DCAS Phase 1 restrictions will allow Tesla to roll out a degraded version of FSD in the EU
Tesla shares are rocketing higher today in the aftermath of an ambitious FSD rollout plan in China and the EU in the first quarter of 2025. Yet, Tesla’s exponentially growing FSD-related prowess is about to face a significant regulatory inertia, which will likely limit the upside for the EV giant.
Due to popular demand, Tesla AI team release roadmap:
September 2024
– v12.5.2 with ~3x improved miles between necessary interventions
– v12.5.2 on AI3 computer (unified models for AI3 and AI4)
– Actually Smart Summon
– Cybertruck Autopark š
– Eye-tracking with sunglasses š¶ļø
-ā¦— Tesla AI (@Tesla_AI) September 5, 2024
Tesla has now announced its FSD release roadmap for the next few months. Notice the arrival of the FSD version 13 in October and the concurrent unlocking of the ability to reverse in FSD. This is a testament to Tesla’s accelerating computing power that is now feeding into an expedited rollout of enhanced capabilities.
$TSLA with $31M in net call premium already this morning as #TSLA flirts with $230 https://t.co/NddT7QSRxp
— Wolf of My Streetš” (@Ryan__Rigg) September 5, 2024
Of course, the critical development remains the Q1 2025 rollout of FSD in the EU and China. This development has spurred Tesla to a ~6 percent gain in early morning trading. Moreover, around $31 million in net call premium has already changed hands.
Yet, despite its ambitions, Tesla faces regulatory hurdles in rolling out the latest FSD capabilities in the EU, which has now adopted the UN-led Driver Control Assistance Systems (DCAS) regulations. Critically, theĀ phase 1Ā of the DCAS framework, which is expected to enter into force in January 2025, does not allow for autonomous driving:
“To avoid driver overreliance on such systems, the regulation stipulates that DCAS shall be designed to ensure that the driver remains engaged with the driving task. The driverās hands must remain on the wheel and the system shall monitor the driverās visual engagement with the road, triggering alarms after 5 seconds when it detects that this is no longer the case.”
Of course, negotiations on the phase 2 of the DCAS are still ongoing, with the next workshop due on theĀ 09th of September. Consequently, it seems much more likely that Tesla will rollout only a degraded version of the FSD in the EU in Q1 2025, which is likely to limit its uptake.
Greater FSD functionality 1/ increases $TSLA FSD take rates, and 2/ sells more Teslas. We currently assume a 15% global FSD take rate on our 2024-2030 forecasts of new deliveries and earnings, and a 10% FSD take-rate on the existing North American HW3/HW4 fleet. Every 5ppā¦ https://t.co/ouBvvkuqyR
— Gary Black (@garyblack00) September 5, 2024
Bear in mind that each 5 percent rise in FSD uptake increases Tesla’s EPS by $0.05 per share, according to Future Fund’s Gary Black.
On the other hand, Tesla is likely to face a much more conducive environment in China, where Mercedes has just received aĀ formal approvalĀ to start testing its bespoke Level 4 Advanced Driver Assistance System (ADAS), which allows autonomous driving without human oversight for extended periods. For comparison, Tesla’s FSD is currency ranked at Level 2.