After yet another tough day for the shares yesterday, Tesla's price target was cut by another investment bank, which notes that the fears about the firm's vehicle demand could be overblown but nevertheless reduces the estimates on the back of lower market share of the firm's assisted driving platform Full Self Driving (FSD) and the robotaxi service. March has seen multiple investment banks cut Tesla's share price targets as they worry about falling deliveries in the first quarter, 2025 and 2026.
RBC Assumes Pricing For Tesla's FSD Will Drop By $50 Per Month In 2026 As It Cuts Price Target But Keeps Outperform Rating
RBC Capital's analyst Tom Narayan takes a different approach behind reducing Tesla's share price target. While his peers have focused on a potential delivery drop this year, Narayan, on the other hand, believes that the firm might find it difficult to match revenue estimates for its FSD and robotaxi services.
While most of Tesla's short-term stock narrative is built around its vehicle deliveries, over the long term, analysts and investors have also focused on its FSD service and the robotaxi to unlock additional revenue. The two services depend heavily on artificial intelligence as they require autonomous vehicles to ferry passengers.
According to Narayan, "Much of the attention around Tesla has centered on its recent delivery performance in Jan and Feb in Europe and China. We think fears [of] demand could be overblown however." As a result, he adds that in the latest analyst note, RBC is lowering its "FSD pricing and robotaxi penetration assumptions."
At the heart of RBC's FSD upgrade is a growing prevalence of autonomous driving features, which it believes are "becoming standard features with some OEMs" which seek to differentiate their cars through them instead of generating profit. Ahead of the target cut, the bank had assumed that while Tesla's FSD pricing could drop to $50 a month in 2026, it would increase to $100 in 2030 based on Level 4 autonomy options being available.
However, now, the bank assumes that FSD pricing will drop to $50 a month from the current $100 a month next year. As a result, the bank has lowered its Tesla share price target to $320 from $440 but kept an Overweight rating on the shares. Other analysts and investment banks have painted a much bleaker picture of Tesla's deliveries for the first quarter of this year, the full year and next year.
A recent note from Mizuho estimated that the firm would deliver 1.8 million and 2.3 million cars in 2025 and 2026. The new estimate marked a significant drop from 2.3 million and 2.9 million, respectively.
However, Tesla China reported 15,300 insured vehicles for the week ending March 16th. This makes it the firm's best week on record and contrasts with reports of a Chinese slowdown. The complete picture of Tesla's Q1 deliveries should become clear as soon as the firm releases the data in April.
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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