Morgan Stanley’s top auto analyst believes Tesla has reached a key milestone in its self-driving ambitions, claiming the company’s autonomous vehicle technology is ready to operate without human supervision in major cities.
In a new research note shared by tech journalist Sawyer Merritt on X, Morgan Stanley’s Adam Jonas declares what he calls the turning point for full autonomy.
According to Jonas, the only remaining barrier to deployment is Tesla’s own caution, a sentiment that echoes Elon Musk’s comments during Tesla’s Q3 earnings call.
“I’m calling it. Autonomous cars are solved. Do I mean six or seven 9s to the right of the decimal? No. Perfection? Never. But enough to pull the safety driver at scale in major metros.
From our discussions with Tesla, it appears the only thing preventing Tesla from pulling the driver is its own abundance of caution. Our understanding is that there is no other explicit regulatory approval required to pull drivers in Texas. “
Jonas argues that Tesla’s reliance on an optical-only system—eschewing radar and LIDAR (light detection and ranging)—directly challenges long-held assumptions across the robotaxi sector. He also links autonomy in vehicles to broader AI robotics breakthroughs.
“A passive optical-only AV system would seriously challenge the conventional thinking of many in the robotaxi community. Tesla truly believes that radar and LIDAR do not make its cars any safer. It is our longstanding opinion that if you solve autonomy for cars – you solve autonomy for many other form factors of AI-enabled robotics (aviation, marine, weapons, etc).”
Jonas lays out the math behind Tesla’s potential earnings from the full self-driving (FSD) initiative, projecting a strong new revenue stream.
“Tesla will have around 8 million vehicles in the global ‘parc’ by year-end. 12% FSD penetration (paying monthly subs and upfront purchasers) implies 1mm active paying users. If we were to apply the $99/month subscription fee to all users (including upfront payers for comparative equivalency) implies approx $300mm of quarterly FSD revenue or $1.2bn annualized FSD revenue at a year-end exit rate.”
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.