In the ever-evolving world of artificial intelligence (AI) and autonomous driving, Tesla continues to position itself at the forefront. During the first-quarter earnings call, Elon Musk made clear that Tesla is pushing boundaries, not just in electric vehicles but also in AI and robotics. An interesting revelation from the call was that Tesla is in discussions with a major automaker about licensing its Full Self-Driving (FSD) technology. Here’s an analysis of who that partner might be and why Tesla still shines as an investment.
The Potential Partner: General Motors
While there are several players in the autonomous driving space, the most prominent contenders include Waymo (owned by Alphabet), Cruise (a subsidiary of General Motors), and Tesla itself. Despite General Motors’ significant investments in Cruise, the subsidiary has struggled to make significant commercial progress, turning into a significant drain on GM’s cash flow.
An intriguing insight into this potential partnership comes from Ron Baron, a well-known Tesla bull and mutual fund manager. In an interview with CNBC, Baron shared that he has a small investment in Cruise and has a good relationship with GM’s CEO, Mary Barra. According to Baron, Barra sought an introduction to Elon Musk, which hints at a potential collaboration between GM and Tesla.
Why Tesla Is a Better Investment Opportunity
- Data-Driven Advantage: Tesla has amassed over 1.3 billion miles of FSD data, giving it a considerable edge over competitors. This extensive data repository provides Tesla with a unique advantage in refining and improving its self-driving algorithms.
- Commercialization Potential: If Tesla can commercialize its FSD technology at scale before other automakers, it could trigger significant demand for its vehicles. In addition, the opportunity to license its FSD technology could evolve Tesla into an AI and software powerhouse in the automotive sector.
- Strategic Positioning: Tesla’s approach to AI and autonomous driving positions it as a future supplier of advanced technology to the automobile industry. Similar to how Intel became a leading supplier of chips for computer hardware, Tesla could dominate the automotive AI landscape.
- Regulatory Challenges and Reality: While autonomous driving offers exciting possibilities, significant regulatory hurdles remain before it becomes mainstream. However, Tesla is well-positioned to navigate these challenges given its technological advancements and data-driven approach.
Conclusion
While specifics around Tesla’s potential partnership remain speculative, the broader trend is evident: Tesla is leading in FSD development. Its competitive edge in AI and vast data sets position it to be a major player in the autonomous driving space.
Strategic partnerships may still be uncertain, and regulatory hurdles could slow down widespread adoption, but Tesla’s current trajectory makes it a compelling investment opportunity. For investors with a long-term vision, Tesla’s blend of AI, electric vehicles, and autonomous driving offers a promising glimpse into the future of the automobile industry.