Investor's Corner
Tesla poised to disrupt the entire transportation industry, not just auto
The following post was originally published on EVANNEX
With Tesla’s first quarter earnings call coming on Wednesday, it’s critical to maintain some perspective. There’s one prescient Wall Street analyst who has a history of predicting Tesla’s future while providing some much-needed perspective. Morgan Stanley Auto and Mobility Analyst Adam Jonas was a Tesla [NASDAQ: TSLA] bull before there was anything you could call a herd. Way back in 2013, when TSLA stock first started soaring, and the company announced that it would pay back its DOE loan several years early, Jonas called the company “our new top pick in US autos.”
Jonas hasn’t always been sure about Tesla though. In 2014, the stock dipped and Jonas waxed more skeptical. In early 2015, with Model X in development and construction beginning on the Gigafactory, Jonas wrote that Tesla has just pushed the “insane button” (in a good way, presumably). “Seems Tesla is preparing to be a much larger company than we have forecast.” A few months later, after Elon Musk evaded a question about the possibility of a Tesla ride-sharing service, Jonas predicted the coming of the Tesla Network, a year before it was formally announced, and speculated that the potential profits could cause the stock price to double (it hasn’t yet – TSLA was around 230 at the time).
In a recent interview (video starts at 17 minutes, 11 seconds, see below) with Business Insider’s Matthew DeBord, Jonas talks about Tesla’s “insane” market capitalization, how other automakers see the upstart company, and Tesla’s future place in the transportation realm.
No, TSLA’s meteoric rise isn’t a hallucination or a case of mass insanity. After all, market disruption isn’t exactly a new thing. “We saw it with Cornelius Vanderbilt and the railroads,” says Jonas. “We saw it with Thomas Edison and the electric utility grid. There were times when people thought men like these were crazy. Henry Ford’s bankers were pretty furious at the risk he was taking with the moving assembly line. But they did it. And once in a while, these things pay off. Elon Musk is in that genre of capitalist/scientist/storyteller.”
What do the men (and one woman) in the corner offices feel about Tesla and Musk? Scorn, respect, fear? “When we engage with auto companies around the world, they admit that that car that [Tesla has] developed is a good car – it’s not a fluke,” says Jonas. “The industry has a reputation of being arrogant. ‘Our cars are the best!’ Even these types of companies say, ‘we’re glad that Tesla is around in many ways.’” The mood includes “more respect than fear, but some concern.”
How much in the way of future sales are baked into TSLA’s sky-high stock price? A lot. To justify its new status as one of the world’s largest automakers by market cap (see chart below), Tesla would have to reach “something approaching a BMW type of scale of a couple million units a year at some point…an order of magnitude higher than what they’ve been doing… and to be making money doing that.”
However, the future isn’t all about the volume of auto sales. Tesla envisions an entire new transportation ecosystem, one that incorporates vehicle autonomy, ride-sharing and distributed renewable energy. “The sooner the market can start to view Tesla as something other than just selling machines for people to own privately and operate in some automated form themselves… the more the events of the next few years are going to make sense,” says Jonas. “We see Tesla as disrupting transportation, not just the automotive industry.”
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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