Autonomous driving is still far away, but Tesla FSD remains the top choice.

Tesla's highest level of autonomous driving software, known as "Full Self-Driving" or "FSD," is considered by Musk to be the key to creating trillions of dollars in value. Critics call it "vaporware" and consider it dangerous.

FSD is impressive, but it's not perfect

Providing robot taxi services in vehicles without a steering wheel, pedals, or a driver still feels far off.

ARK Invest's Cathie Wood predicts that by 2027, such a business will generate $155 billion in annual earnings before interest, taxes, depreciation, and amortization (EBITDA) for Tesla.

However, Wall Street estimates Tesla's total EBITDA for 2024 to be $23 billion.

Wood's numbers seem almost impossible, but Tesla's Musk believes that the exponential growth of computing power, known as the AI effect, at least makes it possible.

Morgan Stanley analyst Adam Jonas recently wrote, "After showing the FSD software a million times in a certain situation, it becomes good at driving tasks. More and faster computers mean the system will understand more situations, and things will quickly get better."

The significance of FSD is extraordinary

Attaining the status of robot taxis is significant for Tesla's stock.

Imagine a fleet of Tesla vehicles operated by Tesla or other parties, generating taxi-like income globally every day.

If self-driving taxis haven't emerged by the end of this decade, investors will have to settle for electric vehicles with highly useful autonomous driving software.

This is not meaningless, but the bulls and bears argue whether Tesla's current market value of around $767 billion is justified.

One thing is certain: all investors should pay attention to FSD.

John Murphy, a securities analyst at Bank of America, believes that autonomous driving will have an even greater impact on the automotive industry than electric vehicles.

After all, a lot of time is wasted in cars, on the way to where people want to go.