Oppenheimer analysts highlighted what they see as the limited earnings potential of Tesla (NASDAQ:TSLA)'s autonomous technology through 2030 in a note to clients Tuesday.
According to the firm, despite Tesla's leadership in data collection and neural network development, significant regulatory and operational hurdles remain.
"We continue to see a long road to driver-out vehicles in commercial operation for TSLA and others," Oppenheimer states, attributing this to an "uncertain regulatory backdrop."
Incremental task automation is seen as a precursor to full autonomy. The analysts expect commercialization to occur through a series of incremental functionalities validated via field testing.
Tesla's robust data collection is considered crucial for improving task automation and accelerating learning cycles. They note that the regulatory environment and testing requirements are still evolving.
"Federal regulators have deferred rule setting to states as the technology matures," Oppenheimer notes.
While states have approved limited testing for individual OEMs with safety provisions, formal feature approval processes are not yet established.
Regarding financial impacts, Oppenheimer projects that Tesla could earn between $1 and $3 per share in net income by 2030 from autonomous technology, either through an FSD (Full Self-Driving) subscription model or a Robotaxi service.
The subscription value of FSD is estimated to yield $1-2 in EPS annually by 2030, assuming a 50% take rate on an expected 15-18 million vehicles on the road, with a 55-70% incremental net margin contribution.
The Robotaxi market is also evaluated. Tesla's focus on the U.S. market is highlighted, with urban vehicle miles traveled (VMT) representing a tangible addressable market by 2030.
Assuming a 60% utilization rate and a $0.79 per mile value capture, Oppenheimer estimates EPS of $2.25-$3.22 per 250,000 vehicles at 35-50% incremental net margins. They add that lowering the value capture to $0.50 per mile to account for competition results in an estimated EPS of $1.42-$2.04.
Overall, Oppenheimer believes that while Tesla's autonomous technology holds promise, its financial impact appears modest through the end of the decade. "We believe the most likely scenarios point to TSLA earning between $1-3/share in net income by 2030," Oppenheimer concludes.