A recent Reuters report claiming that Tesla (NASDAQ:TSLA) is scrapping its plans for a low-cost model (Model 2) was given short shrift by CEO Elon Musk. That said, the company has yet to offer an official rebuttal of the claim. What Musk did do, however, in response to the Reuters piece, is announce August 8 as the date for Tesla’s Robotaxi unveiling.
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While the prospect of a reveal for the Robotaxi is enticing, according to Wedbush analyst Daniel Ives, it alone will not be enough.
“Our view is while this is an exciting announcement around robotaxis we do not expect full autonomy (no steering wheel models) until 2030 and believe it is crucial to deliver a Model 2 vehicle over the next 18 months ALONG with robotaxis,” the analyst said. “If robotaxis is viewed as the ‘magic model’ to replace Model 2 we would view this as a debacle negative for the Tesla story. It would be a risky gamble if Tesla moved away from the Model 2 and went straight to robotaxis.”
First mentioned in 2019, Robotaxis form part of Tesla’s full self-drive (FSD) ambitions, and the unveil will see the robotaxi become a part of the Tesla portfolio. But Ives considers the Model 2 car and its sub $30,000 price point as a “key part of the future growth story” for Tesla and one that will help accelerate worldwide EV adoption.
“We estimate that ~60% of future growth the next few years will come from Model 2 which was set to hit the roads by late 2025 or early 2026,” Ives explained.
Considering the debacle that Q1 represented on the delivery front, and given the soft EV demand seen both in China and globally, the fact Tesla is currently caught between “two waves of growth” is starting to no longer hold water with some investors whose patience is “starting to wear very thin.”
“Robotaxi is the not the near-term answer to fill this growth gap while Model 2 is and this dynamic must be conveyed to the Street on the conference call April 23,” Ives summed up, referring to Tesla’s Q1 results date.
For now, Ives remains “long term bullish,” although he concedes the upcoming months will be crucial to the overall Tesla story. Accordingly, Ives maintained an Outperform (i.e., Buy) rating on Tesla shares along with a $300 price target, implying the stock has room for handsome growth of 75% from current levels. (To watch Ives’ track record, click here)
Overall, 8 other analysts align with Ives in the bullish camp, while 7 advocate selling. However, the majority, totaling 19 analysts, recommend holding, resulting in a consensus Hold (i.e. Neutral) rating. The average target price is $196.72, reflecting an anticipated 12-month return of ~22%. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
