Key Morningstar Metrics for Tesla
- : USD 400Fair Value Estimate
- : ★★★Morningstar Rating
- : NarrowMorningstar Economic Moat Rating
- : Very HighMorningstar Uncertainty Rating
Reuters reported that Dutch regulators have approved Tesla TSLA‘s full self-driving supervised software for use. Tesla shares were up 1% on April 13 at the time of writing.
Why it matters: Tesla’s FSD software is a differentiator for its vehicles. European consumers have not been able to use FSD. In our view, this has weighed on Tesla’s deliveries in recent quarters as newer long-range electric vehicles at similar or lower prices have entered the European market.
- The Dutch regulators notified the European Commission of their plan to seek EU-wide approval for Tesla’s FSD, which is the next step in the regulatory process. We think they are likely to gain approval later this year, which should allow the software to start being used in the second half of 2026.
The bottom line: For now, we maintain our USD 400 fair value estimate for narrow-moat Tesla. At current prices, we view Tesla shares as fairly valued, with the stock trading slightly below our fair value estimate and in 3-star territory.
- We still forecast Tesla’s 2026 deliveries will fall, but we attribute the decline largely to lower US results due to the expiration of the US electric vehicle tax credit last September, which we expect to weigh on year-over-year sales comparisons for the first three quarters of the year.
- However, Tesla’s EU sales should start to rise later this year following regulatory approval. This is in line with Tesla’s sales in China last year, which fell at the beginning of the year until FSD was approved in March. Thereafter, sales began to rise.
