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Tesla’s Autopilot probe worries Morgan Stanley with ‘reputational risks’

A Tesla Model 3 utilizing its Navigate on Autopilot feature. (Credit: Tesla)

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The recently launched Tesla Autopilot probe by the NHTSA is said to be a greater threat to the automaker’s reputation than its financial situation, according to a new note from Morgan Stanley. Headed by analyst Adam Jonas, the note outlines the potential risks that Tesla could face with the probe, which intends to investigate 11 instances of Autopilot-equipped cars crashing into emergency vehicles, according to the documents.

The note outlines four potential risk factors that Tesla could face in a long and drawn-out battle to clear its name of any wrongdoing. In the initial years of autonomous driving development, nearly any instance of a vehicle being involved in an accident has increased skepticism over the potential of future self-driving cars. While Tesla Autopilot only operates on Level 2 autonomy, with Level 5 being a fully operational self-driving machine, the company admittedly states that drivers should still remain alert while the vehicle is in operation, never taking their eyes off the road.

However, this is not the instance for every driver. While Autopilot vehicles from Tesla were involved in accidents on a significantly less-frequent occasion than the national average based on NHTSA statistics, Tesla vehicles involved in accidents seem to catch more media attention than any other instance on the road. After all, we don’t hear about every Chevy Malibu or Ford F-150 crash that occurs, but the false narrative that Teslas drive themselves still floats around in the form of catchy headlines or misleading articles.

The chance for reputational risks is one of the most notable points of the Morgan Stanley note and is the point that the analysts expand on the most. “Vehicle safety actions and recalls (both voluntary and involuntary) are a fact of life in the auto industry, despite cars achieving greater capability and quality over time. While we are not making any changes to our Tesla model and price target at this time, the NHTSA serves as a reminder to investors about the importance of vehicle safety as we turn over greater portions of driving to software in a network,” the note said.

A Tesla Model 3 on Autopilot. [Credit: LivingTesla/YouTube]

Of course, semi-autonomous vehicles, and autonomy in general for automotive, is a young and relatively new feature in the world of cars. There are bound to be mistakes and incidents just as there were with early vehicles. Accidents happen, but the early adopters of motor vehicles did not give up on the task of making them better and safer, and that’s precisely what will happen as more companies take a crack at the potential autonomous driving sector.

“The regulatory, legal, and moral/ethical nuances are difficult, if not impossible, to model. As human driving transitions to computer driving, accident frequency is expected to decline by 90% or more (some experts insist accident frequency must ultimately fall by greater than 99.9%). At the same time, accident ‘fault’ transitions from someone to something,” the note also states. “Just our view, but there is no moral equivalency between a ‘human-caused’ traffic fatality and a ‘system-caused’ traffic fatality. Over time, we believe the industry should be in position to provide vehicle data for 3rd party validation to prove the significant societal/health and safety benefits of autonomy.

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As noted yesterday in an interview with former Ford CEO Mark Fields, the NHTSA study into Tesla could take up to 18 months. Morgan Stanley reiterates this point in its note, especially with Autopilot’s “high profile nature.” Unfortunately, Tesla’s flashy name and mainstream personality as an automaker, especially a revolutionary one, has put them at center stage for this kind of attention. Those with a reasonable platform may not understand all of the functionalities or safety precautions of Autopilot’s nature. Still, unfortunately, many of the accidents are being described as the software’s fault, although many of the instances are actually driver errors.

At the time of writing, TSLA stock was trading at $689.79, up over 3.6%.

Disclosure: Joey Klender is a TSLA Shareholder.

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Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Investor's Corner

Tesla Board member and Airbnb co-founder loads up on TSLA ahead of robotaxi launch

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member’s purchase.

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(Credit: Tesla)

Tesla Board member and Airbnb Co-Founder Joe Gebbia has loaded up on TSLA stock (NASDAQ:TSLA). The Board member’s purchase comes just over a month before Tesla is expected to launch an initial robotaxi service in Austin, Texas.

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member in a post on social media.

The TSLA Purchase

As could be seen in a Form 4 submitted to the United States Securities and Exchange Commission (SEC) on Monday, Gebbia purchased about $1.02 million worth of TSLA stock. This was comprised of 4,000 TSLA shares at an average price of $256.308 per share.

Interestingly enough, Gebbia’s purchase represents the first time an insider has purchased TSLA stock in about five years. CEO Elon Musk, in response to a post on social media platform X about the Tesla Board member’s TSLA purchase, gave a nod of appreciation for Gebbia. “Joe rocks,” Musk wrote in his post on X.

Gebbia has served on Tesla’s Board as an independent director since 2022, and he is also a known friend of Elon Musk. He even joined the Trump Administration’s Department of Government Efficiency (DOGE) to help the government optimize its processes.

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Just a Few Weeks Before Robotaxi

The timing of Gebbia’s TSLA stock purchase is quite interesting as the company is expected to launch a dedicated roboatxi service this June in Austin. A recent report from Insider, citing sources reportedly familiar with the matter, claimed that Tesla currently has 300 test operators driving robotaxis around Austin city streets. The publication’s sources also noted that Tesla has an internal deadline of June 1 for the robotaxi service’s rollout, but even a launch near the end of the month would be impressive.

During the Q1 2025 earnings call, Elon Musk explained that the robotaxi service that would be launched in June will feature autonomous rides in Model Y units. He also noted that the robotaxi service would see an expansion to other cities by the end of 2025. “The Teslas that will be fully autonomous in June in Austin are probably Model Ys. So, that is currently on track to be able to do paid rides fully autonomously in Austin in June and then to be in many other cities in the US by the end of this year,” Musk stated. 

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Investor's Corner

Tesla hints at ‘Model 2’ & next-gen EV designs

Tesla’s Q1 2025 update confirms new models this year, with production tied to existing factory lines. Could it be time for the Model 2 debut?

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(Credit: Tesla)

During its Q1 2025 earnings call, Tesla executives hinted at the much-rumored “Model 2” and other next-gen EV designs.

Tesla slightly addressed whether or not it will be pushing forward with the debut of new models later this year in its latest earnings call. The company’s product development executive, Lars Moravy, shared some details about Tesla’s design process and the upcoming affordable models.

“We’re still planning to release models this year. As with all launches, we’re working through, like, the last minute issues that pop up. We’re knocking them down one by one. At this point, I would say that the ramp might be a little slower than we had hoped initially…But there’s nothing that’s blocking us from starting production within the next, within the timeline laid out in the opening remarks.

“And I will say it’s important to emphasize that, as we’ve said all along, the full utilization of our factories is the primary goal for these new products. And so the flexibility of what we can do within the form factor and, you know, the design of it is really limited to what we can do on our existing lines rather than building new ones. But we’ve been targeting the low cost of ownership. Monthly payment is the biggest differentiator for our vehicles, and that’s why we’re focused on bringing these new models with the, you know, the lowest price, to the market, within the constraints I just highlighted.”

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In January, Tesla’s Chief Financial Officer Vaibhav Taneja teased several new product introductions for this year. There is at least one product that most Tesla supporters and investors are hoping to see: the company’s affordable vehicles, which have been dubbed by the EV community as the “Model 2” or “Model Q.”

Before Tesla’s Robotaxi event last year, many speculated that the company would also unveil its affordable next-gen vehicle. Gene Munster from Deepwater had expected Tesla to release a stripped-down version of the Model 3 as its affordable vehicle during the Robotaxi event. In the end, Tesla unveiled its Robotaxi vehicle and its Robovan design.

It’s been a while since the Robotaxi event, and Tesla has kept mum about its affordable vehicle. Considering its Q1 2025 performance, TSLA investors look forward to catalysts that could boost the stock.

The “Model 2” has been labeled a potential catalyst for Tesla. As such, TSLA investors and supporters have been itching for news about the new affordable vehicle. The main questions surrounding the “Model 2” revolve around its design and price. Based on Moravy’s statement, the “Model 2’s” design will heavily depend on Tesla’s current assembly lines and supply chain structures.

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Tesla regains Piper Sandler’s confidence with Robotaxi plans & Q1 Results

Piper Sandler says Tesla delivered the best-case scenario for bulls. $TSLA has catalysts ahead to silence the bears.

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tesla-model-y-delivery
(Credit: Tesla)

Tesla gained Piper Sandler analyst Alexander Potter’s confidence following its Q1 2025 earnings call. Piper Sandler reaffirmed its Overweight rating and $400 TSLA price target, signaling optimism for the company’s robotaxi and affordable vehicle launches expected this year. The firm’s stance reflects Tesla’s resilience amid market challenges.

Despite expectations of weak Q1 financials, Tesla’s stock edged up in after-hours trading, defying skepticism. Piper Sandler’s Alexander Potter noted that the results met the hopes of Tesla supporters, particularly as the company held firm on its timelines. Potter emphasized that anticipation for robotaxi details and new vehicle launches should keep critics at bay, supporting the $400 target.

“In our preview last week, we predicted that (at best) Q1 would be a non-event. With the stock trading up slightly in the after-hours session, it appears our best-case scenario has materialized. Considering generally weak Q1 financials, we think this is the best result that TSLA bulls could’ve reasonably hoped for.

“In our view, the most important Q1 takeaway is this: Tesla didn’t hedge expectations re: launching Robotaxis or lower-priced vehicles in 1H25. With <2 months until the end of June, investors can look forward to some interesting catalysts in the weeks ahead. In our view, this alone should be enough to keep the bears at bay, at least until we have a better idea re: the details of Tesla’s new products, as well as the scale/scope of the Robotaxi launch,” wrote Potter.

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Wedbush Securities’ Dan Ives, a longtime TSLA bull, echoed Potter’s optimism for Tesla. Ives raised his price target for Tesla stock from $315 to $350 with a BUY rating. His Tesla upgrade came after Elon Musk’s announcement during the Q1 earnings call that he would reduce his involvement with DOGE, signaling a sharper focus on Tesla.

Tesla’s steady Q1 performance and unwavering commitment to its 2025 roadmap, including the Robotaxi launch and lower-priced models, bolster investor confidence. Piper Sandler’s analysis underscores Tesla’s ability to navigate a competitive electric vehicle market while advancing its technological edge. The upcoming Robotaxi launch and affordable vehicle introductions are pivotal, with analysts expecting these initiatives to drive stock value through 2025.

As Tesla prepares for these milestones, its stock movement reflects market trust in Musk’s vision. With Piper Sandler and Wedbush reaffirming bullish outlooks, Tesla’s strategic moves will remain under close scrutiny, positioning the company to capitalize on its innovation pipeline in a dynamic industry landscape.

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