Robotaxi's biggest "bombshell" of the day? Morgan Stanley: Tesla's L4 level product costs may be 41% lower than competitors' highest costs!

Will autonomous driving be widely popular in the future? Will human drivers disappear? Which one has lower costs, human drivers or autonomous driving products?

On Wednesday, October 9th, Morgan Stanley's strategic analyst Brian Nowak and his team released a report analyzing the future of autonomous driving technology, stating that if Tesla introduces a viable L4 product, combined with its existing hardware and software, Tesla will have a cost advantage per mile of driving compared to its peers. Currently, autonomous driving in cars is divided into six levels, from L0 to L5, representing fully human driving, assisted driving, partially autonomous driving, conditionally autonomous driving, highly autonomous driving, and fully autonomous driving.

Furthermore, with technological advancements, the cost of autonomous driving services is decreasing, and ride-hailing services may heavily utilize autonomous driving technology. For ride-hailing software like Uber, a mix of human drivers and autonomous driving products is most advantageous.

However, Morgan Stanley also points out that due to obstacles such as technology, costs, regulations, safety, etc., there is still a long way to go for the widespread use of autonomous driving products in the market.

Waymo is a company developing autonomous driving vehicles and is a subsidiary of Google's parent company, Alphabet. Waymo and Tesla are the two companies with the most autonomous driving data.

Tesla's L4 autonomous driving product may have cost advantages

On Thursday, October 10th, Tesla will hold a "Robotaxi Day" demonstration event at Warner Bros. Studios in Los Angeles to announce its progress in autonomous driving technology.

Morgan Stanley will focus on significant signs of improvement in Tesla's autonomous driving technology, future cost curve expectations, safety statistics, regulatory developments, and whether there is substantial evidence of an accelerated growth rate in the supply and adoption of autonomous driving products in the next 5-10 years.

Additionally, Morgan Stanley will also pay attention to whether Tesla demonstrates any technological or cost curve advancements that would give Tesla a structural advantage over Waymo.

Currently, Tesla's autonomous driving product is at level L2. Morgan Stanley believes that if Tesla successfully launches an L4 product, combined with its existing hardware and software (Tesla's base vehicle cost is low, and the autonomous driving architecture adopts a pure vision approach), Tesla will have a cost advantage per mile of driving compared to its peers. Compared to Uber and Lyft, Tesla's autonomous driving taxi can save 41% of costs; while compared to Waymo's sixth-generation product, it can save 21% of costs.

Therefore, if Tesla can introduce a viable L4 product faster than Waymo, achieve production scale, and reduce costs, it will pose a threat to Waymo, Uber, and Lyft.

Ride-hailing services may heavily use autonomous driving technology in the future

Ride-hailing giants Uber and Lyft generated approximately $54 billion in total U.S. ride-hailing orders in 2024. Morgan Stanley estimates that the current mileage of existing ride-hailing services in the U.S. accounts for only about 1% of the total U.S. mileage As time goes on, the price of autonomous driving services will decrease, and the opportunity and frequency of ride-hailing services using autonomous driving technology will significantly increase.

So, if autonomous driving ride-hailing services are widely popularized, will human drivers still be needed? Morgan Stanley (大摩) stated that a hybrid market like Uber is very important, where human drivers handle most routes while autonomous driving products provide services to increase fleet utilization. This is crucial for promoting widespread use of autonomous driving technology.

However, current ride-hailing platforms do face the dilemma of higher costs compared to autonomous driving taxis. Morgan Stanley research found that Waymo's sixth-generation product has about a 26% cost advantage over Uber, making scale crucial for Uber.

After October 10th, Morgan Stanley expects to focus on market-level trends that Waymo has already launched, especially in markets where they cooperate with Uber. Are the trends of Austin, Atlanta, and Phoenix using Waymo remaining positive, and has the cooperation brought trip increments to Uber? If this collaboration fails to generate increments for Uber, it may pose a risk to Uber's overall market strategy.