Don’t worry about the Q4 performance—the biggest highlights of Tesla’s earnings report next week are robots and autonomous driving.

Tesla will soon release its fourth-quarter financial report on the 29th, and investors’ focus is shifting from traditional financial metrics to the progress of cutting-edge technologies such as robotaxi, unsupervised autonomous driving, humanoid robot Optimus, and the AI5 chip. According to a recent research report from Morgan Stanley, incremental updates about these technologies will determine stock price reactions, rather than conventional delivery volumes or margin data.

According to news from Chase Trading Desk, the Morgan Stanley analyst team led by Andrew S Percoco stated in their report on the 21st that the market has significant divergence regarding Tesla’s key financial indicators for 2026. The firm expects Tesla’s 2026 deliveries to be 1.6 million vehicles, 9% lower than general market expectations and a 2.5% year-on-year decline. More notably, Morgan Stanley forecasts a $1.5 billion free cash flow burn for Tesla in 2026, versus the market consensus which anticipates positive $3.1 billion.

This pessimistic outlook mainly stems from the firm’s view that the market has yet to fully reflect Tesla’s sharp increase in capital expenditures in 2026. Morgan Stanley projects Tesla’s 2026 automotive gross margin (excluding carbon credits) to be 14.2%, lower than the market’s 15.0% expectation, partly due to its cautious view on volume growth.

On the technology front, the timeline for Tesla launching an unsupervised robotaxi service in Austin, Texas is seen as a key near-term catalyst to validate its autonomous driving technology and safety. Additionally, updates regarding the Cybercab planned for production in April 2026 and the anticipated debut of the third-generation Optimus robot in February or March will be major market focal points.

Robotaxi and Cybercab production enter a critical phase

According to the Morgan Stanley report, Tesla’s launch of public service robotaxis without safety supervisors in Austin, Texas is seen as a key near-term catalyst for validation of its robotaxi platform's technology and safety. The firm expects Tesla to update the cumulative mileage data for its Austin robotaxi fleet on the earnings call, which is vital to assess safety improvements.

Morgan Stanley assumes that by the end of 2026, Tesla's robotaxi fleet will reach 1,000 vehicles. Notably, Cybercab has been tested in multiple markets, including Austin, Texas; California’s Bay Area and Fremont; Chicago, Illinois; and Buffalo, New York.

The Cybercab production plan is scheduled to start in April 2026, and any updates to the production timeline will be closely watched. This model, designed specifically for autonomous driving, is viewed as a key product for Tesla’s transformation from a traditional automaker to a mobility service provider.

The path to unsupervised FSD rollout draws attention

Tesla Full Self-Driving (FSD) system’s cumulative mileage shows exponential growth. According to the report, cumulative FSD miles have grown from about 90 million miles in 2022 (150,000 miles per day) to approximately 7.4 billion miles currently (11 million miles per day in 2025). At the same time, third-party reports indicate that FSD product quality has improved considerably.

Morgan Stanley believes the next major breakthrough will come when Tesla can deliver a more robust “eyes-off” experience (i.e. unsupervised FSD). The firm expects this to be rolled out in phases over 2026, and views Tesla’s decision to remove safety supervisors from robotaxis in Austin as a potential precursor to personal unsupervised FSD release.

Tesla’s recent move to switch FSD to subscription-only may signal the launch of tiered FSD products and pricing strategies. Morgan Stanley assumes global FSD subscription rates will rise from the current ~12% to 17.5% by year-end. Approvals and launches of unsupervised FSD in Europe and China will be crucial to driving long-term penetration. This function is key to supporting Morgan Stanley’s assumption of 17.1% vehicle sales growth in 2027.

AI chips and Optimus robot updates imminent

Morgan Stanley expects Tesla to update the progress of its AI5 chip design on the earnings call, as well as how its chip development and computing power investment will evolve over time, including projects like AI6+ and Dojo.

Tesla previously stated it would debut the third-generation Optimus humanoid robot in February or March 2026. This is becoming an increasingly important part of the Tesla story and valuation. After the flood of humanoid robot product showcases at this year’s CES, the market will closely monitor product launch timing and production rollout updates.

In its base-case scenario, Morgan Stanley gives the Optimus business a valuation of $60 per share (applying a 50% probability discount). In the bull case, the business could be valued at $225 per share (0% probability discount).

Musk’s business empire synergy draws attention

The report notes that the integration of Musk’s other businesses with Tesla has come more clearly into view. The market is looking for updates on how these businesses will achieve synergy with Tesla in the future.

Morgan Stanley maintains its "Equal-weight" rating on Tesla, with a price target of $425 and a current price of $431.25. The firm’s price target comprises five segments: core automotive business $55, network services $145, mobility services $125, energy business $40, and humanoid robots $60.

In the bear-case scenario, Morgan Stanley gives a target price of $145; in the bull-case scenario, the target price could reach $860. This wide valuation range reflects the uncertainty Tesla faces as it transforms from a traditional automaker into an AI and robotics company.

~~~~~~~~~~~~~~~~~~~~~~~~

The above content is from Chase Trading Desk.

For more detailed insights, including real-time analysis and frontline research, please join [Chase Trading Desk · Annual Membership]

Risk warning and disclaimerThe market has risks; investments require caution. This article does not constitute personalized investment advice, nor does it take into account individual users' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Investments based on this article are at your own risk.