Tesla Inc. TSLA investor and Future Fund Managing Partner Gary Black sheds light on the perplexing valuation puzzle surrounding Tesla’s Full Self-Driving (FSD) software.
In a recent analysis, Black conveyed that despite the recognition of Tesla’s advancements in FSD, Wall Street remains hesitant to factor it into the valuation until the software achieves true autonomy.
Currently, Black views FSD as a robust driver-assist tool rather than a fully autonomous driving solution. He emphasizes that for FSD to realize its full potential, Tesla must be willing to assume complete liability for any incidents, a significant milestone that seems distant.
Black candidly remarked, “Since I don’t see that happening anytime soon, WS won’t add incremental value beyond the normal take rate math in every analyst’s TSLA valuation model.”
Tesla has consistently held drivers responsible for any FSD-related accidents, underscoring that the software is under testing and necessitates active human oversight. Recently, Tesla announced a complimentary one-month activation of FSD for all compatible U.S. vehicles.
Significance of the Analysis: Tesla’s CEO, Elon Musk, had previously projected a significant leap in FSD’s capabilities by late April or May, with the company aiming for bi-weekly software improvements.
Moreover, Black suggests that Tesla should include a dedicated segment on artificial intelligence in its financial reports to emphasize FSD and other ventures like FSD licensing, robotaxis, Optimus, and Dojo, seeking to attract more investor focus.
As anticipation mounts for Tesla’s upcoming first-quarter delivery figures, expected next week, Black anticipates a favorable response to any number surpassing last year’s 423,000 deliveries, setting his estimate at around 425,000 units.
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