$Tesla(TSLA.US) has solved autonomy by bucking an

$Tesla(TSLA.US) has solved autonomy by bucking an industry trend.

William Gavin

MarketWatch -- Conventional wisdom calls for driverless vehicles equipped with an array of tech. Tesla went for a cheaper option and seems to be having success.

The Cybercab, a dedicated robotaxi vehicle without pedals or a steering wheel, is set to enter volume production next year.

Self-driving cars are here, revved up and ready to go, according to one analyst, who is confident that Elon Musk's Tesla Inc. has effectively "solved" autonomy.

"I'm callin' it," Morgan Stanley analyst Adam Jonas said in a Monday note to investors, before clarifying what he means by "solved."

"When I say solved, do I mean six or seven 9's to the right of the decimal? No. Perfection? Never," the longtime Tesla (TSLA) bull said. "But enough to pull the safety driver at scale in major metros."

In July, Tesla began offering ride-hailing services in Austin, Texas, using electric vehicles operated by its self-driving software. For now, all vehicles used in that service - and a newer operation in the San Francisco Bay Area - are required to be accompanied by a Tesla employee who can respond to an emergency situation.

But, by the end of December, Tesla expects to take its safety drivers out of the cars in Austin, less than half a year after it launched its service. As the company ramps up, Tesla could shorten the time it keeps employees in the car to "maybe three months," according to Musk.

"We probably could just let it loose in these cities, but we just don't want to take a chance," said Musk, describing Tesla's approach as "paranoid about safety."

See also: This underrated Tesla business deserves more attention - and it's not AI

Jonas agreed. The analyst said that, based on discussions with the company, the "only thing" holding it back is an abundance of caution.

Tesla aims to be operating its service in as many as 10 metro areas by the end of 2025, Musk said during a recent earnings call. On that call, he specifically named Nevada, Florida and Arizona as targeted states. A dedicated robotaxi vehicle is scheduled for volume production next year.

If successful, Tesla would "seriously challenge" the industry's conventional approach to safety, which has been on the pricier side, according to Jonas. Most companies working on autonomous vehicles rely on an expensive mix of sensors, cameras and light detection and ranging, or lidar, sensors to map out environments, which they argue is necessary to ensure safety.

The sixth-generation autonomous vehicles used by by Alphabet-backed (GOOGL) (GOOG) Waymo, Tesla's chief domestic autonomous-driving rival, come with 13 cameras, four lidars, six radar units and external audio receivers, according to the company. The driver-assistance system offered by Rivian Automotive Inc. (RIVN) uses a similar rig of 10 cameras, 12 ultrasonic sensors and five radars.

But Tesla opted instead for a cheaper, camera-driven approach, with Musk dismissing lidar in vivid terms. Its vehicles have up to nine cameras, depending on the model year.

"In cars, [lidar is] friggin' stupid. It's expensive and unnecessary," Musk said at a 2019 Tesla event, adding that lidar is "worthless. So you have expensive hardware that's worthless on the car."

Read on: Tesla just shared more about its AI vision. These are the three biggest takeaways.

-William Gavin