New robotaxis could be the future of Tesla Inc TSLA and a multi-billion dollar opportunity. An analyst believes the technology could be great for the U.S. but face pressure of being allowed to be a part of Tesla's China segment.
The Tesla Analyst: Morgan Stanley analyst Adam Jonas reiterated an Overweight rating on Tesla and $310 price target.
The Analyst Takeaways: There could be more question marks about Tesla's future in China given its heavy focus on robotaxis moving forward, Jonas said in a new investor note.
"If Tesla were to ‘solve' the robotaxi problem, we believe it would be highly unlikely that company would be allowed to offer such technology within the PRC (People's Republic of China)," Jonas said.
The analyst said embodied artificial intelligence carries national security sensitivities.
"The US Department of Commerce has banned the export of advanced AI chips but what is the stance on advanced AI-enabled robotics?"
Jonas said autonomous cars must avoid objects, and the technological overlap between the civil and military applications of autonomy is high.
"While Tesla vehicles have been making inroads within China government circles, investors may question Tesla's long term competitive position in such a highly sensitive and regulated industry."
Jonas said investors should consider the national security implications of Tesla's robotaxis sooner than later.
The analyst values Tesla's automotive segment at $56 per share and sees China accounting for 10% of unit volume by 2030. Tesla's China auto segment could represent 5% of the company's total share price, or around $40 billion to $50 billion in value.
Tesla should be valued as an "AI beneficiary" company in the future, the analyst said. Jonas notes Tesla needs to get its auto business in line first before investors fully recognize the AI value.
"We do not believe Tesla will get credit as an AI company as long as core auto earnings are being revised down."
TSLA Price Action: Tesla closed 1.55% higher at $256.56 on Tuesday, versus a 52-week trading range of $138.80 to $299.29. Tesla stock is up 3.3% year-to-date in 2024.
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