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What Tesla’s Robotaxi Could Mean for Its Stock Price

Published 04/08/2024, 03:17 PM
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On April 5th, taking advantage of his X platform, Elon Musk announced the unveiling of Tesla (NASDAQ:TSLA) Robotaxi on August 8th. Over five days, the announcement had little lasting impact on TSLA stock, breaking even at 0.05% to the present price level of $173.66 per share.

Tesla shares are now 7.6% higher from their 52-week low of $152.37. During that period, the average TSLA stock price was $222.39 per share. With a YTD slump of 30%, does Tesla Robotaxi have what it takes to rally the American EV leader?

Is Robotaxi Replacing Tesla’s Affordability Drive with “Redwood”?

Across all polling throughout the years, EV affordability has been the main stumbling hurdle for its adoption. If adoption is lower than expected, so is the deployment of EV supercharging infrastructure, which will further lower EV adoption.

With the dominant EV market share in the US and EU, Tesla aims to rectify this problem by scaling operations with its gigafactories, more specifically, by releasing a new entry model codenamed “Redwood” by mid-2025.

With the rumored price tag of $25,000, the compact Redwood would be a direct competitor to rising Chinese automakers such as BYD (SZ:002594) and Li Auto (NASDAQ:LI). Elon Musk released this affordable EV balloon in September 2020 at a California factory’s “Battery Day.”

“We do not have an affordable car. That’s something we will have in the future. But we’ve got to get the cost of batteries down,”

Now that Robotaxi is in imminent play, Reuters claims that Redwood is a defunct project, based on three insider sources. Considering that many investors have been expecting Tesla’s low-cost car to turn around shareholder fortunes, such news was met with apprehension.

On the same day, however, Elon Musk dismissed the news as “Reuters is lying (again).” Moreover, Musk reacted to Sawyer Merritt’s hypothesis with googly eyes emoji. Merritt posited that Tesla’s entry EV is the same Robotaxi platform without being mutually exclusive.

Although still open to interpretation, what is the best-case scenario for Robotaxi’s impact on Tesla shareholders?

The Value of FSD Data, the Tech Growth Part of Tesla

For years, investors have speculated that TSLA is more of a tech than an automaker stock. After all, at $539 billion, Tesla has a 40% greater market cap than Ford (NYSE: NYSE:F) and Toyota Motor (NYSE: NYSE:TM) combined while manufacturing drastically fewer vehicles per year.

The tech part in Tesla primarily comes from the value of data collected for Full Self-Driving (FSD) capability, with the latest Beta v12.3.3 version out. Utilizing its supercomputer cluster, Tesla Dojo, the company has been training FSD algorithms. The goal is to reach unsupervised, localized FSD, commonly depicted in sci-fi movies.

In technical terms, this capability would be SAE (Society of Automotive Engineers) Level 5. Elon Musk has no qualms about the impact of FSD’s successful deployment, describing it as a high-risk, high-reward scenario for shareholders.

“The overwhelming focus is on solving full self-driving. That’s essential. It’s really the difference between Tesla being worth a lot of money or worth basically zero.”

Elon Musk in Tesla Owners Silicon Valley interview

However, that has been easier said than done, given how much data a vehicle has to process in real time and appropriately interpret. The Washington Post reported in June 2023 that Tesla’s Autopilot feature, SAE Level 2, was responsible for 17 fatalities and 736 crashes since 2019.

For more discerning investors, this rang the bell to Musk’s 2016 promise of scaling a “beautiful solar-roof-with-battery product that just works.” Tesla Solar, previously SolarCity, is yet to deliver on this vision. If FSD is successfully integrated into the Robotaxi network, Tesla will suddenly become a direct competitor to Uber (NYSE:UBER), Lyft (NASDAQ:LYFT), and even e-commerce logistics companies like Amazon (NASDAQ:AMZN).

In other words, just as Amazon started as a book-selling platform, Tesla Robotaxi could transform the company into a Transportation-as-a-Service (TaaS) company. This would translate to added value for shareholders while being the Western leader in electric vehicles.

TSLA Present Price Targets: Low Estimate $23.53, High Estimate $310

Aggregating from 32 analyst inputs by Nasdaq, the average TSLA price target twelve months ahead is $191.67 vs the current $173.66 per share. Reflecting Musk’s high-risk, high-reward gambit, the low estimate is $23.53, while the high forecast goes up as high as $310 per share.

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Disclaimer: Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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