Tesla’s valuation has reached a peak, with the company’s stock price reflecting its current success. However, according to a recent analysis, the company’s true potential for long-term growth lies in its robotaxis and Full Self-Driving (FSD) technology.
Analyst Insights
Goldman Sachs analyst Mark Delaney has highlighted the monetization opportunities for Tesla with its robotaxis and FSD. Delaney maintains a Neutral rating on Tesla with a price target of $345. The analyst’s estimate is based on the expected improvement in Tesla’s FSD software, which has shown significant progress with the V13 update.
Robotaxis Revenue Projections
Delaney expects Tesla’s robotaxis to begin operations in the second half of 2026, with revenue projected to reach $115 million in 2027. This estimate is based on a fleet of 300 vehicles by the end of 2026 and 1,500 vehicles by the end of 2027, with 20 trips per day per vehicle in 2027 and a price of $2.50 per mile.
FSD Performance Improvement
The performance of Tesla’s FSD software has improved significantly with the V13 update, with crowdsourced data showing more miles between interventions and 97% of drives not requiring a critical intervention. However, Delaney notes that while the improvement is encouraging, Tesla still has work to do to reach its goal of being safer than a human driver by 2Q25.
Monetization Potential
Delaney believes that the long-term FSD monetization potential will depend on the degree to which Tesla’s software is differentiated from other alternatives. The analyst also sees FSD licensing to other OEMs as a potential upside scenario for Tesla.
Market Potential
The global market for robotaxis could reach billions of dollars in TAM at a high number of deployments and across operators. Delaney notes that Tesla is well-positioned for long-term growth, given its leadership position in EVs, its technical capabilities in AI, software, and hardware, and its ability to benefit from a full set of solutions including in charging and storage.
Cautionary Notes
While Delaney is optimistic about Tesla’s long-term prospects, he remains cautious about the company’s valuation, which he sees as “full.” The analyst notes that the ramp in FSD could take longer than Tesla targets, and auto fundamentals could remain volatile, with auto delivery volumes potentially lower than Tesla’s outlook in 2025.
Stock Performance
Tesla’s stock is down 3.71% to $412.33, with a 52-week trading range of $138.80 to $488.54. The stock is up 88% over the last year.
Conclusion
In conclusion, while Tesla’s valuation may be at a peak, the company’s robotaxis and FSD technology offer promising long-term growth prospects. With its leadership position in EVs, technical capabilities, and ability to benefit from a full set of solutions, Tesla is well-positioned for long-term success. However, the company still faces challenges, and its valuation may be subject to fluctuations in the short term.