Will autonomous driving be widely popular in the future? Will human drivers disappear? Which one has lower costs, human drivers or autonomous driving products?

On Wednesday, October 9th, Morgan Stanley analyst Brian Nowak and his team released a report analyzing the future of autonomous driving technology, stating that if Tesla introduces a viable L4 product and combines it with its existing hardware and software, Tesla will have a competitive advantage in driving costs per mile compared to its peers. Currently, automotive autonomous driving is divided into six levels: L0-L5, ranging from full human driving, assisted driving, partially autonomous driving, conditionally autonomous driving, highly autonomous driving, to fully autonomous driving.

Furthermore, with technological advancements, the price of autonomous driving services is decreasing, and online car-hailing services may extensively utilize autonomous driving technology. For online car-hailing software like Uber, a hybrid of human drivers and autonomous driving products is most advantageous.

However, Morgan Stanley also pointed out that due to barriers such as technology, costs, regulations, safety, and more, there is still a long way to go for the widespread use of autonomous driving products in the market.

Waymo is a company developing autonomous driving vehicles and is a subsidiary of Google's parent company, Alphabet. Waymo and Tesla are also the two companies with the most autonomous driving data.

Tesla's L4 autonomous driving products may have cost advantages.

On Friday, October 10th, Tesla will hold a "Robotaxi Day" demonstration event at Warner Bros. Studios in Los Angeles to announce its progress in autonomous driving technology.

Morgan Stanley will focus on significant signs of improvement in Tesla's autonomous driving technology, expectations for future cost curves, safety statistics, regulatory developments, and whether there is substantial evidence of accelerated growth in the supply and adoption rate of autonomous driving products in the next 5-10 years.

In addition, Morgan Stanley will also focus on whether Tesla demonstrates any progress in technology or cost curves that would give Tesla a structural advantage over Waymo.

Currently, Tesla's autonomous driving products are at Level 2. Morgan Stanley believes that if Tesla successfully launches Level 4 products, combined with its existing hardware and software (Tesla's basic vehicle costs are low, and the autonomous driving architecture adopts a pure vision solution), it will give Tesla a competitive advantage in driving costs per mile compared to peers. Compared to Uber and Lyft, Tesla's autonomous driving taxis can save 41% of costs; while compared to Waymo's sixth-generation products, they can save 21% of costs.

Therefore, if Tesla can introduce a viable Level 4 product faster than Waymo, achieve production scale, and reduce costs, it will pose a threat to Waymo, Uber, and Lyft.

Online car-hailing services may extensively use autonomous driving technology in the future.

In 2024, online car-hailing giants Uber and Lyft created approximately $54 billion in total orders for online car-hailing services in the USA. Morgan Stanley estimates that the current online car-hailing services in the USA account for only about 1% of the total miles driven in the USA. Over time, as the price of autonomous driving services decreases, the opportunity and frequency of using autonomous driving technology in online car-hailing will significantly increase.

Therefore, if self-driving online car-hailing becomes widely popular, will human drivers still be needed? Morgan Stanley states that a hybrid market like Uber is crucial, where human drivers handle most routes, while self-driving products provide services to increase fleet utilization. This is very important for promoting widespread use of self-driving technology.

However, current online car-hailing platforms do face the dilemma of higher costs compared to self-driving taxis. Morgan Stanley research found that Waymo's sixth-generation product has about a 26% cost advantage over Uber, so incremental improvements are crucial for Uber.

After October 10, Morgan Stanley expects to focus on the market level trends that Waymo has launched, especially those markets collaborating with Uber. Whether the trends of Austin, Atlanta, and Phoenix using Waymo remain positive, and if this collaboration has brought trip increments to Uber. If this collaboration fails to generate increments for Uber, it may pose a risk to Uber's overall market strategy.