Tesla Inc. (TSLA) is preparing to launch a new version of its Full Self Driving (FSD) system with a larger and more advanced artificial intelligence model. CEO Elon Musk said the upgrade has about ten times more parameters than the current version, along with improved video compression. The release could arrive by the end of next month if testing progresses smoothly.
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Full Self Driving is Tesla’s partially automated driving system that aims to handle more complex road conditions than the company’s Autopilot driver assistance. Drivers must keep their hands on the wheel and remain ready to take control at all times. The system uses cameras and sensors to detect surroundings and make driving decisions. A larger model with better video quality can allow for a more accurate perception of traffic, pedestrians, and signs.
FSD Seen as Key to Future Revenue
The timing of the update is of quite importance. Tesla is under pressure from lower car sales and rising competition. In the second quarter, automotive revenue fell 16% from a year earlier. Sales in Europe also dropped. Investors have watched the share price slide 23.55% this year as of Wednesday morning. The company has also faced reputational challenges after its split with the White House administration.
However, some analysts and investors believe Tesla’s long-term growth will depend more on self-driving technology than on traditional car sales. The company has already begun operating a robotaxi service in Austin, Texas. Software and service revenue, such as paid Full Self Driving features, can carry higher margins than vehicle sales, which could support earnings growth over time.
Market reaction will likely depend on how well the new system performs and whether it encourages more customers to pay for the upgrade. Currently, analysts hold mixed views on Tesla, with a range of price targets reflecting uncertainty about the balance between near-term sales declines and future autonomy revenue. Indeed, a successful rollout could help strengthen Tesla’s technology position while the company works to stabilize its core business in a competitive electric vehicle market.
Is Tesla a Buy, Sell, or Hold?
As stated above, the sentiment on The Street for Tesla is mixed, with a Hold consensus rating based on 36 analysts. The average TSLA stock price target stands at $305.37, suggesting a potential downside of 1.09%.
