|Tesla's Big Moves in Self-Driving Cars |
In order to justify its stock price, the automaker must become a leading autonomous mobility platform.
Jul 14, 2017 at 5:15PM
While Alphabet's ( NASDAQ:GOOG) ( NASDAQ:GOOGL)Waymo is currently the leader in driverless-vehicle miles driven, Tesla ( NASDAQ:TSLA) isn't far behind. In fact, one could argue that with Tesla recently having traded at over $60 billion -– higher than any other U.S. automaker -- it must become a leader in autonomous driving, or else. In fact, Morgan Stanley analyst Adam Jonas believes Tesla's "platform" potential is essential to the bull case in which the company reaches an Apple-like valuation:
Could a highly successful Model 3 and its progeny achieve this? In our view, no. Could an electric, autonomous semi truck achieve this? We don't think so. Solar roofs... or Tesla Powerwalls? Not big enough. In our view, there's only one market big enough to propel the stock's value to the levels of [CEO] Elon Musk's aspirations: that of miles, data and content. When does Tesla make the leap to mobility? Therefore, in order to even think about investing in Tesla at these levels, you need to consider where it stands in the race to a fully autonomous future. Here's what you need to know.
Image source: Tesla.
Unlike Waymo, which is aiming straight for producing Level 4-5 autonomous cars without consideration for Level 3 features used in current vehicles, Tesla has had Level 2-3 features in its cars since 2014. Autonomous features are present in all Tesla models -- the Model S, Model X, and even the upcoming mass-market Model 3, slated to begin production this month. These capabilities include auto-steering, traffic-aware cruise control (cruise control while changing lanes), automated parking and "Summon" functionality, and driver warning systems.
But while Tesla includes all of this functionality in today's cars, it's also moving extremely quickly toward Level 4-5 fully autonomous functionality. In fact, all Teslas made with second-generation Autopilot hardware, which came out in October 2016, are capable of full Level 4 autonomy, according to management.
That means that once the company develops and is permitted to upload the necessary software to users' vehicles (two big "if"s), these newer Teslas could theoretically become fully autonomous. In fact, in a recent TED talk, Musk indicated that Level 4-5 autonomous vehicles are only two to three years away, not a decade or more, as others have hypothesized.
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