Morgan Stanley predicts Tesla (TSLA.US) will significantly expand its Robotaxi (autonomous taxi) fleet by 2026. Analyst Adam Jonas and his team estimate Tesla’s operational Robotaxi fleet will grow to 1,000 vehicles by 2026, up from the current 50–150 units. The bank further forecasts Tesla could deploy 1 million Robotaxis across multiple cities by the end of 2035.
Despite Tesla’s cautious approach in rolling out Robotaxi services in Austin and San Francisco, the company has made progress in removing safety monitors. CEO Elon Musk confirmed on Sunday that Tesla has begun driverless Robotaxi testing in Austin, Texas, with no occupants inside the test vehicles. Musk previously stated that safety monitors would be phased out within three weeks.
Since its official launch in June, Tesla has been working toward fully autonomous passenger services by year-end. This milestone underscores the company’s progress in its Robotaxi ambitions. Tesla is aggressively scaling its fleet to meet surging demand. Musk announced a flat $4.20 fare for Robotaxi rides, emphasizing Tesla’s “extra caution” on safety, including remote monitoring teams.
Musk described Robotaxi as not just a service but “the ultimate form of personal transport,” promising safer, more efficient, and cheaper mobility. He projected Robotaxis could achieve high utilization (over 40 hours per week per vehicle) and gross margins of 70%–80%, far exceeding traditional auto sales. Tesla aims for autonomous vehicles to be 10x safer than human drivers, with safety monitors being a temporary measure.
Morgan Stanley’s Jonas outlined three key catalysts for Tesla’s Robotaxi success: 1. Public launch of Robotaxis without safety monitors—timing remains unclear, but Tesla appears closer to this goal. 2. Improved safety metrics without monitors—critical as Tesla expands to new states and cities by 2026. 3. Production launch of the Cybercab in April 2026. This dedicated, two-seater vehicle (no steering wheel or pedals) will leverage Tesla’s cost-efficient “unboxed” manufacturing process to accelerate adoption.
Morgan Stanley maintains an “Equal Weight” rating on Tesla with a $425 price target.
**Core Auto Business Struggles** While Tesla advances its Robotaxi and robotics ventures, its core auto sales face mounting challenges. The EV maker is losing market share in key regions despite broader EV adoption.
In Europe, Tesla’s November sales plummeted: down 58% in France (~1,600 units), 49% in Denmark, and 59% in Sweden. Even as Europe’s EV penetration rose (e.g., France’s EV share jumped to 26%), Tesla underperformed. In Germany, the largest auto market, Tesla’s sales dropped 50% YTD despite a 39% surge in overall EV registrations. Norway was a rare bright spot, with registrations soaring 175% due to anticipated tax changes.
Analysts attribute Tesla’s slump to aging models, delayed refreshes, and Musk’s polarizing political stance (e.g., endorsing Germany’s far-right AfD party), which alienated some European buyers. Regulatory clashes over Full Self-Driving (FSD) claims further dented performance.
In the U.S., Tesla sold ~39,800 vehicles in November, down 23% YoY (per Cox Automotive estimates)—marking its lowest monthly sales since January 2022. The end of federal EV tax credits in September exacerbated the decline. Tesla introduced cheaper Model 3/Y “Standard” trims ($5,000 lower) to offset the lost incentives, but Cox suggests weak demand for these models is cannibalizing premium sales.
Still, Tesla outperformed rivals: U.S. EV sales overall crashed 41% in November, lifting Tesla’s market share to 56.7% from 43.1% a year ago.
China offered a rare positive note. Tesla’s Shanghai Gigafactory shipped 86,700 vehicles in November, up 10% YoY—only the third monthly gain this year and the second-highest volume after September. However, Tesla faces a likely second consecutive annual global sales decline.