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The one piece of news from Tesla’s earnings report that’s got analysts buzzing


Tesla ‘s plan to share its full self-driving capabilities with original equipment manufacturers has Wall Street analysts talking. During an earnings call Wednesday evening, CEO Elon Musk said the company is in talks to share its technology with original equipment manufacturers — and is in early discussions with one unnamed company. “We are very open to licensing our full self-driving software and hardware to other car companies, and we’re already in discussions with – early discussions with a major OEM about using Tesla FSD,” he said. “So, we’re not trying to keep this to ourselves.” TSLA 1D mountain Tesla shares fall after second-quarter earnings The comments from Musk came after Tesla topped second-quarter earnings expectations but showed margin weakness due to recent price cuts. Shares dipped 7%. Despite these near-term margin concerns , Morgan Stanley’s Adam Jonas highlighted the FSD commentary as his biggest takeaway from the call. He did, however, stress some logistical concerns, including whether Tesla would need “greater involvement” in full software system of its peers. “In our opinion, vehicle autonomy lends itself to a winner-take-all/winner-take-most outcome at a regional/local level,” Jonas said. “A potential licensing of FSD would represent an important change of scope in how investors measure the TAM for Tesla.” These FSD aspirations tap into the latest artificial intelligence craze overtaking Wall Street, with Goldman Sachs analyst Mark Delaney viewing it as a key debate for investors in the intermediate term. The analyst, who holds a neutral rating on the stock, views Tesla as well positioned in AI due to the “breadth and depth” of its engineers and data pools but expects these FSD aspirations to take time. Evercore ISI’s Chris McNally referred to Tesla’s FSD capabilities as the “next hot topic,” but said there’s a “very high bar” for the “yet-to-be-proven” path for the autopilot software. “Management continues to sow the seeds of future growth first by prioritizing units over volume — sacrificing near-term gross margin with the plan of penetrating existing vehicles with high-value, high-margin FSD software over time,” said Canaccord Genuity’s George Gianarikas. — CNBC’s Michael Bloom contributed reporting

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