Robotaxis, autonomous vehicles and lower-cost models are the three key areas which could propel Tesla’s share price, but investors will have to remain patient, analysts at Goldman Sachs warned.
Shares in Tesla Inc (NASDAQ:TSLA) dropped more than 12% on Wednesday after its second-quarter profits fell short of expectations and its gross margins came in 200 bps under.
Adjusted earnings per share (EPS) of $0.52 were down 43% from the year-ago quarter and missed estimates of $0.62.
Goldman Sachs analysts therefore lowered their EPS estimates for the full year from US$2.05 to US$1.90.
Making matters worse, the US bank argued it doesn’t think Tesla’s margin pressure will ease until next year.
“Until Tesla is able to begin production of new lower cost models, which the company expects in 1H25, we believe pricing/incentives could remain a key demand lever and weigh on margins,” researchers at the bank said.
“We believe a key debate from here will be around the extent that new models are differentiated enough on price and/or features compared to current offerings to drive improved volume growth.”
Looking forward, Goldman is confident in Tesla’s position as a “leader in autonomous technology for automotive” with hype expected to grow at its robotaxi event on August 10.
Yet, analysts believe it will take another two to three years before it can reach the next level of full driving and even longer before an automated taxi service can come to fruition.
Despite the length required to achieve this, the bank believes it will lead to “meaningful profit growth” and strong earnings.
Goldman Sachs maintains a “neutral” rating for Tesla, with a US$230 price target, a near 7% downside to its current market value.