What Can Make Tesla Stock A Buy?
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Bulls backing Tesla (TSLA) may be betting on its full self-driving software, FSD, which the company sells to car owners for a fee. Skeptics see a carmaker with thinned profit, and the stock lost 22.6% over the past twelve months while the S&P 500 returned 9.9%. Yet management calls FSD the biggest driver of demand for its cars, so the two views point in opposite directions. So how many drivers pay for FSD today?
How Many Tesla Drivers Pay For FSD?
Management said on the October 21, 2026 call that more than 1.7 million customers worldwide pay for FSD, with half of them now paying by subscription. New buyers are also adopting the software faster. Over 75% of Tesla’s North American deliveries in Q3 FY2026 came with a paid FSD sign-up, a share management counts as about 20% higher than in Q2. Every car Tesla delivers there also comes with a free month of FSD, CFO Vaibhav Taneja said.
Management links those sign-ups to demand for the cars themselves. Tesla ended the quarter with its highest backlog in four years, and management says deliveries are held back mainly by production. Revenue in Q3 FY2026 was flat against a year earlier at $28.0 billion. So far, management says paid FSD is pulling buyers in, with production as the limit.
Has Tesla Won FSD Approval Across Europe?
Only in part. While FSD is approved in many European countries, management hopes for approval across the whole European Union, saying it would be surprised if that took longer than Q1 2027. Management also said Tesla does not control that timing. Meanwhile, the company is selling some cars in Europe with extra benefits to put more of them on the road before a broader approval.
Europe aside, the worry about Tesla is profit. Operating margin was 2.6% in Q3 FY2026, against 6.6% a year earlier. Yet the stock trades at 10.8 times sales, against 3.3 for the S&P 500. So far, what Tesla has shown about FSD focuses on demand for its cars, not its margin.
What Tesla’s FSD Count Does Not Show
The 1.7 million count tracks paying customers, not what Tesla earns from them. On the call, CFO Vaibhav Taneja agreed with an analyst’s estimate that FSD’s annual recurring revenue is nearing $1 billion. Management said the company will share more figures on the software, including revenue and other key measures, as FSD grows. Meanwhile, Tesla is spending more elsewhere. Management expects operating expenses to keep growing until new products such as Optimus and the Semi truck are on sale.
A regulator is also looking at Tesla’s driverless robotaxis. NHTSA has opened a safety inquiry after a petitioner alleged the robotaxis were speeding in an active school zone. Separately, the boards of Tesla and SpaceX have formed special committees to discuss a potential merger, CNBC reported on October 21.
Management says paid FSD is pulling buyers to Tesla, but approval across Europe is still pending. When Tesla reports in January 2027, the details to watch are the share of North American deliveries sold with paid FSD and any approval for the software across Europe.
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