"I almost never drive anymore," Morgan Stanley analyst says: Tesla's FSD may be close to "solving" the autonomous driving problem.

Morgan Stanley's star analyst Adam Jonas, drawing on his personal driving experience, has issued what is to date the most compelling endorsement of Tesla's Full Self-Driving (FSD) system—he believes that the autonomous driving challenges represented by the "car-shaped robot" are nearing a solution.

According to a recent research report by Morgan Stanley, Adam Jonas has driven 2,713 miles using Full Self-Driving (FSD) in the past 12 months, accounting for 33% of his total Tesla Model Y mileage.

He stated that he uses FSD (Full Self-Driving) on 100% of his trips, estimating that the actual mileage driven by the system is between 98% and 99%. Last week, FSD even completed a round trip of 28 miles from his residence to Morgan Stanley's Times Square headquarters, without any human intervention. Jonas bluntly stated, "If you see me sitting in a Model Y, I'm not driving."

The release of this report further strengthens market expectations regarding the maturity of Tesla's FSD technology and prompts a re-evaluation of the timeline for the commercialization of autonomous driving. Morgan Stanley maintains its Equal-weight rating on Tesla (TSLA.O) with a target price of $400; the current share price is $357.45.

Analysts' firsthand experience: FSD allows for "complete relaxation"

In his report, Adam Jonas detailed his personal experience using FSD in the first person, with unusually personal wording.

He stated that he has been driving since he was 15, and Tesla's FSD has completely changed his perception of driving. "In the past, I had to keep my attention when using FSD. But now I don't need to. Over the past year, whenever I activate FSD, I completely 'empty my mind'—listening to audiobooks, sending emails, playing the air drums with the Rush band—until I reach my destination."

Jonas also stated that he trusts FSD more than ride-hailing drivers—he'd rather let FSD take his children on long journeys independently than choose a human-driven ride-sharing service. Notably, he also admitted that he hasn't yet convinced his wife to trust FSD, even though she's the primary driver of the car.

Mileage data: Tesla's FSD has achieved economies of scale.

The report cites data from Tesla's official FSD vehicle safety report, showcasing the depth of FSD's technological accumulation from a scale perspective.

As of the report's release, Tesla's Full Self-Driving (FSD) mileage is about to surpass 15 billion miles. The entire Tesla fleet currently travels approximately 24,000 miles per minute in FSD mode—equivalent to multiple round trips between Miami and Anchorage per minute, or the distance from Miami to Seattle and then to San Francisco.

Morgan Stanley estimates this speed to be approximately 1,800 times the speed of sound (about 12.8 miles per minute). In terms of market penetration, the bank estimates that Tesla's Full Self-Driving (FSD) currently accounts for about 0.34% of total mileage driven by U.S. consumers, and expects it to rise to about 1% within the next 18 to 24 months. In areas with a high concentration of Tesla vehicles (such as the San Francisco Bay Area), this percentage could be several times the national average.

Target price composition: Robotics and autonomous driving are the core valuation pillars

Morgan Stanley's $400 price target for Tesla consists of five parts, with the autonomous driving and robotics businesses contributing more than half of the valuation.

Specifically: the core automotive business will contribute $45 per share, based on sales of approximately 8.5 million vehicles in 2040 and an EBIT margin of 8.4%; network services will contribute $144 per share, assuming an 80% FSD add-on rate and an ARPU of $240 per month in 2040; Tesla Mobility will contribute $120 per share, based on approximately 5 million vehicles and a charge of approximately $1.33 per mile; the energy business will contribute $35 per share; and humanoids will contribute $56 per share with a 50% probability after discounting.

Morgan Stanley believes that if FSD penetration continues to increase, unsupervised FSD is implemented, and Robotaxi and Optimus robots make progress, Tesla's valuation could further expand. However, competition from traditional automakers, Chinese automakers, and technology companies, as well as the commercialization progress of FSD and Robotaxi, regulatory policies, performance in the Chinese market, and current valuation levels, remain risks that need to be monitored.

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