One major component of the bull thesis on Tesla Motors is that the firm is disrupting the automotive industry. However, one of the automaker’s biggest bulls argues that it hasn’t done this yet. Indeed, there are new technologies beyond electric vehicle tech that will likely disrupt the industry more than just EVs. It seems the market has largely skipped over electric vehicles as the next big thing in automotive and is looking to self-driving cars as the industry’s biggest disruption.

Tesla Motors Inc Is Not Yet A Disruptor, Says One Bull

So the question now is whether Tesla can move beyond just building EVs and become a major player in autonomous vehicles.

Tesla still following the traditional auto model in some ways

In a report dated Dec. 21, Morgan Stanley analyst Adam Jonas — a notable Tesla bull — suggested a number of similarities between Tesla and traditional automakers dating back a century to Henry Ford’s business model. Indeed, Elon Musk has been compared to Ford in the past, and he has said that he respects the automotive legend. Additionally, Musk said Tesla is modeled after Ford in its early years but with some small changes.

Jonas specifically mentioned “private ownership” and “human driving” as similarities between Tesla’s and Ford’s business model, although these are pretty obvious and simply the way things are done in the industry because of limitations in technology and regulations. Of course Tesla’s cars are also able to go from zero to 60 miles per hour in less than three seconds – a much newer technology – but he says this isn’t disruptive, and indeed other luxury automakers have achieved the same, although with gas engines rather than electric.

Jonas does not mention Tesla’s direct to consumer business model, which is disruptive for the current industry as demonstrated by auto dealerships’ mass opposing of the model. However, selling cars directly to consumers rather than through dealers may not be considered to be disruptive enough. The Morgan Stanley analyst believes that in order for Tesla to “secure its long term growth, profitability and independence,” it must become a disruptor.

Is Tesla fully executing on its mission statement?

Tesla’s mission statement is “to accelerate the world’s transition to sustainable transport,” and management has made it clear that they want to speed up adoption of electric vehicles in general. In fact, Musk has welcomed the idea of an Apple car because he thinks it would help in this area. EVs are expected to cut down on natural resource consumption as the world consumes about 500 billion gallons of gas per year, but Jonas thinks Tesla should go beyond just pushing EVs and focus on other areas of making transportation sustainable.

He reiterated several of the points he has made previously, like the estimate that “cars are utilized less than 4% of the time. Looking at available seat miles, he says cars are used only a little more than 1% of the time, and over the last hundred years, this hasn’t really changed. Further, it’s estimated that drivers spend about 400 billion hours in their cars. If assuming that people’s time is worth $10 per hour, it costs about $4 trillion in unproductive time.

And finally, safety remains a big problem as the World Health Organization estimates that almost 3,500 people die in traffic-related accidents per day. Traffic accidents are the top cause of death among young people in the U.S. at 21% of the population aged between one and 24, according to data from 2013. Next year accidents are estimated to claim almost 40,000 lives, and Jonas says these high numbers are not sustainable either.

Positive impacts from autonomous driving

Currently Tesla is working on self-driving technology as it recently pushed out its autopilot mode to its Model S sedans, so there is a chance that the automaker won’t get left in the dust in this area even though companies like Google appear to have a significant head start. Jonas points out that autonomous vehicles could eventually address the problems he named and thus make transportation even more sustainable.

For example, self-driving cars could, theoretically, address the issue of safety eventually by removing human error. However, much work must be done in this area because unlike serious glitches in smartphones, tablets and other gadgets, even a small glitch in the software of self-driving vehicles could result in a significant amount of deaths. Even with laws requiring drivers to remain alert at all times, it seems unlikely that people will do this.

The texting while driving epidemic in the U.S. illustrates this, as people don’t even remain alert while actually operating the vehicle themselves. Indeed, the safety problem could potentially get even worse around times when software is updated or when it becomes outdated because people didn’t update the software in their cars. There are so many factors that must be taken into consideration here that it’s a very tall order to make self-driving cars safer than human-driven vehicles.

This isn’t to say that it can’t happen, but people may be overestimating computers’ abilities and oversimplifying the safety issue – at least for right now. It seems likely that road infrastructure will need some major changes in order to truly make the roads safer with autonomous cars, and such technology-driven infrastructure updates are an expensive proposition for our nation’s government.

Driving safety is more complex

Google’s self-driving cars have had accidents on the road, but the company maintains that human error was to blame in all of them, seemingly clearing its software of any blame. We probably won’t see whether self-driving cars are safer than human-driven ones until the world is filled with them. And even then, it could be argued that humans are to blame for not paying attention while their car is driving and taking over when a human’s touch is needed to avoid an accident.

The safety issue becomes even more complex when considering the amount of time that is wasted while behind the wheel. In order to make driving time more productive, people must be engaged in other more important activities rather than paying attention to the road.

How is Tesla faring in the journey to autonomous driving?

Jonas also compares Tesla’s efforts in autonomous vehicles with Google’s and reports that Google’s self-driving cars log over 15,000 miles a week and have accumulated over 1.2 million miles since they were put on the road. Tesla’s Model S sedans have logged about 1 billion miles a year or almost 3 million miles a day, he estimates. He believes this figure will double in the next 15 to 18 months.

The analyst adds that while the Model S doesn’t have as many sensors as Google’s prototypes do and that not all of Tesla’s miles are autonomous, but Tesla’s scale of 100,000 cars may give it “a potentially material advantage” over competitors. Further, he said Tesla is collecting information about its vehicles and their surroundings, although for now it’s unclear how much it is learning or how big the advantage might be.

Jonas continues to rate Tesla as Overweight with a $450 per share price target. He says almost all of the upside to his target depends on “the development of a shared electric autonomous transport service” he calls “Tesla Mobility.”

As of this writing, shares of Tesla are up 0.08% at $232.58 per share. Year to date, the stock is up 4.49%.

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