Tesla's Full Self-Driving Business Is Growing Fast. But There's a Catch for Investors

Tesla's Q3 earnings were mixed with flat revenue and declining EV sales, but the Full Self-Driving subscription business showed strong growth with 1.74 million active subscribers and a $1 billion annual run rate. While FSD subscriptions carry higher margins and support vehicle sales, Tesla's valuation at 149.3x forward earnings already prices in significant success, and key risks remain including FSD retention rates, robotaxi scaling challenges, and regulatory headwinds.