Tesla’s Model 3 sedan could end up being significantly safer than the average car currently on the road, according to Morgan Stanley analyst Adam Jonas.
And customer preferences suggest that level of safety will be a major driver of sales, he added.
“We think the Model 3 will feature hardware and software that provide a level of active safety that could significantly lead all other cars on sale today and could, if the company achieves its goal, be an order of magnitude (i.e. 10x) safer than the average car on the road,” Jonas wrote in a note Thursday. “According to nearly every OEM we talk to, safety is the number 1 determinant of car purchases. Look for safety to be the ‘ah-hah!’ moment for this car due to launch this year.”
Jonas’ argument relies on the technical potential of Tesla’s Autopilot system and the company’s ability to collect extensive driving data from customers.
Tesla currently pulls about 5 million miles of road data per day, and Jonas thinks that could double over the next 15 months.
If Tesla goes ahead with its Tesla Mobility ride sharing business, the amount of data could rise to 400 million miles per day by 2025 or 2030. Jonas said that would be 4-times larger than his estimate for Uber’s current fleet.
The safety of Tesla’s cars has been the subject of debate and scrutiny. Tesla cars have been involved in accidents that have garnered international attention, perhaps most notably in the case of one fatal accident in Florida in May 2016 that occurred while Autopilot was engaged.
But following that crash, the National Highway Traffic Safety Administration concluded an investigation of Tesla’s Autopilot with areport noting that no safety defects contributed to the crash, and that data show that crashes in Tesla cars dropped by almost 40 percent after the company installed its Autosteer feature in its cars.
Tesla CEO Elon Musk has also said he thinks the Tesla’s technology can bring down the rate of car crashes down by 90 percent.
Jonas has the equivalent of a “buy” rating on the stock and a $305 price target. Tesla shares were slightly higher in trading Thursday, hovering around $257.14, up 2.2 percent.