Tesla stock surged by 5.34% on Thursday, following upbeat comments from Bank of America (BofA) analysts post a visit to the company’s Giga Austin factory. Lead analyst John Murphy expressed heightened confidence in Tesla’s trajectory, especially with its electric vehicle (EV) and robotaxi offerings set for growth in 2025. He maintained a “Buy” rating, raising the price target to $400 from $350, reinforcing optimism about a low-cost EV model debuting in early 2025.
Tesla shares soar 5.34% after Bank of America visit
Murphy indicated that the anticipated low-cost EV, expected to be priced under $30,000, will expand Tesla’s total addressable market (TAM). Factors contributing to lower production costs include streamlined features and improved battery efficiency, which align with Tesla’s ongoing strategy to deliver more affordable options. Additionally, Murphy noted that several new models in 2025 are likely, based on Tesla’s previous statements.
The analysts’ optimism extends to Tesla’s latest Full Self-Driving (FSD) software, currently in beta testing. Murphy highlighted a recent experience in a Model Y and Cybertruck, which demonstrated advanced capabilities under challenging road conditions, suggesting readiness for a supervised robotaxi launch. Shifting towards software products like FSD is expected to enhance profit margins as the company prioritizes software-driven revenue streams.
Tesla’s plans for expanding its robotaxi testing next year align with CEO Elon Musk’s prediction that production of the Cybercab—Tesla’s version of a robotaxi—will reach volumes of 2 million units annually by 2026. This ambitious goal is underpinned by confidence in the FSD’s reliability during testing.
Focus on Optimus robot as a long-term growth prospect
Murphy also discussed Tesla’s humanoid robot, Optimus, which is currently sorting battery cells autonomously at Giga Austin. Testing includes assessing the robot’s dexterity with simple tasks, such as catching tennis balls. By the end of 2025, Tesla plans to implement 1,000 Optimus robots at the factory, which is part of a broader vision for enhancing operational efficiency through robotics.
While Musk envisions Optimus as potentially Tesla’s most significant product, with a projected $200 trillion TAM, Murphy cautiously framed it as a long-term opportunity. He noted possibilities for reducing the cost of Optimus as its functionality improves, with increased production expected in the latter half of the decade.
Tesla’s stock performance has seen a nearly 53% increase following Donald Trump’s election win on November 5. A surge in Bitcoin’s value, crossing the $100,000 mark, has also positively impacted Tesla, given the company’s affiliations with cryptocurrency. The upcoming meeting of Musk and Vivek Ramaswamy with fellow Republicans at a Capitol Hill event aims to promote their Department of Government Efficiency (DOGE) committee, highlighting Tesla’s ongoing engagement with crypto initiatives.
Analyst ratings reflect divided expectations
Analysts are expressing varied sentiments regarding Tesla’s stock. Craig Irwin, a previously bearish analyst from Roth MKM, has shifted to a “buy” rating with a price target of $380, significantly up from $85. Conversely, Guggenheim maintained a “sell” rating while increasing its target to $175 from $156. The consensus price target across 34 analysts stands at $248.56, with a broad range of opinions from $24.86 to $411.
As Tesla’s stock trades at a price-earnings ratio of 106.72, analysts are particularly focused on the implications of the upcoming low-cost EV launch and further advancements in the Optimus project. The combination of bullish analyst reports and strategic technological initiatives positions Tesla for a potentially transformative period over the next few years.
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