Tesla's Stock Target Raised 11% Amid FSD Ambitions, Challenges

American Bank has raised its target price for Tesla's stock to 341 dollars, reflecting continued confidence in the company's Full Self-Driving (FSD) ambitions. In a recent investor report, analysts from American Bank noted that Tesla faces more significant challenges compared to competitors like General Motors and Ford. These challenges include disappointing delivery figures, the gradual phase-out of incentives, and tariffs, which collectively make Tesla's situation the most challenging among the three original equipment manufacturers. The analysts emphasized that the risk of tariffs is not negligible and could further impact Tesla's operations.

The report also highlighted that Tesla's fourth-quarter sales could be affected by the cancellation of incentives under the Inflation Reduction Act, which includes a 7,500-dollar tax credit for electric vehicles. Despite these challenges, American Bank analysts expressed optimism about Tesla's Robotaxi business in Austin. This optimism has bolstered their belief in Tesla's promise to offer an unsupervised FSD by the end of 2025, leading to an increase in Tesla's target stock price from 305 dollars to 341 dollars, an increase of over 11%.

Analysts from Piper Sandler also welcomed Tesla's robotaxi business and the company's plans to expand the service to Phoenix and the San Francisco Bay Area. However, Tesla's FSD may face stricter scrutiny following calls for more stringent regulation of autonomous driving by the nominee for the National Highway Traffic Safety Administration under the Trump administration. This regulatory pressure could impact Tesla's ability to deliver on its FSD promises and may require the company to make significant adjustments to its technology and marketing strategies.

Tesla is currently engaged in a legal battle with the California Department of Motor Vehicles (DMV) over allegations of misleading advertising regarding its Autopilot and FSD technologies. The DMV has accused Tesla of making false or misleading claims about the capabilities of its autonomous driving features, which could potentially mislead consumers. Tesla has defended its marketing practices, asserting that it has always clearly stated that its technologies require continuous driver supervision and that the company has been transparent about the limitations of its systems. The case is set to go to trial, and the outcome could have significant implications for Tesla's operations in its largest market, California.

In addition to the legal challenges in California, Tesla is also facing a trial in Florida related to a 2019 accident involving a Model S that resulted in a fatality. The trial will focus on whether the Autopilot system contributed to the driver's distraction and whether Tesla's marketing claims about the technology were misleading. The outcome of this trial could set a precedent for how automotive companies market their autonomous driving technologies and could impact consumer trust in these systems. The legal battles and regulatory scrutiny highlight the complex landscape that Tesla is navigating as it works to deliver on its ambitious FSD goals.