD Revenue Potential

Tesla's Advances in Autonomous Driving Technology

Morgan Stanley analyst and prominent Tesla Inc. (NASDAQ: TSLA) advocate, Adam Jonas, believes that Elon Musk's electric vehicle (EV) company has made significant strides toward achieving fully autonomous driving. According to Jonas, Tesla is poised to remove the need for safety drivers in its Robotaxi fleet due to the advancements in its Full Self-Driving (FSD) software.

Elon Musk's Emphasis on Safety and Caution

In a recent note to investors, Jonas pointed out that Tesla has the capability to deploy its robotaxis at scale in major metropolitan areas while ensuring safety. He highlighted that this shift is primarily hindered by Tesla's cautious approach regarding driver removal. "Our understanding is that there is no additional regulatory approval needed to make this happen in Texas," Jonas noted.

Furthermore, by the close of 2025, he anticipates Tesla's global vehicle fleet to reach approximately 8 million, significantly expanding the potential market for autonomous services.

Predicting Vast Revenues from FSD Subscriptions

According to Jonas, achieving a 12% penetration rate in FSD subscriptions at a monthly fee of $99 could result in about $300 million in quarterly revenue, translating to an impressive annual revenue of $1.2 billion. This bullish prediction reinforces his optimistic outlook on the company’s financial prospects.

Reassessing FSD Goals Post Earnings Call

This investor note follows Tesla's earnings call for the third quarter, where Musk hinted at plans to eliminate the safety driver in Austin by year-end. However, he has tempered expectations regarding the service's availability to a wider audience, now aiming to cater to up to ten major cities rather than half the U.S. population as initially projected.

Importantly, Tesla's Full Self-Driving technology is currently under scrutiny by the National Highway Traffic Safety Administration (NHTSA), following reports of various traffic incidents involving vehicles using FSD.

Market Reactions and Predictions of Sales Surge

Future Fund LLC director Gary Black has echoed sentiments that a breakthrough in autonomous driving could significantly boost Tesla's sales. This speculation aligns with Tesla Model Y achieving the status of the best-selling car in Europe for September.

Meanwhile, investor Dan Ives from Wedbush Securities has maintained a positive stance, referring to Tesla's Robotaxi initiative as a formidable competitor to Uber Technologies Inc. (NYSE: UBER). Ives believes that if Tesla successfully rolls out its autonomous technology, it could redefine marketplace dynamics in the transportation sector.

Tesla's Strong Market Metrics

This sentiment resonates widely as Tesla continues to excel in momentum and quality metrics, although it faces challenges in terms of value. Currently, the company also displays a favorable price trend across various time frames. For those interested in deepening their understanding of Tesla’s market position and metrics, further insights can be gained through relevant financial analysis platforms.

Frequently Asked Questions

What is Adam Jonas's prediction regarding Tesla's FSD revenue?

He predicts approximately $1.2 billion in annual FSD revenue with a 12% penetration rate at $99 per month.

How many active Tesla vehicles are expected by 2025?

Jonas anticipates that Tesla's active vehicle count will reach around 8 million globally by the end of 2025.

What is the current status of Tesla's FSD technology?

It is under investigation by the NHTSA due to reports of accidents involving vehicles operating on FSD.

How does Tesla's Model Y perform in the market?

It recently became the best-selling car in Europe, indicating strong market demand.

What competitive threats does Tesla face?

Analysts believe that Tesla's Robotaxi service poses a significant challenge to ride-hailing services such as Uber.

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