Tesla’s shares have staged an impressive recovery so far this year, erasing their 2023 losses with a 27% surge earlier this month. Better-than-expected second-quarter electric vehicle deliveries drove the recent rally.¹

But as encouraging as this news is, investors may be surprised that beyond Tesla’s EV business, analysts are growing interested in Tesla Energy’s performance and excited about Tesla’s pending announcement of its robotaxi.

So, let’s take a deeper look at the state of both Tesla Energy and the planned robotaxi rollout and see what they could mean for Tesla’s future as a company larger than the sum of its parts.

The Growth of Tesla Energy

While Tesla is primarily known for its electric cars, its energy business has (until now) been a “sleeping giant.”

Tesla Energy achieved a significant milestone in Q2 2024 by deploying a record 9.4 GWh of battery storage, marking the highest quarterly deployment in the company’s history. This follows an impressive Q1 2024, where Tesla deployed 4.1 GWh, setting a new record at the time. The Q2 deployment represents a 132% increase quarter-over-quarter and a 157% rise year-over-year.

With a total of 13.5 GWh deployed in the first half of 2024, Tesla is on track to surpass its entire 2023 deployment of 14.724 GWh. This surge is attributed to the ramp-up of the Megapack production at the Lathrop Megafactory, which has an annual capacity of 40 GWh. As Tesla expands its energy storage operations, the Shanghai Megafactory, expected to produce 40 GWh annually, is under construction and slated to begin production in Q1 2025.

Tesla’s aggressive expansion underscores its evolution into a full-fledged energy company, positioning itself as a leader in the energy storage sector.²

This is a significant reason that Morgan Stanley has revised its valuation of Tesla Energy. It anticipates a rise in global power due to the AI boom and its consequent demand for energy. Analysts have increased Tesla Energy’s value to $50 per share within its $310 price target, up from $36 previously.

Morgan Stanley analyst Adam Jonas noted that profits from Tesla’s forthcoming megafactory, which will produce large-storage batteries, will be equivalent to selling one million Tesla vehicles.³ This has led some analysts to suggest Tesla Energy might eventually surpass Tesla Auto in value.⁴

Oppenheimer projects Tesla’s energy sales to exceed $3 billion this quarter but emphasizes that Tesla’s full self-driving, AI-powered platform will be crucial for continued share price growth. CEO Elon Musk stated in April that Tesla aims to launch full self-driving software this year, potentially boosting profits.⁵

Tesla’s Plans for Robotaxi

Anticipation is likewise building for Tesla’s robotaxi reveal, now set for a major kickoff announcement in October of this year. Originally scheduled for early August, this event has been pushed back due to important last-minute design changes to the front end of the vehicle.⁶

First announced in April, Tesla plan is to develop a dedicated robotaxi vehicle, potentially named the “Cybercab,” instead of relying on existing models like the Model 3 and Model Y. This ambitious project hinges on several factors, including regulatory approvals and the success of Tesla’s Autopilot and Full Self-Driving (FSD) systems. Recently, Tesla has prioritized the robotaxi over other projects, including a planned mass-market vehicle known as the Model 2.

The vehicle, expected to lack a steering wheel or pedals and feature a futuristic design, will potentially look like a small, two-seat car with a teardrop shape. Tesla aims to use a hybrid of current and next-generation technologies for its construction. Tesla’s competitors in the autonomous taxi space, such as Waymo, Cruise, and Zoox, use more sensor-based technologies, including LiDAR, which Tesla has avoided. Tesla’s system is expected to rely solely on cameras for self-driving.

Musk envisions Tesla’s robotaxi service as a mix of Airbnb and Uber, where owners can rent out their cars when not in use.⁷

Tesla anticipates that autonomous driving will eventually lead to significant revenue. Analysts likewise believe that the robotaxi plans could be “a massive pivot” for Tesla. While the next several years will be a testing phase for the robotaxi, once Tesla is able to scale the vehicles post-2030, they are expected to contribute significantly to Tesla’s business.⁸

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Sources

  1. Kolodny, L., “Tesla shares wipe out loss for the year with 27% rally this week,” CNBC, July 5, 2024; https://www.cnbc.com/2024/07/05/tesla-shares-wipe-out-loss-for-the-year-with-27percent-rally-this-week.html
  2. Alvarez, S., “Tesla Energy posts record 9.4 GWh of battery storage deployed in Q2 2024,” Teslarati, July 2, 2024; https://www.teslarati.com/tesla-energy-9-4-gwh-of-battery-storage-deployed-q2-2024-new-record/
  3. Singh, M., “Morgan Stanley bullish on Tesla’s energy storage segment,” Reuters, July 10, 2024; https://www.reuters.com/markets/us/morgan-stanley-bullish-teslas-energy-storage-segment-2024-07-10/
  4. Klender, J., “Tesla’s energy unit gives Morgan Stanley reason to modify price target breakdown,” Teslarati, July 10, 2024; https://www.teslarati.com/tesla-energy-unit-gives-morgan-stanley-reason-to-modify-price-target-breakdown/
  5. Singh, M., “Morgan Stanley bullish on Tesla’s energy storage segment,” Reuters, July 10, 2024; https://www.reuters.com/markets/us/morgan-stanley-bullish-teslas-energy-storage-segment-2024-07-10/
  6. O’Kane, S., “Elon Musk confirms Tesla ‘robotaxi’ event delayed due to design change,” Tech Crunch, July 15, 2024; https://techcrunch.com/2024/07/15/elon-musk-confirms-tesla-robotaxi-event-delayed-design-change/
  7. Levin, T., “Tesla Robotaxi: Everything We Know,” InsideEVs, July 12, 2024; https://insideevs.com/reviews/722798/tesla-robotaxi-cybercab-explainer/
  8. Smith, S. & Mills, M., “Tesla robotaxi won’t be ready for scale until 2030: Analyst,” Yahoo Finance, July 12, 2024; https://finance.yahoo.com/video/tesla-robotaxi-wont-ready-scale-151912360.html

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