Investment bank Goldman Sachs is out with a fresh analyst note for Tesla, which takes a look at the firm's full self-driving (FSD) assisted driving platform and the expectations surrounding it for the US and Chinese markets. FSD is a key part of Tesla's valuation, and Goldman believes that the software will perform better in the US than in China. The bank has reached this conclusion as Tesla has had more time to refine FSD in the US while it launched FSD in China with little data to train the software on.
Goldman Sachs Sticks With Neutral Rating & $235 Share Price Target For Tesla
Tesla's stock has been on an upward trend lately, having gained 20% over the past month and 23% since the firm's earnings report, where Elon Musk indicated that he would devote less time to his government work and more to the firm. At Tesla's earnings call, management shared quite a lot of details about FSD. Tesla's VP of AI Software, Ashok Elluswamy, revealed that the firm had deployed FSD in China with "very minimal data" specific to the country, but it was still performing well.
Musk shared that his firm was focusing on safety before deploying FSD in the US. The Tesla CEO was confident FSD would "be available in many cities in the US by the end of this year." In its note, Goldman Sachs comments on the differences in FSD experience in the US and China and adds that Tesla could introduce its Robotaxi service in Texas in June.
Noting that the autonomous and assisted driving markets are significantly different in the US and in China, Goldman believes that competition will play a key role in determining Tesla's success in the latter. FSD "is one of several ADAS options for consumers in China," it writes and adds that the "level of technology and cost improvement that Tesla can achieve with FSD, both absolute and relative to competitors, will be key for its longer-term economics related to autonomy in our opinion (both globally and in China)."
Goldman also believes that while Tesla's long-term goal is to offer a robotaxi service, the firm will rely on a steady hand for a rollout. This falls in line with Musk's earnings call comments, with Goldman adding that "the cost of Tesla's vehicles could be an advantage compared to other robotaxi offerings" in the US, provided the firm can achieve economies of scale through deployment.
The bank's comments relate to the costs of manufacturing a Tesla and incorporating the hardware necessary for level 4 autonomy. Level 4 autonomy is the ability of a vehicle to operate independently of a driver, with Goldman noting that "per Tesla its more recent HW4 equipped vehicles have all of the hardware needed for L4."
As for China and FSD, Goldman believes Tesla "would be facing a different competitive landscape with several AVs having attractive costs." To overcome the competitive landscape, "technology development, scale/cost, and regulatory approvals" will be key for Tesla's success, it adds.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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