Well-known tech analyst: Tesla's (TSLA.US) autonomous driving business will significantly boost operating profit
1min read Over the past few weeks, confidence in Tesla's (TSLA.US) further success has grown, driving the stock higher. This optimism was fueled by reports that the Trump team plans to make "building a federal framework for fully self-driving (FSD) cars" a priority for the U.S. Department of Transportation, which is expected to benefit the company.
Under current federal regulations, companies like Tesla face significant hurdles in their efforts to deploy large fleets of cars without steering wheels or brakes. While the U.S. Department of Transportation can promulgate rules through the National Highway Traffic Safety Administration to enable the operation of autonomous vehicles, congressional legislation would pave the way for the widespread adoption of autonomous vehicles. A bipartisan legislative measure being discussed would establish federal regulations for autonomous vehicles. If the new regulations enable FSD cars, then Tesla CEO and Trump mega donor Musk would directly benefit, as he has bet the future of the company on autonomous and artificial intelligence technology.
Currently, the market broadly believes that an unregulated FSD approval path is easier to navigate, though not guaranteed. Gene Munster, a well-known technology analyst and managing partner at Deepwater Asset Management, believes that Tesla has a unique position in the autonomous taxi industry because the company can achieve autonomous through a combination of light and heavy asset models.
Gene Munster believes that by the end of this decade, Tesla's operating profit will have grown significantly, with a potential 10%-155% increase depending on which model Tesla adopts. In the light asset model, Gene Munster believes that by 2030, Tesla will capture 30% of the autonomous market, with autonomous contributing 40% of the company's operating profit; in the heavy asset model (similar to Waymo's autonomous fleet model), Tesla's operating profit will grow 62%.
