Morgan Stanley says Tesla needs Robotaxi proof to win back investors

Morgan Stanley made that tension explicit in an April 20 note, reiterating its Equalweight rating on Tesla with a price target of $415, while flagging that the stock’s valuation rests almost entirely on the company delivering credible, scalable evidence of unsupervised Robotaxi operations.

What Morgan Stanley actually wants to see

The bank’s core argument is straightforward: Tesla approaching 10 billion cumulative Full Self-Driving miles is a genuine technical milestone, but accumulated miles are not the same as a working commercial business.

As of early April 2026, Tesla’s FSD platform was logging an average of 19 million daily miles. That is a large number, but the metric investors care about is whether those miles translate into a vehicle that can operate without a human safety monitor in the seat.

Andrew Percoco, who took over coverage from longtime Tesla analyst Adam Jonas, highlighted two additional pressure points: rising capital expenditures and negative free cash flow. In plain terms, Tesla is spending more and generating less cash, which makes the timeline for Robotaxi profitability feel longer and the risk feel larger.

Houston and Dallas are a start, not a story

Tesla launched unsupervised Robotaxi operations in Houston and Dallas in mid-April 2026, with plans to expand into seven additional cities by mid-year. Morgan Stanley acknowledged the move as material progress, but described the rollout as slower than originally anticipated.

Morgan Stanley currently projects Tesla could have roughly 1,000 unsupervised Robotaxi vehicles operational by the end of 2026. The bank’s longer-range projections show scaling to 30,000 active Robotaxis by 2030 and 1 million by 2035, contingent on removing in-car safety monitors, improving operational efficiency, and clearing regulatory hurdles across dozens of jurisdictions.

FSD v15 sits at the center of this narrative. Morgan Stanley flagged the software version as critical to unlocking broader unsupervised capabilities, framing it as a technical prerequisite before meaningful fleet expansion becomes possible.

The investor calculus

The capex and free cash flow concerns that Percoco raised add another layer of complexity. A company burning cash while simultaneously trying to fund an ambitious autonomous fleet buildout has less room for error than one generating strong operating cash flow.

Morgan Stanley’s $415 price target reflects a middle-ground view: the autonomy optionality is real, but it is not yet proven enough to warrant a more constructive rating.

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