Tesla Stock May Have A European Catalyst Investors Are Missing

Tesla's stock price may benefit from a potential European catalyst that investors have largely ignored: the possibility of generating high-margin revenue from fully autonomous cars already on the market. France is testing Tesla's Full Self-Driving (FSD) system on public roads and expects a regulatory decision by mid-to-late September.

If France approves the system, an EU-wide approval vote could follow as early as October 6, providing investors with a clear date to watch. This regulatory decision is rare and carries significant weight since it requires approval from at least 15 member states representing 65% of the EU's population.

While FSD approval could potentially help Tesla sell more cars in Europe, the more valuable opportunity lies in monetizing the existing cars through a software update that charges owners a monthly fee. This could be a better business model than cutting the price of another Model Y to keep factories moving, given the current automotive margin pressure.

France has completed testing the FSD Supervised system for over 18 months and is now awaiting the EU-wide approval. If approved, Tesla could charge owners €99 per month for the FSD Supervised system, potentially generating €600 million in annual revenue.