TLDR
- Tesla’s Full Self-Driving technology advances at pace that leaves traditional automakers years behind, according to Melius Research analysis
- Melius analyst maintains Buy rating with $525 price target, citing Tesla’s chip performance and hardware-software integration improvements
- Musk confirms Tesla open to FSD licensing but says legacy automakers only propose impractical pilot programs years away
- Company launches FSD ride-alongs in Germany, France, and Italy while targeting February 2026 Dutch regulatory approval
- Tesla European sales plunged 50% in October versus prior year as Chinese competitor BYD surged 200%
Tesla’s self-driving technology is leaving traditional carmakers in the dust. Wall Street analysts say the gap keeps growing wider.
Melius Research issued a report saying Tesla’s driver-assist system advances faster than competitors can match. Analyst Rob Wertheimer pointed to improvements across multiple areas. Chip performance has jumped. Hardware and software work together more smoothly.
Legacy automakers built their businesses around efficiency and cost control. That focus may now work against them. Wertheimer said the old model leaves them slow to adapt when technology drives competition.
Tesla maintained a Buy rating from Melius with a $525 price target.
The Licensing Problem
Elon Musk addressed FSD licensing on Monday. He confirmed Tesla will share the technology with other companies. The catch is how they want to use it.
Traditional automakers reach out with small pilot program ideas. These proposals target launches three or four years away. Musk called this approach impractical for Tesla’s fast-moving technology development.
Wertheimer’s analysis suggests many automakers lag years behind in autonomous vehicle design. They may also lack the internal organization to compete at scale. He compared the shift to past transportation changes. Old technologies disappeared fast once better options arrived.
Europe Becomes Key Battleground
Tesla is pushing hard to launch FSD across Europe. The company announced ride-along events in three countries next month.
German, Italian, and French customers can experience FSD from the passenger seat. The test drives showcase software that handles most driving situations but needs human oversight.
FSD went live in America in 2022. Getting it approved overseas has proven tougher.
Tesla posted Saturday it expects Dutch regulator RDW approval by February 2026. The company said it has worked for over a year on European authorization.
RDW responded with caution. The regulator confirmed it created a February approval schedule but said meeting that deadline “remains to be seen.” The agency asked Tesla supporters to stop contacting them after the company urged fans to reach out.
Tesla tested FSD on European streets for months. Videos show cars driving through Rome and around Paris landmarks.
Employees working on European approval expressed frustration with the testing requirements. One told regulators that FSD approval was “mission critical” to leadership.
Sales Pressure Mounts
Musk frequently criticizes European regulations. He called the approval process a “Kafkaesque” maze during a July earnings call. He predicted sales would jump once FSD gets the green light.
Tesla needs the boost. European sales crashed nearly 50% in October compared to last year. European Automobile Manufacturers’ Association data confirmed the drop.
Chinese rival BYD saw sales explode over 200% in the same period. Competition from Chinese EV makers has intensified. Backlash over Musk’s political statements also hurt European demand.
Tesla expects Dutch approval by February 2026 despite regulatory warnings about the timeline.
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