Tesla Inc. (TSLA) shares are climbing Tuesday, getting a boost from fresh analysis showing the company's self-driving software has made some genuinely impressive strides lately.

Piper Sandler analyst Alexander Potter is keeping his bullish stance on Tesla, maintaining an Overweight rating with a $500 price target. The optimism comes from a deep dive into the FSD Community Tracker, a tool that measures how well Tesla's Full Self-Driving technology actually performs in the real world.

The Numbers Tell an Interesting Story

Here's the standout finding: the tracker's key metric called "miles to critical disengagement" showed a massive jump after Tesla released FSD v14.1.x back in October. We're talking about performance leaping from 441 miles in the previous version to over 9,200 miles. That's more than a 20-fold improvement and represents the strongest sequential gain in four years of data collection.

Potter also pointed to data from Austin suggesting FSD-equipped vehicles could average about 40,000 miles between crashes. This calculation is based on seven incidents reported to NHTSA across roughly 280,000 miles of driving. If you assume the typical driver logs 13,000 miles annually, that means an FSD-equipped car might go about three years without a crash.

There are some caveats, though. Potter notes that not every critical disengagement actually prevents an accident—the two aren't perfectly correlated. Plus, the newest version (v14.2.x) appears to show weaker performance at just 1,500 miles per disengagement, though Potter believes only part of that decline is truly meaningful.

The Pushback from Morgan Stanley

This positive momentum comes right after Monday's reality check from Morgan Stanley. Analyst Andrew Percoco downgraded Tesla to Equal-weight from Overweight, setting a $425 price target. His argument? The stock is fairly valued at current levels, especially considering what Morgan Stanley calls an extended "EV Winter" lasting through 2026.

"Tesla is a clear global leader in electric vehicles, manufacturing, renewable energy, and real world AI and thus deserving of a premium valuation," Percoco wrote. "However, high expectations on the latter have brought the stock closer to fair valuation. Looking out over the next 12 months we see a challenging catalyst path, with downside to consensus estimates, while positive catalysts for its non-auto business appear priced at current levels."

Morgan Stanley expects U.S. EV sales to drop about 20% year-over-year in 2026, pressured by the expiration of the $7,500 federal EV tax credit, affordability issues and general consumer hesitation about electric vehicles.

Meanwhile, Piper Sandler is betting that Tesla's rapid FSD progress will push the stock higher next year. The firm projects EPS of $2.78, revenue growth of 16% and EPS growth of 54% for 2026.

Tesla shares were up 1.37% at $445.60 at the time of publication on Tuesday.