Global Autos and Technology Mobility Revolution: Autonomous driving and robotaxi 27 January 2026 Masahiro Akita +81 3 6777 6998 masahiro.akita@bernsteinsg.com Eunice Lee, CFA +852 2123 2606 eunice.lee@bernsteinsg.com Stephen Reitman +44 20 7762 5535 stephen.reitman@bernsteinsg.com Harry Martin, CFA +44 20 7676 8965 harry.martin@bernsteinsg.com Venugopal Garre +65 6326 7643 venugopal.garre@bernsteinsg.com Qingyuan Lin, Ph.D. +852 2123 2654 qingyuan.lin@bernsteinsg.com Dien Wang, Ph.D. +852 2123 2622 dien.wan ...

Investment Rating - The report maintains a "Recommendation" rating for the automotive industry, indicating a positive outlook for the sector's fundamentals and an expectation that the industry index will outperform the benchmark index [8]. Core Insights - The transition to a subscription model for Tesla's Full Self-Driving (FSD) is seen as a significant shift, with the potential for increased penetration rates and confidence in the business model [2][4]. - The introduction of real-time mileage insurance discounts by Lemonade for FSD users highlights the recognized safety benefits of FSD compared to human drivers, which could further enhance the commercial viability of the FSD subscription model [3][4]. - The testing of Robotaxi without safety drivers in Austin marks a pivotal moment for the industry, with expectations for increased deployment throughout the year [5][6]. - The potential approval of FSD in Europe and China is viewed optimistically, with implications for broader market acceptance and growth in 2026 [7][12]. Summary by Sections Event 1: FSD Subscription Model - Tesla has shifted to a subscription-only model for FSD, with a current penetration rate of approximately 22% in the U.S. This is expected to rise significantly following the cancellation of the buyout option and the end of free trials [2]. - The anticipated price increase for FSD subscriptions reflects a shift in strategy, moving away from price reductions to enhance penetration [2]. Event 2: Insurance Model - Lemonade's new car insurance policy offers a 50% discount on premiums when FSD is activated, indicating a recognition of FSD's safety advantages [3][4]. - The average accident rate for FSD is reported to be significantly lower than the national average, further supporting the case for its adoption [4]. Event 3: Robotaxi Testing - The initial testing of Robotaxi without safety drivers is underway, although most vehicles still have safety drivers. This is seen as a starting point for future developments in autonomous driving [5][6]. Event 4: Regulatory Approvals - Optimism surrounds the potential approval of FSD in Europe, with a possibility of broader EU acceptance based on mutual recognition mechanisms [7][12]. - Caution is advised regarding the timeline for FSD approval in China, with the market currently showing limited sensitivity to this development [12].

Group 1 - The article highlights the rapid development of artificial intelligence technology, presenting significant opportunities in the market [3] - Apple has initiated its largest promotion in history for the newly launched iPhone Air, reducing its price by 2500 yuan to attract consumers [5] - Baidu's Wenxin Assistant is launching a cash red envelope campaign for the Spring Festival, offering a total of 500 million yuan in cash rewards [6] Group 2 - Shanghai AI unicorn Jiyue Xingchen has completed a B+ round financing, raising 5 billion yuan, setting a record for single financing in the large model sector over the past year [7] - Tencent's AI assistant Yuanbao has begun internal testing of a new social AI feature called "Yuanbao Club," allowing users to create or join groups for collaborative activities [9] - Tesla has suspended its basic Autopilot system in the US and Canada to promote its more advanced Full Self-Driving technology [11] Group 3 - Intel's latest financial report disappointed the market, leading to a 17% drop in its stock price, with analysts expressing concerns over supply constraints and profit margin pressures [12] - Apple has experienced an eight-week consecutive decline in stock price, the longest streak since May 2022, attributed to rising storage chip prices impacting profit margins [14] - Meta Platforms is facing a lawsuit for patent infringement related to smart glasses technology, which could disrupt the sales of its Ray-Ban products [15]

Core Insights - Tesla's Full Self-Driving (FSD) system will see a price increase as its capabilities improve, with the current $99/month for supervised FSD expected to rise once unsupervised FSD is implemented [2][4] - The unsupervised FSD will allow users to engage in other activities, such as being on their phone or sleeping during the ride, marking a significant value enhancement for customers [2][3] FSD Price Hike - Elon Musk announced on social media that the price for supervised FSD will increase as the technology advances [2] - The anticipated "value jump" will occur with the introduction of unsupervised FSD, which allows for complete hands-off driving [2][3] Autopilot Changes - Tesla has discontinued the Autopilot feature in the U.S. and Canada, replacing it with Traffic-Aware Cruise Control for all new car purchases [3] Value Generation - ARK Invest, led by Cathie Wood, estimates that the FSD system could generate eight times more value for customers once unsupervised autonomy is achieved, making the current pricing a great deal [4] Driverless Robotaxis - Tesla has launched driverless Robotaxis in Austin, which operate on unsupervised FSD, with Musk claiming that autonomous vehicles are "essentially" solved by Tesla [5] - Concerns have been raised regarding the safety of these Robotaxis, as human-driven Tesla vehicles were observed following them, suggesting a potential shift in safety protocols [6] Insurance Collaboration - Lemonade Inc. has partnered with Tesla to reduce insurance rates by 50% for FSD-engaged driving, promoting the system as safer than human drivers [7] - This collaboration has faced criticism, with some investors labeling it a marketing gimmick rather than a genuine safety improvement [7]

Company - Tesla has suspended the use of its basic driver assistance system, Autopilot, in the US and Canada [3] - BlackRock's private bond fund is expected to see a net asset value decline of 19% [7] - Meta has temporarily blocked underage users from accessing AI features and is developing a dedicated version for teenagers [7] - Nestlé and Danone are involved in a baby formula recall scandal, with France reporting two infant deaths [7] - Binance is considering restarting US stock tokens as global crypto exchanges compete for regulatory approval in parallel markets [7] - Goldman Sachs has increased its CEO's annual salary from $39 million to $47 million [7] - Citigroup plans further layoffs in March [7] - UBS is considering offering cryptocurrency trading services to its private banking clients [7] - Apple's stock price has fallen, marking its longest weekly decline since 2022 [7] - OpenAI's CEO plans to visit India in mid-February and will host a closed-door meeting [7] - Databricks has secured $1.8 billion in a new funding round [7] Industry - Analysts indicate that Intel's long-term profitability outlook for its 18A process technology remains uncertain [9] - The European debt market has seen the spread between French and German government bonds narrow to the lowest level since June 2024 [9] - The US bond market has experienced a slight increase in government bonds, with long-term bonds leading the rise [9] - In the commodities market, oil prices have risen, silver has surpassed $100 for the first time, and base metals have generally increased [9]

Core Insights - The U.S. stock market experienced mixed performance with major indexes reflecting cautious investor sentiment ahead of significant economic announcements and the continuation of Q4 earnings season [1] Major Index Performance - The Dow Jones Industrial Average (DJI) closed down by 249.76 points at 49,134.25 - The S&P 500 (SPX) rose by 13.30 points to close at 6,926.65, on track for its first back-to-back weekly drop since June - The Nasdaq Composite (IXIC) increased by 137.87 points to 23,573.89 - The CBOE Volatility Index (VIX) decreased, indicating a slight easing of market stress [2] Upcoming Market Events - The Federal Open Market Committee (FOMC) meeting on January 29 is a key focus, with expectations that interest rates will remain in the 3.50-3.75% range - Investors will be attentive to Fed Chair Jerome Powell's comments on future monetary policy, labor market conditions, and inflation risks [3][4] Q4 Earnings Season - The upcoming week will see earnings reports from major tech companies including Apple, Microsoft, Alphabet, Amazon, Meta Platforms, and Tesla - These companies have underperformed the S&P 500 over the past year, making their earnings particularly crucial for market sentiment [5] Major Stock News - Intel (INTC) shares dropped by 17% in pre-market trading after a Q4 earnings report that, while beating estimates, included a weaker-than-expected Q1 outlook - Nvidia (NVDA) shares rose by 1.4% due to reports of Chinese regulators allowing orders for its H200 AI chips, with Q3 earnings up 62% year-over-year to $57 billion [7][8] - Tesla (TSLA) discontinued its basic driver-assistance system, Autopilot, in the U.S. and Canada - Capital One Financial (COF) shares fell after missing earnings estimates and announcing an acquisition of fintech startup Brex for $5.15 billion [9][10] Broader Market Trends - Commodities showed continued strength, with gold futures reaching $4,970 an ounce and silver surpassing $100 an ounce - Crude oil futures traded above $60 a barrel, reflecting ongoing investor sentiment and geopolitical considerations - U.S. consumer sentiment reached a five-month high, providing support for the economy [13]

Core Viewpoint - Tesla has discontinued its basic driver-assistance system, Autopilot, in Canada and the US, pushing customers towards the more advanced Full Self-Driving (FSD) technology, which will now only be available through a monthly subscription model priced at $99 [1][4]. Group 1: Changes in Driver-Assistance Features - Tesla's new vehicle configurations now only include Traffic Aware Cruise Control, which maintains speed and follows traffic at a safe distance, while Autosteer is no longer a standard feature [2][3]. - The California Department of Motor Vehicles has imposed a 60-day deadline for Tesla to revise its marketing practices, including ceasing the use of the "Autopilot" name, which regulators argue misleads consumers regarding the system's capabilities [3]. Group 2: Subscription Model and Market Strategy - The subscription price for FSD is expected to increase over time as the software's capabilities improve, positioning it as a key profit driver for Tesla [4][7]. - Currently, only 12% of Tesla customers have opted to pay for the FSD software, indicating a potential area for growth as the subscription model becomes more accessible [7].

Core Viewpoint - Tesla has discontinued its basic driver-assistance system, Autopilot, in Canada and the United States, aiming to encourage customers to adopt a more advanced version of its technology [1] Group 1 - The discontinuation of Autopilot is part of Tesla's strategy to push for more advanced driver-assistance features [1] - This move may reflect Tesla's commitment to enhancing safety and performance in its vehicles [1] - The decision could impact customer perception and adoption rates of Tesla's advanced driving technologies [1]

Group 1 - The document does not contain any relevant information regarding companies or industries [2][3][4][5][6]

Core Viewpoint - Tesla has discontinued its basic driver-assistance system, Autopilot, to promote the adoption of its more advanced Full Self-Driving (FSD) technology [1][2]. Group 1: Discontinuation of Autopilot - The discontinuation of Autopilot is part of Tesla's strategy to enhance the adoption of FSD, which is marketed as a more advanced driver-assistance system [1]. - A judge ruled that Tesla had engaged in deceptive marketing by overstating the capabilities of Autopilot and FSD, leading to a 30-day suspension of its manufacturing and dealer licenses in California [2]. - The California DMV has allowed Tesla 60 days to comply with the ruling by dropping the Autopilot name [2]. Group 2: Features and Customer Impact - Autopilot included features like Traffic Aware Cruise Control and Autosteer, but new cars will now only come with Traffic Aware Cruise Control as standard [3]. - It remains unclear if existing customers will be affected by this change [3]. Group 3: Pricing and Subscription Model - Starting February 14, Tesla will eliminate the one-time $8,000 fee for FSD, transitioning to a monthly subscription model priced at $99, with potential future increases as software capabilities improve [4]. - This shift aims to make FSD more accessible while aligning with Tesla's long-term goals [4]. Group 4: Future Developments and Goals - Elon Musk envisions that Tesla's newer cars will achieve "unsupervised" driving capabilities, allowing drivers to engage in other activities during the ride [5]. - Tesla has begun rolling out robotaxi versions of its Model Y SUVs in Austin, Texas, which operate without human safety monitoring personnel [6]. - As of October 2025, only 12% of Tesla customers had subscribed to FSD, highlighting a gap between expectations and actual adoption [8].