Al Root
Few on Wall Street would argue that Tesla's valuation is all about AI. Many, however, will argue over just how much progress Tesla is making on that front.
Tesla's $1.4 trillion valuation comes down mainly to AI computing the company is using to train cars to drive themselves and, eventually, mass produce humanoid robots that can do useful tasks.
Deutsche Bank analyst Edison Yu values robo-taxis and robots for about $850 billion, with robo-taxis accounting for more than half of that. Tesla launched its robo-taxi service in Austin, Texas, in June. There is a catch, though. Tesla still has safety monitors in the front passenger seat.
Removing the monitors is something investors are looking for. CEO Elon Musk has suggested safety monitors could be gone by the end of the year.
Piper Sandler analyst Alexander Potter believes Tesla is getting close, writing recently that the latest version of Tesla's Full-Self Driving product, version 14, is selling far fewer "critical disengagements," when humans have to take over for the car.
FSD is Tesla's highest-level driver assistance product that Tesla owners can purchase for about $100 a month. Humans are still responsible for the car, even when FSD is engaged.
Potter used the website teslafsdtracker.com for some of his conclusions. The site shows the latest version, able to drive thousands of miles without a human having to take over. The number of miles with version 13 was measured in the hundreds.
FSD version 14.1.7, which has some 30,000 miles logged, shows 9,487 miles between disengagements. Impressive.
GLJ Research Gordon Johnson, however, doesn't think a crowdsourced website is the best sign of Tesla's improvement, adding that even if the tracker is accurate, Alphabet's Waymo, which doesn't have safety drivers, is almost twice as effective, with more than 17,000 miles driven between a critical disengagement.
Johnson is waiting for Tesla to file paperwork with more state regulators, which would demonstrate that Tesla is confident to remove monitors and expand its service.
It isn't surprising that the two analysts disagree about FSD progress. Johnson rates Tesla stock Sell. Potter rates shares Buy. They might both agree that success or failure for Tesla's robo-taxi business will be a primary driver for stock in 2026.
Tesla stock was down 0.6% in premarket trading on Thursday at $448.75, while S&P 500 and Dow Jones Industrial Average futures were down 0.3% and flat, respectively.
Coming into Thursday trading, Tesla stock was up about 12% this year and down about 1% for the week.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 11, 2025 08:19 ET (13:19 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Comments