Goldman Sachs has maintained its 'neutral' rating on Tesla Inc (NASDAQ:TSLA) despite a boost in the company’s profit margins, pointing to significant challenges that could affect the electric vehicle maker's ambitious targets for 2025.
Elon Musk's EV maker recently reported a gross margin of 19.8% for the third quarter of 2024, exceeding both Goldman Sachs’s forecast and market expectations. This improvement was largely due to lower production costs and higher-than-anticipated revenue from regulatory credits.
However, Goldman analysts note that Tesla’s 2025 targets — particularly for vehicle deliveries and full self-driving (FSD) capabilities — remain a point of debate.
Tesla has projected a 20-30% increase in vehicle deliveries for 2025, along with an FSD performance benchmark that would surpass human drivers by mid-2025.
While these targets are ambitious, the US investment bank highlights potential obstacles, including Tesla's historical delays in meeting such goals, and the challenges in maintaining elevated profit margins.
Despite concerns, Goldman acknowledged Tesla's leadership in electric vehicles and autonomous driving technology, as well as the potential for artificial intelligence to drive long-term growth.
It raised its 12-month price target to $250, up from $230, based on expected improvements in gross margins and revenue from regulatory credits.