Tesla’s stock price surged on Thursday following a positive assessment from BofA Securities analysts after their recent visit to the Giga Austin factory. This visit reinforced their confidence in Tesla’s future growth potential.
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“Our trip strengthened our belief that Tesla is well-positioned for growth beyond 2025, driven by its core electric vehicle (EV) business, the anticipated launch of its robotaxi service, and longer-term prospects from investments in the Optimus robot,” stated lead analyst John Murphy in a note to investors. This positive outlook led Murphy to reiterate his Buy rating for Tesla and raise his price target from $350 to $400, contributing to a 3% jump in Tesla’s share price during midday trading.
Key Drivers for Tesla’s Future Growth
A primary catalyst for Tesla’s growth, according to BofA, is the forthcoming release of a lower-priced EV, expected in the first half of 2025. This new model is projected to expand Tesla’s total addressable market (TAM) significantly. Priced under $30,000, its affordability will stem from cost reductions achieved through “simplifying features, enhancing motor efficiency for a smaller battery, and modifying the interior,” among other strategies. Murphy anticipates additional new models in 2025, based on Tesla’s previous announcements.
Full Self-Driving and Robotaxi Potential
BofA also expressed optimism about Tesla’s latest Full Self-Driving (FSD) software, currently in beta testing. Murphy highlighted a test drive in a Cybertruck and Model Y, which “navigated flawlessly to a charging station several miles away, despite encountering road construction and executing a challenging left turn against oncoming traffic.” The minimal human intervention required suggests the imminent launch of a supervised robotaxi service.
The transition towards software-based products like FSD is expected to enhance profit margins. Tesla plans to broaden its robotaxi testing in the coming year. CEO Elon Musk projected during the Q3 earnings call that Cybertruck volume production, targeting 2 million units annually, would commence in 2026.
Optimus: A Long-Term Game Changer?
Another compelling aspect highlighted by Murphy is Tesla’s humanoid robot, Optimus. Currently utilized for sorting battery cells without human intervention, Optimus is also undergoing dexterity tests, such as catching tennis balls.
Tesla aims to deploy 1,000 Optimus robots at Giga Austin by the end of 2025. Murphy anticipates accelerated robot training, with computing power from Tesla’s supercomputers shifting towards Optimus development as the robotaxi technology matures.
While Musk has boldly claimed Optimus will be Tesla’s most significant product, boasting a staggering $200 trillion TAM, Murphy adopts a more cautious stance. He suggests Optimus costs will decrease as capabilities improve, with increased production from 2026 onwards, representing a “long-term potential” opportunity. An equity offering could provide the necessary capital for expanding compute capacity.
Conclusion: Tesla’s Multifaceted Growth Trajectory
BofA’s bullish outlook, fueled by Giga Austin insights, underscores Tesla’s multifaceted growth strategy. From affordable EVs expanding market reach to the disruptive potential of FSD and robotaxis, and the long-term promise of Optimus, Tesla continues to position itself at the forefront of technological innovation. These factors contribute to the company’s strong performance, with the stock price experiencing a significant surge since early November. While challenges remain, Tesla’s ambitious vision and execution capabilities continue to attract investor confidence.
