Amid the uncertainty about a cheaper sub-$30,000 electric vehicle from Tesla, Inc. TSLA, a bullish analyst said the company cannot but afford to shelve it.
Risky Move: “Robotaxi is not the answer for now; Model 2 needs to be on the Tesla blueprint,” said Wedbush analyst Daniel Ives in a note. As the company is left to navigate through the Category 5 demand storm, a key part of the future growth story for it is the Model 2 vehicle and sub-$30,000 price point to drive mass demand globally, he said.
Ives said he sees 60% of future growth over the next few years coming from Model 2, which was expcted to hit the roads by late 2025 or early 2026. As such, Tesla CEO Elon Musk has announced an Aug. 8 to unveil the robotaxis, he noted.
“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,” Ives 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.”
The analyst said a potential move away from the Model 2 and into robotaxis would be a “risky gamble.”
See Also: Everything You Need To Know About Tesla Stock
Robotaxi Offering: Tesla first mentioned robotaxis in 2019 as part of its long-driven full self-drive thesis, Ives said. Musk had previously said Tesla would make a car without controls for human
use and that full-self driving will reach a point of full autonomous use for tax and driverless scenarios, he added.
As Tesla is now caught between “two waves of growth,” robotaxis are not the near-term answer to fill this
growth gap, the analyst said.
Model 2 is key for kickstarting volume growth and this dynamic must be conveyed to the Street on the earnings call on April 23, he said.
Positive On Long-Term: Ives said he remained long-term bullish but cautioned that the next few months would be crucial for Musk and Tesla, as they are expected to give the Street a blueprint for growth into 2025.
“The future of Tesla is a bit murky now … Musk needs to give the clear roadmap and strategic vision for
the Street with Model 2 a key component,” the analyst said.
Wedbush maintained an Outperform rating and a $300 price target for Tesla stock.
Tesla ended Thursday’s session up 1.65% at $174.60, according to Benzinga Pro data.
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