Fully Self-Driving Technology Positions Tesla Stock for Another Wave of Value Creation

Through the years, there has always been a valuation premium attached to Tesla (TSLA) stock. One of the most important reasons for this premium is innovation and brand pull. Amidst macroeconomic challenges and intense competition, TSLA stock has returned 27% in the last 52 weeks. With focus on autonomous driving technology, there seems to be a clear path towards sustained value creation. 

In an important development, Tesla announced that the company’s full self-driving (supervised) is available in China. This system requires active driver supervision, but minimal intervention and is the first step towards fully autonomous vehicles. It’s worth noting that that FSD is already available in multiple countries that includes the United States, Canada, Mexico, South Korea, among others. However, the U.S. and China remain the most important markets. 

Once broader approvals are secured, Tesla’s FSD may be a key growth driver. To put things into perspective, Morgan Stanley believes that vehicles with partial to full automation could be a $200 billion market by 2030 and $400 billion by 2035. 

About Tesla Stock

Headquartered in Austin, Texas, Tesla operates in the automotive and energy generation and storage segment. With a market valuation of $1.6 trillion, the innovation-driven company has been on the forefront of the electric vehicle revolution. 

In the automotive segment, the company’s consumer vehicle models include the Model 3, Y, S, X, and Cybertruck. The focus of the company in this segment is to utilize artificial intelligence through products like full self-driving and Robotaxi. 

Further, in the energy storage segment, the company’s products include Powerwall and Megapack, which are lithium-ion battery energy storage products. Tesla also sells energy generation systems directly to customers. 

For FY25, Tesla produced and delivered 1.66 million and 1.64 million consumer vehicles, respectively. During the year, the company also deployed 46.7 GWh of energy storage products. This translated into total FY25 revenue of $94.8 billion. 

It’s however worth noting that TSLA stock has remained sideways in the last six months. This provides a good accumulation opportunity as the company builds its FSD business. 

EV Sales Accelerate

One of the unintended results of the geopolitical tensions in the Middle East has been an acceleration in EV sales. As fuel prices surge, EVs and hybrid vehicles have been in the limelight. 

Data indicates that the sale of new EVs increased by 34% on a year-on-year basis in Europe. The trend is likely to be similar in other regions. 

Tesla is well positioned to benefit with a strong existing portfolio and an attractive launch pipeline. This includes Roadster in the consumer space and Tesla semi trucks. Speculations continue on Tesla developing a low-price model, which can make significant inroads in emerging markets. Overall, tailwinds for the EV industry is likely to sustain and Tesla is positioned to remain among the leaders in the global markets. 

What Do Analysts Say About TSLA Stock?

Based on 42 analysts with coverage, TSLA stock has a consensus “Moderate Buy” rating. While 15 analysts have a “Strong Buy” rating for TSLA stock, two have a “Moderate Buy,” and 19 have a “Hold” rating. Among the bears, six analysts have a “Strong Sell” rating. 

The mean price target of $401.77 represents potential downside of 7% from current levels. However, the most bullish price target of $600 suggests that TSLA could climb 49% from here.

Concluding Views

Tesla ended Q1 FY26 with a cash buffer of $44.7 billion. This provides the company with high flexibility for investment in innovation and production capacity. It’s worth noting that the company is already planning a $20 billion capital investment this year. 

Ultimately, these investments in AI and capacity are likely to translate into sustained growth. According to Wolfe Research, Tesla’s Robotaxi revenue can potentially reach $250 billion by 2035. 

Wedbush Securities recently reiterated its view that "SpaceX and Tesla will eventually merge into one company in 2027.” This is another possible catalyst for value creation. 

Overall, TSLA stock remains attractive and has multiple growth catalysts that include the launch of new models, expansion in emerging markets, and full self-driving.