Tesla's new Autopilot safeguards could set it up for a smoother regulatory ride ahead

Tesla (TSLA) may have taken a step in the right direction with its decision to recall 2M vehicles in the U.S. for an over-the-air software update, according to Wedbush Securities. Although Tesla (TSLA) said it did not agree with the National Highway Traffic Safety Administration's analysis on the issue, it did agree to incorporate additional controls and alerts to those already existing on the two million affected vehicles.

The Wedbush view is that Tesla's (TSLA) decision to make the requested software update could end up clearing a path for broader acceptance. Analyst Dan Ives called full self-driving FSD the holy grail for the electric vehicle maker on the road ahead, and sees FSD becoming a reality over the next few years. FSD is seen being a major valuation addition to the sum-of-the-parts thesis for Tesla (TSLA) that is not currently being captured in the valuation.

"With the company spending a large amount of capex spend on its Dojo expenditures, the company has taken major steps to upgrade its AI technology by improving its FSD algorithm through video training for a higher ratio of compute to memory bandwidth. While the company aims to make its software capable of driving at a level safer than humans, the implementation of AI provides a greater opportunity to advance its software by training data for safer and more predictable outcomes."