2025 Outlook: A Pivotal Year for Autonomous Driving, Potential Gains for Tesla Shares?
Tesla's shares surged more than 80% after Donald Trump's win in the 2024 presidential election, propelling its market capitalization to $1.5 trillion. This valuation accounts for half of the combined worth of global automakers, positioning $Tesla Motors(TSLA)$
A key factor behind Tesla's recent surge is investor optimism that its autonomous driving technology will advance swiftly under Trump's favorable regulatory environment.
Tesla's Robotaxi made its debut at an October event, with CEO Elon Musk stating that Robotaxi could propel Tesla's market value to $10 trillion.
On December 2, Tesla announced the release of FSD V13, the latest iteration of its most advanced driver-assistance software. Although FSD V13 marks significant technological progress, it still requires human supervision. During Tesla's Q3 earnings call, Musk targeted Q2 2025 for FSD to be safer than human drivers without supervision. Investors are keenly watching FSD's development, as it impacts the rollout of Tesla's Robotaxi service.
On December 21, Tesla hinted on social media that the era of Robotaxi is approaching faster than expected.
2025: A Breakthrough Year for Autonomous Driving
Industry experts predict 2025 will be a pivotal year for autonomous driving. According to IDTechEx, the autonomous vehicles market is set for rapid growth, with robotaxi sales projected to reach $174 billion by 2045, representing a CAGR of 37% starting in 2025.
Autonomous driving is categorized into five levels of automation. $Alphabet(GOOG)$
The realization of autonomous driving, particularly L4 Robotaxi, requires policy support. Investors anticipate that the Trump administration may relax regulations for the autonomous driving sector, leading to greater policy backing. Additionally, over 50 Chinese cities have initiated autonomous driving pilot policies or local legislation, with several already trialing Robotaxi services.
Tesla's robotaxi plans extend beyond software updates, as it engages in preliminary cooperation with Austin's city government.
Autonomous Driving as Tesla's Core Valuation Driver
Wedbush analyst Dan Ives, a long-time Tesla bull, believes Trump's tenure will significantly benefit Tesla's autonomous driving efforts. He recently raised Tesla's price target from $400 to $515, stating, "We believe the Trump White House the next 4 years will be a 'total game changer' for the autonomous and AI story for Tesla and Musk over the coming years. Our bull case is $650 for 2025."
In previous reports, Ives noted that Trump could "accelerate some of the FSD and autonomous initiatives for Tesla once he is in the White House." He added, "We believe a Trump White House helps unlock the $1 trillion of autonomous/AI value to Tesla's stock as autonomous/FSD is likely accelerated starting in 2025 and a tailwind for Cybercab timing."
Last Monday, Mizuho analyst Vijay Rakesh upgraded Tesla's rating from neutral to outperform, raising the price target from $230 to $515. Rakesh believes Tesla's autonomous driving software stack is advancing toward broad commercialization and that regulatory easing could provide upside potential for the autonomous driving sector.
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- Reglloyd·2024-12-28Thanks for sharing.LikeReport
