MW How Tesla can leave 'obsolete' rivals in the dust, according to this analyst

By William Gavin

The automaker can collect more data and move faster than legacy competitors, a Melius analyst notes

Tesla said more than 6.5 million miles have been driven by vehicles equipped with its Full Self-Driving software.

It could come as soon as next year or take until the end of the decade, but one analyst is confident that Tesla Inc. will make its old rivals struggle, or even leave them "obsolete," as it pursues autonomous-driving technology.

"One of the reasons we called Tesla a 'must own' in our recent launch - despite all the obvious risks - is that the world is about to change,dramatically," Melius Research analyst Rob Wertheimer wrote in a Monday note to investors.

Wertheimer forecasts "hundreds of billions in value" shifting to Tesla $(TSLA)$ from other companies over the next five years. The "spark" for his belief, he said, was the latest version of its Full Self-Driving $(FSD)$ software, which Tesla claims keeps its drivers much safer when enabled.

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That software has been available to customers for years in the U.S. and is at the core of Tesla's plans for an autonomous ride-hailing service meant to rival companies like Uber Technologies Inc. (UBER) More than 6.5 billion miles have been driven with FSD enabled, according to Tesla's safety report.

That ability to collect a massive amount of data, along with other factors, gives Tesla a leg up on its competition, according to Wertheimer.

"Over the past decade and even up to a year or two ago, weassumed others could catch up quickly," Wertheimer said. "Now, we are not quite so sure."

Tesla's current ride-hailing operation is available in the company's hometown of Austin, Texas, and in the San Francisco Bay Area. However, the company uses Model Y SUVs overseen by a safety monitor who is capable of intervening if necessary.

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By the end of December, Tesla aims to offer its services in at least seven cities, take the safety monitor out of its vehicles in Austin and expand its fleet. The Cybercab, a designated robotaxi vehicle, is expected to enter production in April.

Legacy automaker, such as General Motors Co. $(GM)$ and Ford Motor Co. $(F)$ are too far behind to match Tesla, Wertheimer argued, while smaller operations like Amazon.com Inc.'s (AMZN) Zoox may not be able to effectively scale.

As for Waymo, Tesla's chief rival in the U.S., Wertheimer said the company's slow-and-steady approach and pricier vehicles may hurt it. The 16-year-old startup backed by Google parent Alphabet Inc. $(GOOGL)$ $(GOOG)$ operates a fully autonomous robotaxi service in five cities and has another 12 picked out for short-term expansion.

Wertheimer said Tesla also benefits from its camera-only approach to autonomy, which is relatively cheap. Most competitors use an approach that relies on a mix of sensors and light detection and ranging, or lidar, to map environments. While more expensive, it can help ensure safety, according to proponents of the technology.

The analyst pointed as well to Chief Executive Elon Musk's recent comments on Tesla's efforts to develop its next-generation AI5 chip, which will power its Optimus robots and vehicles. Musk has said the chip will be much cheaper and offer better performance than others on the market. Volume production is expected to begin in 2027.

"We're going for radical simplicity," Musk said in October. "The net effect is that I think AI5 will be the best performance per watt, maybe by a factor of two or three, and best performance per dollar for AI, maybe by a factor of 10," when compared to rival chips.

See more: Tesla's stock could climb by more than 25% as robotaxi efforts intensify, analyst says

-William Gavin

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November 24, 2025 14:28 ET (19:28 GMT)

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