Tesla’s (TSLA) much-awaited robotaxi launch in Austin garnered significant attention from analysts and investors, as this product is viewed as one of the key growth drivers for the electric vehicle (EV) maker. Jed Dorsheimer, a top analyst from William Blair, cautioned about the bumpy road ahead for Tesla investors, but reaffirmed a Buy rating on the stock due to the robotaxi opportunity. The 5-star analyst stated that based on his analysis, Tesla’s valuation is “increasingly dependent on the robotaxi business.”
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Top Analyst Is Optimistic About Tesla’s Robotaxi Business
Dorsheimer highlighted some positives related to Tesla, including the successful launch of robotaxis in Austin, the first autonomous vehicle delivery, and the inclusion of battery storage subsidies in the Senate budget proposal.
However, he noted certain unfavorable aspects, including the expectation of Tesla missing the Q2 deliveries consensus estimate (the analyst lowered his estimate to 355,000 compared to the consensus of around 385,000) and the cancellation of the Model 2 hatchback. Additionally, he mentioned weakness in China and Europe sales as well as emerging rival Xiaomi’s (XIACF) YU7 securing 200,000 preorders in three minutes. Plus, Dorsheimer pointed out the phasing out of the $7,500 EV tax credit in 180 days, tariffs, tighter foreign entities of concern (FEOC) restrictions for battery materials from China, and intense competition from Alphabet’s (GOOGL) Waymo, which is expanding rapidly.
Despite these pressures, Dorsheimer remains bullish on TSLA stock, as he believes the company is entering its transition from an automaker to an AI and autonomous driving company — a shift that presents a new trillion-dollar total addressable market (TAM). Based on Tesla’s ability to capitalize on its lower cost structure and leverage pricing, the analyst believes that even by charging 50% less per mile, the Elon Musk-led company can still deliver about 60% in EBITDA margins. He expects Tesla to win 35% market share compared to rivals Waymo at 15%, Uber Technologies (UBER) at 38%, and Lyft (LYFT) at 13%, generating nearly $250 billion in revenue in 2040.
“In sum, despite some crosswinds, we believe the launch of robotaxi keeps momentum at Tesla’s back,” concluded Dorsheimer, who ranks 201st out of more than 9,600 analysts tracked by TipRanks. He has a success rate of 53%, with an average return per rating of 29.50% over a one-year period.
Is Tesla Stock a Buy, Sell, or Hold?
Tesla stock is down about 20% year-to-date due to concerns over weak EV demand amid rising competition and macro uncertainties. Overall, Wall Street has a Hold consensus rating on Tesla stock based on 14 Buys, 12 Holds, and nine Sells. The average TSLA stock price target of $291.31 indicates 10% downside risk.
