Tesla’s Full Self-Driving feature could add $20 billion a year in revenue, Gene Munster says

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• Gene Munster, a Tesla executive, said that the FSD software could have a major impact on Tesla's revenues.
• If Tesla licenses its technology and lowers prices, this could amount to up to $20 billion per year.
• Investors digested lower profit margins in the second quarter, which led to a 8% drop in the shares on Thursday.

Gene Munster says that Tesla's "Full Self-Driving", or self-driving, feature is an important one for its stock. The technology could boost revenues by as much as $20 billion per year.

Deepwater Asset Management's managing partner referred to Elon Musk’s announcement during Tesla's earnings call for the second quarter, where he said that the company had been in discussions with a major manufacture to license its Full Self-Driving Software.

Shared FSD technology from Tesla could have a big impact, as competitors will likely use the first-to market technology rather than spend money on developing their own version.

Munster wrote in a Wednesday note that "the financial potential of licensing FSDs is significant."

Munster estimates that if Tesla reduced the cost to $100 a monthly and licensed the software out to 25% of the new light trucks and cars on the market, it could increase its revenue by $4 billion.

He added that by the fifth year this could grow to $20 billion more in revenue. He estimated that Tesla could generate $100 billion in annual operating income in 10 years. FSD licensing will add 20% to Tesla's operating profits.

Munster stated that "while these targets are many, many years off, it shows the FSD licensing opportunities is valuable and worth the waiting."

Tesla's stock fell 8% Thursday, as investors digested its financial results for the second quarter. The company had lower profit margins because of aggressive price reductions in the past year on key models.

Munster predicted that margins would increase over the next couple of years. He predicts a gross margin of 20% by 2024.

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By: jsor@insider.com (Jennifer Sor)
Title: Tesla’s Full Self-Driving feature could add $20 billion a year in revenue, Gene Munster says
Sourced From: markets.businessinsider.com/news/stocks/tesla-stock-price-fsd-full-self-driving-earnings-margins-revenue-2023-7
Published Date: Thu, 20 Jul 2023 18:01:19 +0000

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