Piper Sandler supports Tesla: The challenge of autonomous driving may have been overcome

According to the Zhītōng Finance APP, Piper Sandler has recommended investors to buy Tesla (TSLA.US) stock because it believes the company "may have solved the problem of autonomous driving".

In a report released on Monday, Piper Sandler wrote: "Don't roll your eyes. Buy Tesla stock."

Piper Sandler emphasized Tesla's release of the Full Self-Driving (FSD) version 12.5. The new FSD version has received very positive reviews in the first few days of use.

Piper Sandler analysts are well aware that Tesla has been notorious for overpromising when describing its projects (including autonomous driving capabilities). For years, people have been hearing that Tesla will solve the FSD issue "by the end of the year". But analysts believe that this time, the situation may be different.

Piper Sandler analysts stated: "Investors are used to ignoring Tesla's exaggerated claims about full self-driving. However, based on comments on the X platform, the update to Tesla 12.5 is 'revolutionary'."

Piper Sandler analysts also mentioned that the upcoming Robotaxi event (postponed from August 8 to October 10) may indeed be Tesla's most important moment, as the company plans to launch a fully autonomous driving car, possibly as early as next year.

"We believe investors should consider the possibility that Tesla's decision to hold the Robotaxi event is not to divert attention from the decline in electric vehicle sales."

Piper Sandler analysts suggested that with the continuous improvement of Tesla's technology, the subscription price for full self-driving may increase. If Tesla is able to launch a fully autonomous driving car, the current price of $99 per month will not be sustainable.

Piper Sandler believes that the subscription price could approach $500 per month, which will bring more value to investors, depending on the acceptance rate and overall usage of the final ride-sharing model that Tesla plans to bring to the market.

Tesla CEO Elon Musk optimistically predicted during the second quarter earnings call that Tesla vehicles equipped with unsupervised FSD will form a huge fleet of autonomous driving vehicles, which could significantly increase Tesla's valuation. Musk reiterated that Tesla's value lies mainly in its autonomous driving technology, not other factors.

However, Truist Securities analyst William Stein released a report on Monday stating that he almost crashed while testing Tesla's FSD. He concluded that the FSD version he tested is "indeed amazing, but far from 'fully' autonomous driving". Stein maintains a "hold" rating on Tesla stock with a target price of $215.

It is worth noting that Tesla has replaced Ford as Morgan Stanley's preferred American car stock. Morgan Stanley believes that Tesla's stock price has a 40% upside potential, but expresses that Tesla's expectations for autonomous driving taxis are "too high". As a result of this news, Tesla rose by 5.6% on Monday, closing at $232.10