Investor's Corner
The ‘Tesla Effect’ is starting to extend from legacy carmakers to the oil industry
Back in February, self-made billionaire Don Gao from China mentioned that the “Tesla Effect” continues to grow even in markets beyond the California-based company’s reach. Gao, who owns Positec – a maker of power equipment – uses lithium-ion batteries for his company’s products, and they are steadily becoming a potent rival for heavyweight brands like Black & Decker. The billionaire entrepreneur noted that Tesla’s commitment to battery tech is spilling over into other industries, to the point where consumers’ perception of battery-powered devices is now changing.
“This Tesla Effect is a major trend and has really changed consumers’ perception of things that are battery driven and their capabilities,” he said.
Tesla did not come up with the electric car, nor did it come up with lithium-ion batteries. Both technologies were present even before the company was founded. That said, and partly thanks to the unraveling of Elon Musk’s first Master Plan, Tesla was able to capture an audience and a dedicated consumer base with its first vehicle – the Tesla Roadster. The small sports car was mostly a proof-of-concept, in the way that it was intended to show that electric cars need not be boring or limited in range. The car was successful enough that Tesla was able to follow it up with the Model S, a vehicle designed from the ground up to be a high-performance, long-range electric car. The rest is history.
Tesla’s electric cars were able to capture the interest of car buyers, even those that are particular about power and performance. It should be noted that Tesla’s electric cars were showing strong sales even before the company rolled out features like Autopilot. The company’s electric vehicles, from the Model S, to the Model X, to the Model 3, were desirable simply because they were excellent cars. They just happen to be powered by electricity instead of gas.
Since Tesla is still in the process of growing, its electric cars have been competing in the luxury segment. The electric vehicles themselves are not traditional luxury cars, with their minimalistic and almost spartan interiors, but they do provide a premium experience through their deep integration of software and hardware. Over the years, Tesla’s electric cars sold well, until such time that they started outselling mainstays from legacy carmakers like BMW and Mercedes-Benz. The Tesla Model 3, the company’s first attempt at a mass-market car, was recently listed as the 4th best-selling passenger car in the US, beating out competitors from the luxury midsize segment like the Mercedes-Benz C-Class.
In the same way that companies unrelated to Tesla are starting to explore the potential of lithium-ion batteries partly due to the electric car maker, a number of legacy automakers have accelerated their transition to electrified transport as well. Among the German carmakers, several have expressed their intent to come up with their own premium electric vehicles. Mercedes-Benz has the EQ program, Volkswagen just announced that it is investing ~$7 billion into e-mobility, and Porsche has the Taycan, a high-performance electric car that’s set to meet the Model S head-on in the premium EV market. Most of these carmakers would likely not acknowledge it, but there is little doubt that the transition to electrified transport was expedited by the efforts of a small electric car startup from Silicon Valley.
In a way, the Tesla Effect is happening at the perfect time. Several regions in the world are shifting towards cleaner forms of transportation. China plans to eventually ban diesel and gasoline-powered cars in its major cities. France and Britain have both committed to banning gas-powered automobiles in the future as well. Earlier this month, the EU Parliament voted for a 20% cut in CO2 emissions from new cars and vans in 2025 and a 40% reduction in 2030, accelerating the region’s transition towards cleaner transport. To effectively support the transition, carmakers, from startups like Tesla to pedigreed veterans like Mercedes-Benz, have to ramp their efforts at creating even more compelling, cost-effective electric vehicles.
In a recent segment on CNBC, Paul Sankey of Mizuho Securities mentioned that the “Tesla Effect” is starting to make its way to the oil industry as well. Last Thursday, oil prices tumbled as much as 4% amidst concerns about the fallout from the United States’ sanctions on Iran, the OPEC’s third-biggest crude oil producer. Wall St. analysts noted that oil could be in striking distance of $100 per barrel – an adjustment that would be felt by owners of fossil fuel-powered cars. The Mizuho analyst noted that part of the reasons behind the struggles of the oil industry is the shifting perception towards oil itself.
“Essentially, the big issue is the so-called “Tesla Effect,” the general “End of the Oil Age” theme that is a problem for these (oil) stocks. As the oil price goes up, especially to the levels we’re at now and potentially beyond, it’s almost as if the Tesla Effect could be exacerbated by the potential for higher oil prices to accelerate the end of the Oil Age. The Tesla Effect is the overall concept that (while) the 20th century was driven by oil, the 21st century will be driven by electricity. There’s a 30-year transition, and we’re somewhere probably 10 years into that transition. Ultimately, (the) terminal value of oil has been severely affected by the potential for us to change behavior,” the analyst said.
What is quite remarkable is that Tesla is nowhere close to reaching the company’s overall goals. Elon Musk once noted that Tesla would not stop until all cars in the road are electric. And the truth is, even if the company reaches its production targets for the Model 3 and the Model Y and its future Truck and compact sedan, Tesla would not be able to transition the auto industry towards electrification on its own. What Tesla could do, though, is to accelerate this transition, and if recent projects by legacy carmakers are any indication, it appears that the Silicon Valley-based company is doing just that.
Investor's Corner
Tesla enters new stability phase, firm upgrades and adjusts outlook
Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.
Tesla is entering a new phase of stability in terms of vehicle deliveries, one firm wrote in a new note during the final week of October, backing its position with an upgrade and price target increase on the stock.
Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.
While most firms are interested in highlighting Tesla’s future growth, which will be catalyzed mostly by the advent of self-driving vehicles, autonomy, and the company’s all-in mentality on AI and robotics, Pozdnyakov is solely focusing on vehicle deliveries.
The analyst wrote in a note to investors that he believes Tesla’s updated vehicle lineup, which includes its new affordable “Standard” trims of the Model 3 and Model Y, is going to stabilize the company’s delivery volumes and return the company to annual growth.
Tesla launches two new affordable models with ‘Standard’ Model 3, Y offerings
Tesla launched the new affordable Model 3 and Model Y “Standard” trims on October 7, which introduced two stripped-down, less premium versions of the all-electric sedan and crossover.
They are both priced at under $40,000, with the Model 3 at $37,990 and the Model Y at $39,990, and while these prices may not necessarily be what consumers were expecting, they are well under what Kelley Blue Book said was the average new car transaction price for September, which swelled above $50,000.
Despite the rollout of these two new models, it is interesting to hear that a Wall Street firm would think that Tesla is going to return to more stable delivery figures and potentially enter a new growth phase.
Many Wall Street firms have been more focused on AI, Robotics, and Tesla’s self-driving project, which are the more prevalent things that will drive investor growth over the next few years.
Wedbush’s Dan Ives, for example, tends to focus on the company’s prowess in AI and self-driving. However, he did touch on vehicle deliveries in the coming years in a recent note.
Ives said in a note on October 2:
“While EV demand is expected to fall with the EV tax credit expiration, this was a great bounce-back quarter for TSLA to lay the groundwork for deliveries moving forward, but there is still work to do to gain further ground from a delivery perspective.”
Tesla has some things to figure out before it can truly consider guaranteed stability from a delivery standpoint. Initially, the next two quarters will be a crucial way to determine demand without the $7,500 EV tax credit. It will also begin to figure out if its new affordable models are attractive enough at their current price point to win over consumers.
Investor's Corner
Bank of America raises Tesla PT to $471, citing Robotaxi and Optimus potential
The firm also kept a Neutral rating on the electric vehicle maker, citing strong progress in autonomy and robotics.
Bank of America has raised its Tesla (NASDAQ:TSLA) price target by 38% to $471, up from $341 per share.
The firm also kept a Neutral rating on the electric vehicle maker, citing strong progress in autonomy and robotics.
Robotaxi and Optimus momentum
Bank of America analyst Federico Merendi noted that the firm’s price target increase reflects Tesla’s growing potential in its Robotaxi and Optimus programs, among other factors. BofA’s updated valuation is based on a sum-of-the-parts (SOTP) model extending through 2040, which shows the Robotaxi platform accounting for 45% of total value. The model also shows Tesla’s humanoid robot Optimus contributing 19%, and Full Self-Driving (FSD) and the Energy segment adding 17% and 6% respectively.
“Overall, we find that TSLA’s core automotive business represents around 12% of the total value while robotaxi is 45%, FSD is 17%, Energy Generation & Storage is around 6% and Optimus is 19%,” the Bank of America analyst noted.
Still a Neutral rating
Despite recognizing long-term potential in AI-driven verticals, Merendi’s team maintained a Neutral rating, suggesting that much of the optimism is already priced into Tesla’s valuation.
“Our PO revision is driven by a lower cost of equity capital, better Robotaxi progress, and a higher valuation for Optimus to account for the potential entrance into international markets,” the analyst stated.
Interestingly enough, Tesla’s core automotive business, which contributes the lion’s share of the company’s operations today, represents just 12% of total value in BofA’s model.
Elon Musk
Tesla analyst: ‘near zero chance’ Elon Musk’s $1T comp package is rejected
“There is a near-zero chance that $TSLA shareholders will vote down Elon’s new proposed comp plan at the Nov 6 shareholders’ meeting.”
A Tesla analyst says there is “zero chance” that CEO Elon Musk’s new compensation package is rejected, a testament to the loyalty and belief many shareholders and investors have in the frontman.
Tesla investors will vote on November 6 at the annual Shareholder Meeting to approve a new compensation package for Musk, revealed by the company’s Board of Directors earlier this month.
The package, if approved, would give Musk the opportunity to earn $1 trillion in stock, an ownership concentration of over 27 percent (a major request of Musk’s), and a solidified future at the company.
The Tesla Community on X, the social media platform Musk bought in 2023, is overwhelmingly in favor of the pay package, though a handful of skeptics remain.
Nevertheless, the big pulls of this vote are held by proxy firms and other large-scale investors. Two of them, Institutional Shareholder Services (ISS) and Glass Lewis, said they would be voting against Musk’s proposed compensation plan.
Tesla CEO Elon Musk’s $1 trillion pay package hits first adversity from proxy firm
Today, the State Board of Administration of Florida (SBA) said it would vote in favor of Musk’s newly-proposed pay day, making it the first large-scale shareholder to announce it would support the CEO’s pay.
One analyst said that Musk’s payday is inevitable. Gary Black of the Future Fund said today there is a “near-zero chance” that shareholders will allow Musk’s pay package to be rejected:
“There is a near-zero chance that $TSLA shareholders will vote down Elon’s new proposed comp plan at the Nov 6 shareholders’ meeting.”
He added an alternative perspective from Wedbush’s Dan Ives, who said that he had a better chance of starting for the New York Yankees than the comp package not being approved.
There is a near zero chance that $TSLA shareholders will vote down Elon’s new proposed comp plan at the Nov 6 shareholders’ meeting. As Wedbush analyst Dan Ives (@divestech) colorfully put it in a Yahoo Finance interview on October 23rd: “I have a better chance of starting for…
— Gary Black (@garyblack00) October 27, 2025
Black’s the Future Fund sold its Tesla holdings earlier this year. He explained that the firm believed the company’s valuation was too disconnected from fundamentals, citing the P/E ratio of 188x and declining earnings estimates.
The firm maintained its $310 price target, and shares were trading at $356.90 that day.
Shares closed at $452.42 today.
The latest predictions from betting platform Kalshi have shown Musk’s comp package has a 94 percent chance of being approved:
— Kalshi (@Kalshi) October 20, 2025
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