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Key Points
- Tesla missed first-quarter delivery estimates due to intensifying competition and the removal of government incentives, and the stock is currently down 29% from its high.
- Bank of America analyst Alexander Perry sees Tesla as the clear leader in autonomous driving technology because its vision-only approach is more cost-effective and scalable.
- Morgan Stanley analyst Andrew Percoco thinks Tesla’s robotaxi rollout will create a flywheel that ultimately boosts demand in the core electric car business.
Tesla (NASDAQ: TSLA) is having another difficult year. Deliveries increased just 6% in the first quarter, missing expectations for the second consecutive time, as demand remained sluggish amid intensifying competition and the expiration of federal tax credits.
That news comes on the heels of a disastrous last year. In 2025, Tesla lost its position as the global leader in electric car sales, and deliveries, revenue, and earnings declined as the company navigated headwinds related to CEO Elon Musk’s politics and President Donald Trump’s tariffs.
Tesla stock is currently down 29% from its high. But shareholders recently got good news from Wall Street analysts.
Bank of America sees Tesla as the future leader in autonomous ridesharing
In March, Bank of America reinstated coverage on Tesla. Analyst Alexander Perry set the company with a target price of $460 per share, which implies 33% upside from the current share price of $345.
For context, among the 56 analysts who currently cover Tesla, the median target price is $460 per share, according to The Wall Street Journal.
So Perry’s forecast is not absurdly high, but the rationale behind the target price is still very good news for investors.
While some analysts are concerned that Tesla’s electric car business has essentially become an afterthought as the company has shifted focus to robotaxis and robotics, Perry is particularly optimistic about the company’s growth prospects in autonomous driving.
Tesla currently offers robotaxi rides in two U.S. cities. That puts the company way behind Alphabet’s Waymo, which already has commercial autonomous ridesharing services in 11 U.S. cities.
Nevertheless, Perry thinks Tesla’s vision-only approach affords the company durable competitive advantages in cost efficiency and scalability.
To elaborate, most robotaxi companies rely on multiple sensors (i.e., cameras, lidar, radar), but Tesla relies entirely on external cameras.
CEO Elon Musk has defended that approach with a simple explanation: Humans operate cars with nothing but eyesight, so autonomous vehicles should be able to navigate with nothing but cameras. So, why spend large sums of money outfitting robotaxis with unnecessary sensors?
That vision-only approach has two major benefits. First, Tesla pays far less to build its robotaxis because its vehicles are not equipped with expensive radar and lidar systems.
Second, Tesla does not have to create detailed lidar maps before deploying its robotaxis on city streets. Instead, its cars should be able to navigate in any environment once its full self-driving (FSD) system is sufficiently advanced.
“Tesla’s camera-only approach is technically harder but much cheaper and leverages a consumer-fleet data engine. Tesla’s strategy should allow it to scale more profitably compared to robotaxi competitors, while the lack of drivers gives it a cost advantage versus rideshare players,” Perry said.
Morgan Stanley thinks the robotaxi rollout could reenergize the core automotive business
Today, Tesla offers robotaxi services in Austin and San Francisco, but this year could be an inflection point. Musk believes the company’s autonomous ridesharing service area will expand to “dozens of major cities” that cover somewhere between “a quarter and half of the United States by the end of the year.”
Morgan Stanley analyst Andrew Percoco thinks the scaling of the robotaxi business “has the potential to create a powerful flywheel across Tesla’s ecosystem.”
He describes a situation in which robotaxi rides accelerate unsupervised data collection, which improves the artificial intelligence (AI) models that power personal FSD features, which improves demand in the core automotive business.
Percoco also believes Tesla has a significant cost advantage due to its vision-only strategy. He estimates the cost-per-mile for traditional ridesharing services and Waymo at $1.71 and $1.43, respectively, but he believes Tesla pays just $0.81 per mile and thinks that figure will drop much further as production of the Cybercab (Tesla’s dedicated robotaxi) scales in the years ahead.
Additionally, Percoco estimates Tesla will account for 25% of autonomous driving trips annually in the U.S. by 2032, putting it in second behind Waymo (34%).
Meanwhile, he sees Uber Technologies (22%), Amazon’s Zoox (12%), and Lyft (7%) rounding out the leader board. That hints at a substantial market opportunity for Tesla. Grand View Research estimates robotaxi sales will grow at 99% annually to approach $150 billion in 2033.
In closing, Tesla stock is absurdly expensive at 320 times earnings. However, despite the struggling electric vehicle business, patient investors should consider holding a position if they are confident in the company’s ability to monetize autonomous driving technology.
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