Tesla FSD Nails 120-Mile Drive Post-Eclipse, Stock Up 4.9%

Key Takeaway

• Tesla's FSD technology demonstrated significant improvement, managing a 120-mile highway stretch nearly flawlessly post-solar eclipse.
• With FSD priced at $12,000 or $199/month, Tesla explores flexible subscription models to enhance market penetration and profits.
• Regulatory advancements and a 4.9% stock increase following robotaxi announcements highlight Tesla's ongoing innovation and market confidence.

FSD Evolution and Performance

Tesla's Full Self-Driving (FSD) technology has shown significant improvements over time, evolving from a cautious and sometimes confused system to one that is smoother and more adept at handling unusual situations. A recent test drive following a solar eclipse demonstrated the system's enhanced capabilities, particularly on highways where it managed a stretch of 120 miles nearly flawlessly. Despite a minor hiccup involving another vehicle's hazard lights, the Tesla required no driver intervention to navigate the situation. This progress is part of Tesla's broader efforts to refine FSD, with ongoing updates aimed at improving reliability and performance. The company's CEO, Elon Musk, has expressed confidence in the technology, suggesting that Tesla is on the cusp of a major breakthrough in self-driving capabilities.

Pricing and Market Penetration

The cost of FSD has been a topic of discussion among potential users and analysts. With a purchase price of $12,000 or a subscription option at $199 per month, the affordability of FSD is a consideration for many drivers. Canaccord analyst George Gianarikas launched a survey to gauge what consumers are willing to pay for FSD, highlighting its importance to Tesla's profit margins. Despite the high price, the flexibility of subscribing and unsubscribing on a monthly basis offers a tailored approach for users, allowing them to activate FSD for long trips without committing to a permanent purchase. This pricing strategy could influence FSD's penetration rate and, consequently, Tesla's operating profits.

Regulatory Challenges and Innovations

Tesla continues to navigate regulatory and legal challenges as it advances its Autopilot and FSD technologies. The company has proactively addressed concerns by recalling software to enhance driver engagement safeguards. With approximately 400,000 North American drivers having downloaded the FSD software, Tesla remains at the forefront of driving innovation. Musk's vision for the future includes the development of "robotaxis," which could revolutionize personal and public transportation. This ambition is supported by Tesla's commitment to ongoing improvements in FSD technology, with significant enhancements promised in the near term.

Market Reaction and Future Prospects

Tesla's stock experienced a 4.9% increase following Musk's announcement of an upcoming robotaxi reveal, despite a year-to-date decrease of about 30%. The introduction of a one-month free FSD trial for U.S. drivers led to a nearly 3% rise in stock prices, reflecting market confidence in Tesla's innovative direction. The company's efforts to boost FSD sales and enhance user experience through employee-led test drives for new customers underscore its commitment to safety and customer satisfaction. As Tesla continues to refine its self-driving technology, the potential for "robotaxis" and other autonomous driving applications remains a key factor in its future growth and market valuation.

Street Views

• George Gianarikas, Canaccord (Neutral on Tesla's FSD pricing strategy):

  "The rate of Tesla FSD penetration is critical to the company’s [profit] margin trajectory... FSD penetration rates have been lackadaisical to date."