Gene Munster of Deepwater Asset Management described Tesla's Full Self-Driving (FSD) technology as being at an "inflection point" following Tesla's Q3 earnings call on Wednesday. Munster said Tesla added about 250,000 FSD subscriptions during Q3. Munster said miles driven using FSD rose 190% year over year. Munster and investor Dan Ives regard FSD as a central element of Tesla's business strategy.
Munster attributed Tesla's share-price decline to slightly lower capital expenditure in the December quarter. Munster said investors focused on Tesla's long-term opportunity wanted greater capital expenditure. Munster described the opportunity for customers to add customer-owned cars to Tesla's Robotaxi fleet sometime in Q2 2027 as a significant advance.
An analyst asked whether traditional automakers could affect Tesla by partnering with companies such as Nvidia to develop Level 2+ self-driving systems. Tesla AI Lead Ashok Elluswamy responded that completing the first 90% and producing an impressive demonstration was easy. However, Elluswamy said completing the final 10% to achieve self-driving without injuries or accidents was difficult and involved long-tail challenges. Elluswamy said, "People don't realize anyone with their sane mind should not attempt to solve this problem." Elluswamy said Tesla's competitors would not be able to match Tesla's unsupervised FSD for several years as Tesla releases the technology to customer vehicles.
Munster praised Elluswamy's answer and encouraged people to try FSD. Munster said FSD would "blow you away". Elon Musk said during the earnings call that showroom visitors were requesting FSD demonstrations rather than asking for specific vehicles such as the Cybertruck or Model Y. Munster said progress in FSD, the additional sales value FSD provides and Robotaxi potential were strengthening Tesla's momentum. Munster argued that FSD was delivering results for Tesla and that traditional automakers would find closing the gap very difficult.
Ives said FSD continued to support Tesla's sales, with attach rates exceeding 75% of North American deliveries. Ives said Tesla's active FSD subscriptions totaled 1.74 million, an increase of 67% year over year. Ives said Optimus production had started and argued that Tesla's developing AI business reinforced the strategic case for a merger with SpaceX. Ives again endorsed a merger between Tesla and Space Exploration Technologies Corp.
Musk said during the earnings call that reaching Optimus production of 20,000 robots per week at Tesla's Fremont, California, facility could take a year or longer. Musk said earlier this month that Optimus and Robotaxi could eventually represent most of Tesla's value.
Tesla FSD at Inflection Point, Rivals Struggle to Match Capabilities
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Summary
Tesla's Full Self-Driving (FSD) technology is at an inflection point, with risk-to-reward ratio favoring early adopters. Gene Munster of Deepwater Asset Management cited FLASH AI data showing Tesla added 250,000 FSD subscriptions in Q3, with FSD miles driven up 190% year over year. Asset allocation strategies may need to reflect FSD's growing traction, as active subscriptions hit 1.74 million, up 67% annually. Tesla AI Lead Ashok Elluswamy said rivals can’t match unsupervised FSD for years due to the complexity of accident-free driving. FSD now accounts for over 75% of North American deliveries.
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