Investor's Corner
Tesla (TSLA) shows strength amid impending Made-in-China Model 3 deliveries, Cybertruck sightings
Tesla stock (NASDAQ:TSLA) is showing some strength on Tuesday amid reports hinting that deliveries of the Made-in-China Model 3 may be starting sooner than expected. Apart from this, interest in the Tesla Cybertruck remains high weeks after the vehicle’s unveiling, thanks to sightings of the upcoming pickup and Elon Musk’s recent trip to Malibu, CA.
As the year ends, things appear to be settling for Tesla. Following its breakout recovery in the third quarter, a lot of what was once deemed as potential issues are starting to melt away. CEO Elon Musk recently won a defamation case filed against him by a British caver who mocked and insulted the efforts of SpaceX engineers during the height of the Thai cave rescue. Alexander Potter, an analyst at Piper Jaffray, also shared some optimistic expectations for the company, raising his TSLA price target to $423 and dubbing the electric car maker’s shares as a “must-have.”
Yet, if there is one aspect of Tesla’s business that seems poised to make a big difference for the electric car maker, it would be the progress of its Gigafactory 3 in Shanghai, China. Tesla’s China push has beat expectations pretty much at every turn, with the electric car maker’s targets being met and exceeded by its Chinese construction partner and regulators. From Gigafactory 3’s construction of its Phase 1 zone, which would allow the company to start producing the Made-in-China Model 3, to the quick processing of permits with regulators, Tesla China has proceeded at near-ludicrous speed.
Recent reports from China indicate that not only was Tesla already starting the mass production of the MIC Model 3 in its Shanghai-based plant; it is also poised to begin initial deliveries soon. Just days after receiving its final sales license, car carrier trucks loaded with Model 3 were spotted in Gigafactory 3 premises, with the vehicles reportedly being sent to Tesla delivery centers in select areas of the country. Drone flyovers of the Gigafactory 3 area also revealed over 300 MIC Model 3 in Gigafactory 3’s parking lots, ready for delivery.
Apart from Gigafactory 3’s steady progress, Tesla’s recently unveiled pickup truck continues to reach more and more people. Thanks to the Cybertruck’s design, the vehicle has captured the interest even of individuals who would normally have no interest whatsoever in pickups at all. Over the weeks since the vehicle’s unveiling, the Cybertruck has inspired countless memes, fan-made video trailers, and cool DIY projects. That doesn’t count viral videos of the Cybertruck’s sightings either. This weekend, for example, the Cybertruck was spotted in Malibu being driven by none other than Elon Musk, and the vehicle attracted a ton of attention.
While Musk has stated that the Cybertruck is pretty much like an acid test for Tesla, the vehicle seems poised to be a big hit for the electric car maker. Over 250,000 reservations have been filed for the vehicle as per Musk’s most recent update, and more and more people are warming up to the futuristic pickup. Among them is Piper Jaffray’s Alexander Potter, who noted that prior to the Cybertuck’s unveiling, he was skeptical that Tesla could move the needle in the pickup segment. The analyst noted that it did not take long before his perception of the vehicle began to change.
“The more we looked, the more we began considering the possibility that ALL OTHER pickup trucks might actually be pretty crummy, and that Tesla’s Cybertruck is the only pickup worth ordering,” he wrote.
Overall, Tesla may be looking at steadier waters ahead. From June, when TSLA stock was trading at 52-week lows, the company has rebounded by almost 92% and $29 billion on forecasts of rising profits, market share, and steady demand for its vehicles like the Model 3 and its crossover sibling, the upcoming Model Y. If Tesla can end 2019 on a strong note, 2020 may very well be more welcoming to the electric car maker than this very challenging year.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
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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