The verdict is in, and it spells trouble for Tesla’s (NASDAQ:TSLA) Autopilot features. Following a two-year investigation by US safety regulators, the EV leader said it is recalling over 2 million vehicles in the US fitted with its Autopilot advanced driver-assistance system to install new safeguards.
The National Highway Traffic Safety Administration (NHTSA) looked into around 1,000 crashes that occurred when the feature was engaged, concluding that the Autopilot system has the potential to create a misleading sense of security among drivers and can be prone to misuse in specific hazardous scenarios, especially when Tesla’s technology may struggle to navigate the road safely.
Tesla stated that it disagrees with the NHTSA’s analysis on this controversial issue; nevertheless, the company announced plans to implement an over-the-air software update that will introduce “additional controls and alerts” to enhance the existing features on affected vehicles.
It’s been a rocky ride so far for Tesla on the Autopilot front. However, for Wedbush’s Dan Ives, a 5-star analyst rated in the top 2% of the Street’s stock pros, the “tug of war with the NHTSA might now finally head in the right direction.”
“In our opinion FSD (full self-driving) represents the holy grail for Musk & Co. over the coming years and we believe after some successful new releases of this software that Tesla is heading down the right path to where FSD will start to become a reality over the next few years and will be a major valuation addition to the sum-of-the-parts thesis for Tesla,” the 5-star analyst opined. “We do not believe FSD is currently being captured in the valuation of Tesla and this represents a key 12 to 18 months to get past some of the regulatory black eyes seen over the past few years with FSD.”
With AI Training, Ives claims FSD is now “reaching new heights.” The company recently introduced its V12 update, featuring an FSD package that incorporates end-to-end AI. This update aims to enhance the smoothness of driving through turns while also improving decision-making and detection capabilities in Tesla’s journey toward achieving full autonomy over the coming year.
So, down to business, how does this all translate to investors? Ives maintained an Outperform (i.e., Buy) rating on Tesla shares alongside a $310 price target. There’s potential upside of ~26% from current levels. (To watch Ives’ track record, click here)
The Street’s average target, however, is a less exuberant $245.89, indicating the shares are currently fully valued. Rating wise, based on a mix of 14 Buys, 13 Holds and 6 Sells, the analyst consensus rates this stock a Hold. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
