FSD’s Next Version (13.0) Is Tracking At ~10k Miles Before Intervention, Compared To Waymo’s 17k Level

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Tesla is one of the top gainers in early trading today, spurred by reports that the upcoming Trump administration is prioritizing the creation of a federal framework for autonomous vehicles (AVs). This news bite is also attracting scrutiny from sell-side analysts, with RBC going so far as to pen a fairly exhaustive note on the topic.

Pre-market Movers. $TSLA +8% [following a report from Bloomberg that said President-elect Donald Trump will seek to create a federal framework for self-driving cars.

A federal framework could make it easier to obtain self-driving licenses and allow autonomous cars to drive…

— NOTRELOAD AI (@thudderwicks) November 18, 2024

RBC analysts believe that a streamlined federal framework for autonomous vehicles, as is reportedly in the works, “would be a positive for Tesla shares,” especially as robotaxis account for a whopping 44 percent of RBC’s valuation of Tesla.

While expressing confidence in the prognostication that the FSD would “ultimately reach Level 4 status,” RBC analysts see private AVs eventually becoming “living rooms, bedrooms and offices on wheels.” This is all the more critical as FSD accounts for another 33 percent of RBC’s valuation of Tesla.

However, the Canadian bank does introduce a cautionary note in its write-up, underscoring the fact that Tesla “still has a ways to go to prove that its camera-based system will ultimately work with limited interventions.”

Critically, RBC notes:

“As we understand it, FSD’s next version (13.0) is tracking at ~10k miles before intervention, compared to Waymo’s 17k level.”

What’s more, some states like California mandate LiDAR sensors for granting an AV license. RBC analysts remain unsure whether a federal AV regulatory framework would be able to supersede the specific policies of individual states.

Moreover, RBC views the expected removal of the $7,500 EV tax credit as a net negative for Tesla. This is in direct opposition to Tesla’s own assertions during the Q3 earnings call, where the EV giant took pains to highlight its cost advantage over other players. To hammer their point home, RBC analysts assert that the manufacturers of Internal Combustion Engine (ICE) vehicles in the US constitute “real competition” for Tesla:

“We think Tesla’s real competition is not other EV makers, especially in the US where EV penetration is still in the single digit percentages. Rather, competition is ICEs and IRA federal credits are an important aid to re-accelerate EV demand which has stalled in recent months.”

Nonetheless, given the outsized importance that autonomous driving carries for Tesla, RBC analysts think that “federal deregulation on AVs would be a bigger positive than eliminating the $7,500 credit would be.”

Today’s note from RBC echoes the broadly upbeat tone that Wall Street analysts have been striking on Tesla since Trump’s reelection. For instance, BofA analysts recently admitted that Tesla might see potential upside going forward vis-à-vis “the federal regulation of autonomous vehicles and FSD, which aligns with Elon Musk’s push for a national standard for self-driving.”

Similarly, last week week, Wedbush’s Dan Ives raised his target for Tesla shares by $100 per share to $400, arguing that the “Trump White House win will be a game changer for the autonomous and AI story for Tesla and Musk over the coming years.”

More recently, Jefferies urged Tesla to take advantage of its ongoing stock rally, one that has seen its market capitalization soar above $1 trillion, to raise fresh capital.