Future robotaxi leader: BofA recommended buying Tesla stock

Bank of America resumed coverage of Tesla shares on March 4 with a buy recommendation. Prior to the suspension of analytical support, the bank had a neutral stance on the company. According to BofA, the company's progress in autonomous driving and robotaxi services could be the next stage of its growth. Tesla shares jumped 3.5% in trading Wednesday, but are down 10% since the beginning of the year.

Bank of America recommended buying Tesla shares and set a target price of $460, CNBC reported. This target suggests a potential upside of 13% relative to the close of trading on March 4.

The bank's analysts valued the company at $1.625 trillion, with the robotaxi business both in the U.S. and abroad accounting for more than half of that, at $844 billion, according to their calculations. The traditional car segment forms 21% of Tesla's value, Full Self-Driving's driver-assistance technology accounts for 19%, the energy business for 6%, and the Optimus robot project for 2%, BofA said in a note.

"We expect Tesla to quickly become the market leader in robotaxi services due to its ability to scale at higher margins than its competitors. We believe unmanned vehicles will be the driving force behind the next era of mobility and the most significant driver of change in the new stage of the automotive industry," Bofa analyst Alexander Perry wrote.

He believes that most cab customers will soon favor robotaxis over traditional driver-driven companies like Lyft and Uber - due to privacy and safety, Yahoo Finance notes . The analyst also sees a benefit to consumers' wallets: nearly half of the cost of a standard $20 ride in traditional services is for cab driver labor. In the robotaxi model, there are no such costs, which forms a structural advantage.

Meanwhile, it costs about $150,000 to produce a robotaxi from rival Waymo, owned by Alphabet, while the Tesla Model Y costs about $40,000, according to BofA. Perry also notes that Tesla's technology is more sophisticated than other companies in the autonomous transportation industry, but also cheaper: it uses only cameras, no radar, and relies on an array of data collected from the company's consumer fleet.

Tesla's robotaxi technology is now in limited operation in San Francisco and Austin, Texas, and is expected to launch in seven more markets in the first half of the year, CNBC reported.

- Full Self-Driving autopilot software is in the early stages of monetization and could become the leading consumer autonomous driving solution, BofA believes. He estimates that adoption of the technology will grow rapidly and Tesla will be able to increase market share.

- Additional potential, according to the analyst, may be provided by the project of humanoid robot Tesla Optimus, which Perry estimates at more than $30 billion. Optimus is likely to be used at first in production and may replace some jobs in the U.S. industry, and in the future - to appear in households, he predicts.

- The bank valued Tesla's energy business at $90 billion and also expects the company to take a leadership position in this market with Tesla Powerwall home batteries and Tesla Megapack systems for utility companies and data centers.

Tesla shares are advised to buy by 23 analysts out of 54, MarketWatch shows . At the same time, 22 - took a neutral position, recommending neither to increase the position in the company, nor to reduce it. Nine analysts suggest selling these securities.

The average target price is $426 - that's 5% above current quotes.

This article was AI-translated and verified by a human editor