News

Tesla ( TSLA ) stock popped Thursday on the back of bullish comments from BofA Securities, with the firm’s analysts fresh off a Giga Austin factory visit.

“The trip gave us increased confidence that TSLA is well-positioned to grow in 2025+ with its core EV business and launch of its robotaxi offering, and longer-term from its investments in Optimus,” lead analyst John Murphy wrote in a note to investors.

Murphy reiterated his Buy rating for Tesla and upped his price target to $400 from $350. Tesla shares jumped 3% in midday trade.

Following the factory visit, Murphy and BofA claim the first big driver for Tesla is the prospect of an upcoming low-cost EV, which Tesla said is coming in the first half of 2025.

Murphy believes the new vehicle will increase Tesla’s TAM (total addressable market), cost less than $30,000, and benefit from a lower cost due to factors like “de-contenting, making the motor more efficient and thereby enabling a smaller battery, and changing the interior,” among other factors. Murphy is confident the low-cost model won't be its only new model in 2025, per Tesla’s past statements.

BofA and the team are also bullish on Tesla’s latest FSD (full self-driving) software, currently in beta.

“The Cybertruck and Model Y we rode in … drove seamlessly to a charging station several miles away despite abnormal road conditions, traveling on roads under construction and taking a tough left turn against traffic,” Murphy wrote, noting that the minimal interventions needed by a human driver suggest a supervised launch of Tesla’s robotaxi business is near.

Murphy said a shift to grow software-based products like FSD would also improve margins.

Tesla has said it plans to expand its robotaxi testing next year, and CEO Elon Musk predicted during the Q3 earnings conference call that the Cybercab would reach volume production in 2026, with the company aiming for 2 million Cybercabs per year.

One of the more intriguing points made by Murphy has to do with Tesla’s humanoid robot, Optimus. Tesla is currently using Optimus to sort through Tesla’s battery cells without any intervention, Murphy noted, and has been testing Optimus’s dexterity via use cases such as catching tennis balls.

Tesla has said it plans to have 1,000 Optimus robots working at Giga Austin by the end of 2025, and Murphy believes that robot training will accelerate, with “compute power” of Tesla’s supercomputers shifting to Optimus development as Tesla’s robotaxi tech matures.

While Musk has said Optimus will be Tesla’s biggest product ever with a hard-to-believe $200 trillion TAM, Murphy would only go so far as to say Optimus costs will go down as its abilities improve, with increased production occurring in 2026 and beyond.