Morgan Stanley Reaffirms Tesla’s $425 Price Target
Morgan Stanley analyst Andrew Percoco reiterated on January 22, 2026, an ‘Equalweight’ rating and $425 price target on Tesla.
“Lemonade’s newly announced autonomous car insurance product represents a notable step in legitimizing autonomous driving, and in particular, Tesla’s Full Self-Driving (FSD) technology, in the eyes of the insurance industry.
The policy directly links insurance pricing to miles driven under Tesla’s FSD, cutting rates by up to 50% for those miles.
By explicitly distinguishing between human-driven and FSD-driven mileage, Lemonade is signaling that its underwriting models recognize materially improved accident risk when the vehicle is operating autonomously.
This is an important shift in how insurers treat advanced driver-assistance and autonomy features.
Lemonade’s approach suggests growing confidence in the data coming from Tesla’s fleet, using real-world driving outcomes to assess safety performance rather than relying solely on theoretical or regulatory classifications.
Beyond the cost savings, the structure of the policy could encourage increased FSD usage and adoption.
Lower insurance premiums create a recurring economic benefit for drivers who choose to engage FSD more frequently, reinforcing Tesla’s value proposition.
Over time, as FSD adoption accelerates we expect a positive feedback loop, whereby miles driven correlates to improved performance and safety, and further reductions in insurance costs.
More broadly, Lemonade’s announcement points toward a future in which insurance becomes one of the clearest market-based validators of autonomous driving progress.
As insurers incorporate increasingly granular driving data into pricing, technologies that demonstrably reduce risk should be rewarded faster and more transparently.
For Tesla, this marks another step toward external recognition that FSD is moving from an experimental feature to an economically relevant safety system.”
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