Tesla (TSLA) shares climbed 4.3% to $452.42 on Monday after a bold call from Morgan Stanley analyst Adam Jonas, who declared that the company has effectively "solved" self-driving. While Jonas clarified that "solved" doesn’t mean perfection, he argued it’s good enough to start removing safety drivers in major cities—a milestone that could reshape the auto industry.
Tesla's Self-Driving Push
Tesla has been testing its ride-hailing service in Austin, Texas, since June, using EVs equipped with its self-driving software. For now, a Tesla employee still rides along in case of emergencies, but the company expects to remove safety drivers in Austin by year-end. Elon Musk has suggested that as the service scales, employee oversight could shrink to just a few months.
"We could actually have cars operating freely in these cities right now, but we don’t want to take that risk," Musk said, describing Tesla’s approach as "safety paranoid." Jonas agreed, noting that Tesla’s caution—not technical limitations—is the main reason safety drivers remain.
Expansion Plans and Robotaxis
On Tesla’s recent earnings call, Musk revealed plans to expand the service to up to 10 major U.S. metro areas by the end of 2025, with Nevada, Florida, and Arizona among the targets. The company also expects to begin mass production of dedicated robotaxis next year, a move that could accelerate adoption and challenge traditional ride-hailing models.
If successful, Tesla would "seriously challenge" the industry’s safety paradigm, Jonas said. Most autonomous vehicle companies rely on expensive sensor suites—a mix of cameras, radar, and lidar—to map their surroundings. Tesla, by contrast, has doubled down on a camera-only approach, betting that software and AI can do the heavy lifting.
Tesla vs. Waymo and Rivian
Tesla’s strategy stands in stark contrast to rivals like Waymo, Alphabet’s self-driving subsidiary, which equips its sixth-generation vehicles with 13 cameras, four lidars, six radars, and an external audio receiver. Rivian Automotive also uses a multi-sensor setup, with 10 cameras, 12 ultrasonic sensors, and five radars.
Musk has long dismissed lidar as unnecessary. Back in 2019, he called it "expensive and useless," arguing that adding lidar to cars was like "putting expensive, useless hardware on the vehicle." Tesla vehicles today use up to nine cameras, depending on the model year.
Market Impact
Tesla stock is up 19% year-to-date, and Jonas’s endorsement adds fuel to the rally. Investors are betting that if Tesla can scale self-driving services and roll out robotaxis, it could open up a massive new revenue stream—one that goes far beyond selling cars.
Still, questions remain. Regulators will need to sign off on removing safety drivers, and the company must prove its camera-only system can handle real-world complexity at scale. But for now, Wall Street seems willing to give Musk the benefit of the doubt.
The Bottom Line
Tesla’s latest surge shows how much weight the market gives to its self-driving ambitions. With Morgan Stanley calling the problem "solved" and Musk promising robotaxis by next year, the stakes couldn’t be higher. If Tesla delivers, it won’t just be another car company—it could redefine urban mobility.