Tesla Price Target Raised by RBC Capital

Investing.com — RBC Capital has increased its price target for Tesla (NASDAQ:TSLA) to $387 from $323 in a note released on Friday. This adjustment reflects growing confidence in the company’s ambitions in autonomous vehicles (AV) and its operational advantages over traditional automakers.

The bank pointed out Tesla's advancements in Full Self-Driving (FSD) technology and its vertically integrated manufacturing as significant factors contributing to the company’s long-term value.

After inspecting Tesla's Giga Texas facility in Austin, RBC analysts shared their optimism regarding the company’s capacity to scale its autonomous capabilities and keep a competitive edge.

> “The sessions gave us increasing confidence in Tesla's ability to achieve its autonomy goals and highlighted the comparative advantage it has over both legacy ICE and EV makers in building cars,” RBC noted.

Tesla's FSD technology, which recently launched a hands-free version in the U.S., is valued at $102 per share according to RBC. The analysts project a rising demand for premium AV features, especially among robotaxi operators and high-end consumers.

> “We raise our FSD pricing in the outer years,” RBC stated, mentioning that increased usage of robotaxis will capture market share from mass-market users.

Robotaxis play a crucial role in RBC's outlook, contributing $136 per share to Tesla’s valuation. The analysts expect that Tesla will make the most of its end-to-end control of the robotaxi ecosystem, covering software, vehicles, and applications, providing a cost advantage over competitors.

Additionally, the analysts believe Tesla could partner with ride-hailing companies such as Uber (NYSE:UBER) or Lyft (NASDAQ:LYFT) to enhance its market share.

RBC also emphasized that Tesla's manufacturing capabilities further strengthen its valuation.

> “Thanks to vertical integration, Tesla enjoys one of the best cost structures in the auto industry,” RBC stated, while raising its multiple on Tesla’s vehicle revenues to 1x.

Despite acknowledging potential challenges, including regulatory changes under a Trump administration, RBC sees Tesla gaining market share from other EVs. They reiterated their Outperform rating, underscoring Tesla's secular growth engines and improved risk/reward dynamics.