Tesla, Inc. (TSLA) "Bigger Than Musk" – Jefferies Holds as Robotaxi Launch Sparks Tech Edge Talk

Tesla’s journey toward becoming a leader in autonomous driving and AI has never been more fraught—or more fascinating. In a recent report, Jefferies reaffirmed its “Hold” rating on Tesla (TSLA) with a price target of $300, arguing that the company’s long-term vision may outlast its controversial CEO. While Elon Musk’s political entanglements and governance concerns dominate headlines, the firm’s analysis suggests Tesla’s value lies in its operational resilience and ambitious tech roadmap. Central to this narrative is the 2025 launch of its Robotaxi service in Austin, Texas—a milestone that could redefine Tesla’s trajectory.

The Robotaxi Gambit: Scalability Over Superiority?

Tesla’s Robotaxi, slated to begin volume production in 2026, represents its boldest bet yet on autonomous driving. The vehicle’s driverless design—without traditional controls—aims to capitalize on Tesla’s vast trove of real-world driving data, collected via its fleet of vehicles equipped with Autopilot. Jefferies highlights Tesla’s potential advantage in scalability, not just technological prowess. Competitors like Waymo, which rely on costly lidar systems, face higher production costs. Tesla’s software-centric approach, paired with its Dojo supercomputing infrastructure, could allow it to deploy a cheaper, mass-market solution.

However, execution risks loom large. The June 2025 testing launch in Austin is a critical test. Jefferies warns that Tesla’s ability to scale its autonomous system without costly recalls or regulatory hurdles will determine whether its valuation—a forward P/E of 107x for 2026—is justified.

Musk’s Shadow and the Governance Headwinds

Elon Musk’s reduced involvement at Tesla—limiting his time to “a day or two per week” starting May 2025—reflects growing concerns about his dual roles as CEO and head of the controversial Department of Government Efficiency (DOGE). Analysts link his political activities, including support for far-right European parties and ties to Donald Trump, to a 36% sales drop in Spain and declining European deliveries overall. Protests at Tesla showrooms and a 9% year-over-year revenue decline in Q1 2025 underscore the brand’s vulnerability to Musk’s persona.

Jefferies notes that while Musk’s vision drives innovation, his leadership volatility creates investor uncertainty. The firm’s “Hold” stance partially hinges on the risk that Tesla’s governance issues could deter institutional investors or delay regulatory approvals for its tech ambitions.

Regulatory Crosswinds: Trade Policies and Semiconductor Limits

Tesla’s global ambitions face new headwinds from U.S. trade policies. Proposed changes to AI chip export rules, spearheaded by Republican lawmakers, could restrict Tesla’s access to advanced semiconductors—a critical component for its Robotaxi and Dojo systems. If enacted, these rules might push Tesla toward cheaper, Chinese-made alternatives, complicating its supply chain. Meanwhile, the Biden-era AI diffusion framework’s May 15, 2025, revision adds further uncertainty.

These regulatory pressures have already taken a toll. Tesla’s automotive gross margins fell to 12.5% in Q1 2025, down from 18% a year earlier, as cost inflation and trade barriers bit into profitability. The company’s withdrawal of its long-term 50% annual growth forecast signals a new reality: Tesla’s path to dominance is narrowing.

The Hedge Fund Play: Overvalued or Underappreciated?

Despite the risks, Tesla remains a top holding for hedge funds, ranking 8th among AI stocks tracked by investors. Over 126 funds owned TSLA as of Q4 2024, betting on its AI-driven future. Yet Jefferies questions whether the stock’s valuation—now at $1 trillion—can sustain its premium.

While Tesla’s AI initiatives are compelling, the firm cautions that its near-term challenges, including a 25% sales drop in Spain and BYD’s rising market share, could test investor patience. Meanwhile, cheaper AI stocks trading at 5x earnings (vs. Tesla’s 152x for 2025) may offer better risk-reward profiles.

Conclusion: A Tightrope Between Vision and Reality

Jefferies’ “Hold” rating captures the paradox of Tesla today: a company with a vision “bigger than Musk” yet weighed down by its CEO’s liabilities, regulatory vagaries, and execution risks. The Robotaxi launch in 2025 is a pivotal moment—it must prove that Tesla’s software and scale can outpace rivals and justify its sky-high valuation.

Key data points reinforce this duality:
- Financials: Q1 2025 revenue fell to $19.34B (-9% YoY), with margins at 12.5%, down from 18% in 2024.
- Valuation: A forward P/E of 107x for 2026 assumes flawless execution—a tall order given Tesla’s history of missing timelines.
- Competitor Threats: BYD’s global expansion and Waymo’s sensor-driven tech highlight the crowded race Tesla faces.

For investors, Tesla remains a bet on Musk’s ability to pivot from controversy to execution. Without it, the “Bigger Than Musk” thesis may unravel—and the $300 price target could look optimistic.

In the end, Tesla’s fate hinges on whether its tech ambitions can outpace its growing list of challenges. The next 12 months will be a proving ground—and the stakes couldn’t be higher.