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Ahead of Tesla’s upcoming Robotaxi Day on Oct. 10, Morgan Stanley analysts outlined five key factors they are focused on from a Waymo, Uber (NYSE:UBER) and LYFT Inc (NASDAQ:LYFT) perspective, both at and after the event.

1) A Trillion-Mile Autonomous Opportunity

The U.S. rideshare market currently captures about 1% of the total miles driven, with Uber and Lyft (NASDAQ:LYFT) generating roughly $54 billion in gross bookings in 2024. The arrival of autonomous vehicles (AVs) could unlock a much larger market, according to Morgan Stanley analysts. A lower-priced autonomous offering could dramatically expand rideshare usage and frequency.

2) Technological Innovation and Acceleration of Autonomous Rollout

A key focus for Robotaxi Day is whether there will be evidence of step-change improvements in AV technology. Tesla (NASDAQ:TSLA)'s advancements in machine vision, autonomous driving systems, and GPU-enabled training could be pivotal. Morgan Stanley remains cautious, as the road to a fully scaled autonomous offering is still fraught with technological, regulatory, and safety challenges. However, significant progress from Tesla could steepen the adoption curve for AVs over the next 5-10 years.

3) Will a Hybrid Marketplace Still be Needed?

Morgan Stanley analysts will watch to see if Tesla reveals technological advancements or cost curve improvements that could give it a structural advantage over Waymo, which may struggle to overcome this. “Whether we feel better or worse about multiple players in this autonomous market matters materially to Uber,” analysts noted. They think a hybrid marketplace offering (like Uber) will remain important for enabling the autonomous driving adoption curve.

4) Tesla's Potential Cost Advantage

Tesla’s potential to launch a Level 4 (L4) autonomous offering is crucial, as it could significantly reduce the cost per mile. Analysts estimate that if Tesla succeeds with its L4 rollout, it could hold a 41% cost advantage over Uber and Lyft, and a 21% edge over Waymo’s upcoming sixth-generation vehicle, which is set to begin road testing in 2025. Tesla's advantage stems from its lower base vehicle costs and camera-only approach, in contrast to Waymo’s sensor-heavy setup.

5) Monitoring Market-Level Trends in Key Cities

Beyond Robotaxi Day, the performance of autonomous programs in cities like Austin, Atlanta, and Phoenix will be an important indicator of success. These markets, where Waymo operates in partnership with Uber, are key testing grounds for integrating AVs with rideshare platforms. “The extent to which Austin, Atlanta and Phoenix Waymo trends stay positive and Uber (or data) can demonstrate the incrementality of the trips to Uber would be a positive signal about Uber's marketplace strategy,” analysts said. “If they do not end up being incremental to Uber, that is a risk to Uber's strategy.”