In 2035, the fleet size may reach one million! At a time when car sales are declining, Robotaxi could save Tesla, Inc. (TSLA.US).

Morgan Stanley predicts that Tesla, Inc. (TSLA.US) will significantly expand its Robotaxi fleet by 2026. Analyst Andrew-Pelkoco and his team at Morgan Stanley estimate that by 2026, the Tesla, Inc. Robotaxi fleet on the road will increase to 1,000 vehicles, far higher than the current range of about 50 to 150 vehicles. The bank also predicts that by the end of 2035, Tesla, Inc. will have 1 million Robotaxi vehicles on the road in multiple cities. Although Tesla, Inc. has been cautious overall in promoting its Robotaxi business in Austin and San Francisco, the company has recently made progress in removing safety supervisors. Tesla, Inc. CEO Elon Musk confirmed last Sunday that the company has launched unmanned Robotaxi road tests in Austin, Texas, with no occupants in the test vehicles. It is worth noting that Musk confirmed last week that "safety supervisors will be removed from vehicles within the next three weeks." Since the official launch of the Robotaxi fleet in June this year, Tesla, Inc. has been working towards achieving fully autonomous passenger services by the end of the year. This progress is significant for the Robotaxi project and shows that the company's efforts are gradually paying off. Tesla, Inc. has been working hard to expand its Robotaxi fleet to meet the huge market demand for the platform. Musk has stated on social media that Tesla, Inc. Robotaxi service will have a fixed fee of $4.20. He emphasized that the company is "extra cautious" in safety and Tesla, Inc. will have a professional team for remote monitoring interventions to ensure the safety of the trial operation. Musk stated that Robotaxi is not just a service, but the "ultimate form of personal transportation," making travel safer, more efficient, and cheaper. Robotaxi will bring Tesla, Inc. huge profits, presenting a "trillion-dollar opportunity." Musk also mentioned that the Robotaxi fleet can achieve high utilization rates (running over 40 hours per week per vehicle), with gross profit margins potentially reaching 70% to 80%, far exceeding traditional automotive businesses. Musk said that Tesla, Inc.'s goal is to make autonomous vehicles 10 times safer than human drivers. He mentioned that the safety personnel configuration in the Austin pilot is just a transitional measure, and ultimately full autonomous driving will be achieved. To assess whether the Tesla, Inc. Robotaxi project is on the right track, Morgan Stanley analyst Andrew-Pelkoco listed three key catalysts: (1) Public opening of Robotaxi services without safety supervisors. The timetable is not clear yet, but Tesla, Inc. seems to be nearing its goal. (2) Improvement in safety metrics without safety supervisors. As Tesla, Inc. expands its business in new states and cities by 2026, the ability to improve safety metrics when scaling up driving distances without safety supervisors is crucial. (3) Cybercab production starting in April 2026. Tesla, Inc.'s Cybercab is a custom vehicle (without a steering wheel or pedals, only two seats), which is expected to be produced through its advanced integrated unpackaged manufacturing process, further reducing costs and accelerating promotion over time. It is reported that Morgan Stanley has a "hold" rating on Tesla, Inc. stock with a target price of $425. Car sales are still stuck in the mud While Tesla, Inc. has made further progress in advancing its Robotaxi business, Elon Musk has focused most of his efforts this year on the company's Siasun Robot&Automation business layout and gaining shareholder approval for its new trillion-dollar compensation plan. However, at the same time, the outlook for Tesla, Inc.'s main businesscar sales is growing increasingly bleak. The electric car manufacturer is facing sales pressure in several major markets. In November, Tesla, Inc.'s sales drop in key European markets further worsened, even though demand for electric cars in several countries is strong, which has not stopped this company led by Musk from continuing to lose market share in Europe. According to data from the French Automobile Manufacturers Association, Tesla, Inc.'s new car sales in France plummeted by 58% in November, to just under 1,600 units. In Denmark, Tesla, Inc.'s sales dropped by 49%; in Sweden, the decrease was even sharper at 59%, showing a continued weak trend over multiple quarters. Despite the continuous increase in the penetration rate of electric cars in major European markets, Tesla, Inc. has not been able to benefit from it. In France, the market share of electric cars surged by 9 percentage points to 26% in November, but Tesla, Inc. went against the trend. In Spain, Tesla, Inc.'s registration number dropped by 8.7% in November. In Germany, which is the largest car market in Europe, the registrations of pure electric cars surged by 39% in the first 10 months of the year, but Tesla, Inc.'s sales during the same period plummeted by 50%, far behind its competitors. However, Norway stands out as a rare exception in the overall downturn in Europe. Tesla, Inc.'s sales in Norway increased by 175% in November, partly due to the uncertainty in local tax incentives for future electric cars, which prompted consumers to buy early. The reasons for Tesla, Inc.'s weak sales performance include aging product lines, lengthening of new model update cycles, and political earthquakes triggered by CEO Musk, such as his public support for the far-right AfD party in Germany and his activities in the Trump administration. These factors have weakened the appeal of the brand to some European consumers. Meanwhile, Tesla, Inc. continues to clash with European regulators on the safety and advertising issues of the "full self-driving (FSD)" driver assistance system, further affecting its market performance. In Tesla, Inc.'s home base, sales performance is also grim. According to the latest estimates released by Cox Automotive, Tesla, Inc. sold about 39,800 vehicles in the U.S. market in November. This number is down approximately 23% from the 51,513 deliveries in November 2024, and reportedly the lowest monthly sales volume in the U.S. market for Tesla, Inc. since January 2022. It is important to note that Tesla, Inc. does not disclose monthly sales volume, and the above figures are estimates based on data collected by Cox Automotive. Although Tesla, Inc. has tried to mitigate the impact by increasing discounts, the market has still experienced a significant adjustment due to the expiry of federal electric vehicle tax incentives. Since the expiration of the federal electric vehicle tax credit policy at the end of September, the U.S. electric car market has been in a state of confusion. The market had already anticipated a cooling-off period after the buying frenzy in the third quarter, but the sales data in November remains bleak. After the $7,500 federal tax credit expired, Tesla, Inc. introduced new "standard" models for the Model 3 and Model Y in October, priced about $5,000 lower than the base models before to offset the loss from the expiration of the tax credit. These new models are expected to have a more significant impact on sales starting next year. However, Cox Automotive believes that the impact of this strategy may be limited. Stephanie Bardes-Sutter, the company's director of industry insights, pointed out: "The decline in sales clearly indicates that the standard version models, which were supposed to boost sales after the tax credit expiration, have lacked demand. In addition, the sales of the standard versions are eating into the sales of the high-end versions, especially the high-end versions of the Model 3." It is worth noting that while Tesla, Inc.'s 23% decline in U.S. sales in November may seem eye-catching, the company's ability to withstand risks is actually better than other electric vehicle companies. Overall electric car sales in the U.S. plummeted by over 41% in November. Because Tesla, Inc.'s decline is smaller than that of its competitors, its market share has increased from 43.1% in the same period last year to 56.7%. Most other automakers heavily relied on tax incentives to clear out electric car inventory, and after losing this policy support, their demand decreased much faster than Tesla, Inc. China remains one of the few bright spots. According to preliminary data released by the China Passenger Car Association earlier this month, Tesla, Inc.'s Shanghai factory sold 86,700 cars in November, a 10% increase from the same period last year. Against the backdrop of a general drop in Tesla, Inc.'s global sales, the shipment volume from its Chinese factory achieved its third growth this year. This is the second-highest shipment volume for the company this year, second only to the wholesale volume in September. This growth becomes a rare bright spot for Tesla, Inc. in the Chinese market this year. The company is facing a situation where its global sales are expected to decline for the second consecutive year.