Connect with us

Investor's Corner

Why Tesla Autopilot will ultimately prove the self-driving industry leader

Source: Tesla

Published

on

Tesla took an early lead in the race to develop vehicle autonomy, and its Autopilot system remains the state of the art. However, the technology is advancing more slowly than the company predicted – Elon Musk promised a coast-to-coast driverless demo run for 2018, and we’re still waiting. Meanwhile, competitors are hard at work on their own autonomy tech – GM’s Super Cruise, is now available on the CT6 luxury sedan.

Is Tesla in danger of falling behind in the self-driving race? Trent Eady, writing in Medium, takes a detailed look at the company’s Autopilot technology, and argues that the California automaker will continue to set the pace.

Every Tesla vehicle produced since October 2016 is equipped with a hardware suite designed for Full Self-Driving, including cameras, radar, ultrasonic sensors and an upgradable onboard computer. Around 150,000 of these “Hardware 2” Teslas are currently on the road, and could theoretically be upgraded to self-driving vehicles via an over-the-air software update.

Above: In its current state, Tesla’s Autopilot requires a hands-on approach (Youtube: Tesla)

Advertisement

Tesla disagrees with most of the other players in the self-driving game on the subject of Lidar, a technology that calculates distances using pulses of infrared laser light. Waymo, Uber and others seem to regard lidar as a necessary component of any self-driving system. However, Tesla’s Hardware 2 sensor suite doesn’t include it, instead relying on radar and optical cameras.

Lidar’s strength is its high spatial precision – it can measure distances much more precisely than current camera technology can (Eady believes that better software could enable cameras to close the gap). Lidar’s weakness is that it functions poorly in bad weather. Heavy rain, snow or fog causes lidar’s laser pulses to refract and scatter. Radar works much better in challenging weather conditions.

According to Eady, the reason that Tesla eschews lidar may be the cost: “Autonomy-grade lidar is prohibitively expensive, so it’s not possible for Tesla to include it in its production cars. As far as I’m aware, no affordable autonomy-grade lidar product has yet been announced. It looks like that is still years away.”

If Elon Musk and his autonomy team are convinced that lidar isn’t necessary, why does everyone else seem so sure that it is? “Lidar has accrued an aura of magic in the popular imagination,” opines Mr. Eady. “It is easier to swallow the new and hard-to-believe idea of self-driving cars if you tell the story that they are largely enabled by a cool, futuristic laser technology…It is harder to swallow the idea that if you plug some regular ol’ cameras into a bunch of deep neural networks, somehow that makes a car capable of driving itself through complicated city streets.”

Those deep neural networks are the real reason that Eady believes Tesla will stay ahead of its competitors in the autonomy field. The flood of data that Tesla is gathering through the sensors of the 150,000 or so existing Hardware 2 vehicles “offers a scale of real-world testing and training that is new in the history of computer science.”

Advertisement

Competitor Waymo has a computer simulation that contains 25,000 virtual cars, and generates data from 8 million miles of simulated driving per day. Tesla’s real-world data is of course vastly more valuable than any simulation data could ever be, and the company uses it to feed deep neural networks, allowing it to continuously improve Autopilot’s capabilities.

A deep neural network is a type of computing system that’s loosely based on the way the human brain is organized (sounds like the kind of AI that Elon Musk is worried about, but we’ll have to trust that Tesla has this under control). Deep neural networks are good at modeling complex non-linear relationships. The more data that’s available to train the network, the better its performance will be.

“Deep neural networks started to gain popularity in 2012, after a deep neural network won the ImageNet Challenge, a computer vision contest focused on image classification,” Eady explains. “For the first time in 2015, a deep neural network slightly outperformed the human benchmark for the ImageNet Challenge…The fact that computers can outperform humans on even some visual tasks is exciting for anyone who wants computers to do things better than humans can. Things like driving.”

By the way, who was the human benchmark who was bested by a machine in the ImageNet Challenge? Andrej Karpathy, who is now Director of AI at Tesla.

===

Advertisement

Note: Article originally published on evannex.com by Charles Morris; Source: Medium

Advertisement
Comments

Investor's Corner

Tesla investor Calpers opposes Elon Musk’s 2025 performance award

Musk’s 2025 pay plan will be decided at Tesla’s 2025 Annual Shareholder Meeting, which will be held on November 6 in Giga Texas.

Published

on

Credit: Tesla China

One of the United States’ largest pension funds, the California Public Employees’ Retirement System (Calpers), has stated that it will be voting against Elon Musk’s 2025 Tesla CEO performance award. 

Musk’s 2025 pay plan will be decided at Tesla’s 2025 Annual Shareholder Meeting, which will be held on November 6 in Giga Texas. Company executives have stated that the upcoming vote will decide Tesla’s fate in the years to come.

Why Calpers opposes Musk’s 2025 performance award

In a statement shared with Bloomberg News, a Calpers spokesperson criticized the scale of Musk’s proposed deal. Calpers currently holds about 5 million Tesla shares, giving its stance meaningful influence among institutional investors.

“The CEO pay package proposed by Tesla is larger than pay packages for CEOs in comparable companies by many orders of magnitude. It would also further concentrate power in a single shareholder,” the spokesperson stated.

This is not the first time Calpers has opposed a major Musk pay deal. The fund previously voted against a $56 billion package proposed for Musk and criticized the CEO’s 2018 performance-based plan, which was perceived as unrealistic due to its ambitious nature at the time. Musk’s 2018 pay plan was later struck down by a Delaware court, though Tesla is currently appealing the decision.

Advertisement

Musk’s 2025 CEO Performance Award

While Elon Musk’s 2025 performance award will result in him becoming a trillionaire, he would not be able to receive any compensation from Tesla unless aggressive operational and financial targets are met. For Musk to receive his full compensation, for example, he would have to grow Tesla’s market cap from today’s $1.1 trillion to $8.5 trillion, effectively making it the world’s most valuable company by a mile. 

Musk has also maintained that his 2025 performance award is not about compensation. It’s about his controlling stake at Tesla. “If I can just get kicked out in the future by activist shareholder advisory firms who don’t even own Tesla shares themselves, I’m not comfortable with that future,” Musk wrote in a post on X.

Continue Reading

Investor's Corner

Tesla enters new stability phase, firm upgrades and adjusts outlook

Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.

Published

on

Credit: Tesla China

Tesla is entering a new phase of stability in terms of vehicle deliveries, one firm wrote in a new note during the final week of October, backing its position with an upgrade and price target increase on the stock.

Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.

While most firms are interested in highlighting Tesla’s future growth, which will be catalyzed mostly by the advent of self-driving vehicles, autonomy, and the company’s all-in mentality on AI and robotics, Pozdnyakov is solely focusing on vehicle deliveries.

The analyst wrote in a note to investors that he believes Tesla’s updated vehicle lineup, which includes its new affordable “Standard” trims of the Model 3 and Model Y, is going to stabilize the company’s delivery volumes and return the company to annual growth.

Tesla launches two new affordable models with ‘Standard’ Model 3, Y offerings

Tesla launched the new affordable Model 3 and Model Y “Standard” trims on October 7, which introduced two stripped-down, less premium versions of the all-electric sedan and crossover.

They are both priced at under $40,000, with the Model 3 at $37,990 and the Model Y at $39,990, and while these prices may not necessarily be what consumers were expecting, they are well under what Kelley Blue Book said was the average new car transaction price for September, which swelled above $50,000.

Despite the rollout of these two new models, it is interesting to hear that a Wall Street firm would think that Tesla is going to return to more stable delivery figures and potentially enter a new growth phase.

Many Wall Street firms have been more focused on AI, Robotics, and Tesla’s self-driving project, which are the more prevalent things that will drive investor growth over the next few years.

Wedbush’s Dan Ives, for example, tends to focus on the company’s prowess in AI and self-driving. However, he did touch on vehicle deliveries in the coming years in a recent note.

Ives said in a note on October 2:

“While EV demand is expected to fall with the EV tax credit expiration, this was a great bounce-back quarter for TSLA to lay the groundwork for deliveries moving forward, but there is still work to do to gain further ground from a delivery perspective.”

Tesla has some things to figure out before it can truly consider guaranteed stability from a delivery standpoint. Initially, the next two quarters will be a crucial way to determine demand without the $7,500 EV tax credit. It will also begin to figure out if its new affordable models are attractive enough at their current price point to win over consumers.

Continue Reading

Investor's Corner

Bank of America raises Tesla PT to $471, citing Robotaxi and Optimus potential

The firm also kept a Neutral rating on the electric vehicle maker, citing strong progress in autonomy and robotics.

Published

on

Credit: Tesla

Bank of America has raised its Tesla (NASDAQ:TSLA) price target by 38% to $471, up from $341 per share.

The firm also kept a Neutral rating on the electric vehicle maker, citing strong progress in autonomy and robotics.

Robotaxi and Optimus momentum

Bank of America analyst Federico Merendi noted that the firm’s price target increase reflects Tesla’s growing potential in its Robotaxi and Optimus programs, among other factors. BofA’s updated valuation is based on a sum-of-the-parts (SOTP) model extending through 2040, which shows the Robotaxi platform accounting for 45% of total value. The model also shows Tesla’s humanoid robot Optimus contributing 19%, and Full Self-Driving (FSD) and the Energy segment adding 17% and 6% respectively.

“Overall, we find that TSLA’s core automotive business represents around 12% of the total value while robotaxi is 45%, FSD is 17%, Energy Generation & Storage is around 6% and Optimus is 19%,” the Bank of America analyst noted.

Still a Neutral rating

Despite recognizing long-term potential in AI-driven verticals, Merendi’s team maintained a Neutral rating, suggesting that much of the optimism is already priced into Tesla’s valuation. 

Advertisement

“Our PO revision is driven by a lower cost of equity capital, better Robotaxi progress, and a higher valuation for Optimus to account for the potential entrance into international markets,” the analyst stated.

Interestingly enough, Tesla’s core automotive business, which contributes the lion’s share of the company’s operations today, represents just 12% of total value in BofA’s model.

Continue Reading

Trending