This Tesla bull makes a bold claim: The company has solved the 'self-driving puzzle'

By William Gavin

A Piper Sandler analyst says Tesla's autonomous-driving technologies are more advanced than even the company will say

Tesla's electric vehicles can be equipped with the company's advanced driver-assistance system for a monthly subscription fee.

Tesla has solved the "self-driving puzzle," according to a bullish analyst, who sees room for the stock to surge 30% from here.

"When it comes to the efficacy of Tesla's Full Self-Driving (FSD) software, there's no shortage of skeptics," wrote Piper Sandler's Alexander Potter in a note to clients on Wednesday. But he and his team "think Tesla has effectively achieved Level 4 autonomy (at least in most conditions)."

Tesla (TSLA) says that its supervised FSD advanced driver-assistance system is a "Level 2" system. That means that drivers are still meant to constantly watch the road and keep their feet on the pedals.

A "Level 4" system - the second highest on the standards organization SAE International's scale - doesn't require drivers to take over, and may or may not require the installation of pedals or a steering wheel. Such vehicles are also limited to specific areas, such as Alphabet-backed (GOOG) (GOOGL) Waymo's geofenced robotaxis in operation in San Francisco and Atlanta.

Potter, who rates Tesla's stock at overweight, listed six reasons why he believes the company has also achieved Level 4 autonomous vehicles. He cites, in part, Tesla's promotion of car-insurance discounts for customers that use FSD frequently, as well as his personal experience driving - or being driven by - Tesla cars.

"In April, my Tesla drove me from Missoula to Minneapolis," Potter said. "The latest FSD versions are capable of 'true' self-driving, especially in good weather."

The analyst also cited Tesla's recent disclosure of active FSD subscriptions. It began providing this figure last quarter and showed that it had 1.28 million subscriptions. That metric, Tesla noted, included both upfront payments and monthly plans to use its software, keeping in line with the requirements of CEO Elon Musk's massive, milestone-based compensation plan.

Additionally, Potter pointed to Tesla's efforts to scale its robotaxi operations, including by seeking permits to develop infrastructure in Irving, Texas, and begin volume production of its Cybercab vehicle. The company also plans to launch its robotaxis in seven new states in the first half of 2026, although time is running out to achieve that goal.

"This might be unrealistic ... but the trend is clear," Potter wrote.

In April, Tesla began rolling out unsupervised robotaxi services in Dallas and Houston, joining its operations in Austin, Texas. Tesla also offers supervised ride-hailing services in the San Francisco Bay Area.

The company has 32 active unsupervised vehicles operating across the three Texas cities, according to a crowd-sourced tracker. It's also testing 54 Cybercab vehicles across eight regions, although the majority are being put to work in Austin, home to Tesla's headquarters.

See more: Tesla just hit a 'symbolic' self-driving milestone. Real-world success will be tougher.

That's a massive improvement over where Tesla was when the year kicked off. But it's also well short of Musk's highly ambitious timeline.

"We'll probably have autonomous ride-hailing in about half the population of the U.S. by the end of the year," Musk said on a July 2025 earnings call, where he also predicted that robotaxis would have a "material impact" on Tesla's financials by the end of 2026.

In April, Musk offered up a justification for the slower-than-expected rollout. He said that the limiting factor is "really rigorous validation" because Tesla wants to avoid safety incidents. Musk also said robotaxi revenue would be material "probably in a significant way" in 2027.

While Tesla's progress has slowed, its rivals have been expanding. So far this year, Waymo has expanded access in at least six cities and introduced a new vehicle. Uber Technologies (UBER) has inked several deals to bulk up its robotaxi plans, and international rivals such as WeRide (WRD) have also been expanding.

-William Gavin

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06-10-26 1522ET