Tesla’s Future Beyond Musk: Embracing Scale and Robotaxi Potential
While Elon Musk remains the public face of Tesla (NASDAQ: TSLA), Jefferies analysts assert that the company’s scale, cost flexibility, and strategic roadmap play a critical role in defining its valuation.
Resilient Margins amid Declining Revenue
Despite a 21% YoY drop in Q1 revenue, Tesla achieved nearly 30% operating leverage on core auto gross margins, showcasing its ability to control costs effectively in challenging times.
- Efficient Gigafactory Operations: Streamlined processes enhance design and manufacturing efficiency.
- Localized Production: “Re-shoring” manufacturing in the U.S. helps manage input costs.
- Supply Chain Optimization: Integrating battery modules and packs aids in reducing expenses.
Investors can track Tesla’s profitability and leverage ratios for a more accurate financial forecast.
Robotaxi Program: Evolution to Profitability
Tesla confirmed the launch of its Robotaxi program in June in Austin, with varying fleet-scale scenarios outlined by Jefferies:
| Scenario | Fleet Size (20230) | Implied Valuation |
|---|---|---|
| Conservative | 1M vehicles | $200B |
| Base-Case | 5M vehicles | $560B (~$160/sh) |
| Aggressive | 10M vehicles | $1T |
Jefferies stresses that robotaxi revenue won’t significantly contribute until mid-2026, allowing Tesla time to refine its Full Self-Driving stack.
Valuation Insights and Beyond Automotive
Utilizing a sum-of-the-parts valuation approach, Jefferies estimates:
- $560B for core automotive and robotaxi services.
- Additional potential value in stationary storage and humanoid robotics.
Employing tools for discounted cash flow modeling can help assess Tesla’s intrinsic value across varying scenarios.
Balancing Leadership with Corporate Growth
Despite any governance concerns associated with Musk, Jefferies points out several positive fundamentals:
- Manufacturing Moat: Efficient processes are challenging to replicate.
- Product Ecosystem: Synergy across vehicles, energy storage, and AI boosts brand loyalty.
- Financial Strength: Strong cash flows enable aggressive R&D without excessive leverage.
Finally, Tesla’s strong operational fundamentals and strategic investments help mitigate risks associated with any single individual’s influence.
Newsletter