UBS Raises Tesla Target on Robotaxi Hype, But Maintains Sell on Valuation Concerns
Summary
UBS increased its price target for Tesla (TSLA) to $215 from $190, citing growing excitement around the company's robotaxi ambitions. However, the firm maintained its 'Sell' rating, arguing that much of the potential upside from autonomous driving and other future technologies is already priced into the stock. UBS values the robotaxi segment at $99 per share but remains skeptical of Tesla's overall valuation, viewing the stock as fully valued relative to its fundamentals and execution risks.
UBS Raises Tesla Target on Robotaxi Hype, But Maintains Sell on Valuation Concerns
Publication Date: June 23, 2025
UBS has adjusted its price target for Tesla (NASDAQ: TSLA) to $215, an increase from its previous $190 target. Despite this upward revision, the firm has reiterated its 'Sell' rating on the electric vehicle giant. This decision reflects a nuanced view, acknowledging the burgeoning investor enthusiasm surrounding Tesla's ambitious autonomous ride-hailing initiatives while simultaneously cautioning that much of this potential upside is already factored into the stock's current valuation.
Robotaxi Ambitions Drive Target Increase
Tesla's recent introduction of a robotaxi service in Austin has significantly amplified market focus on the company's long-term prospects within the self-driving mobility sector. UBS's analysis delves into the potential scale of this opportunity, projecting that under optimal conditions—encompassing technological maturity, regulatory approvals, and extensive network deployment—Tesla could command a formidable 2.3 million vehicle robotaxi fleet by 2040. Such a fleet, according to UBS, could generate an impressive annual revenue of approximately $200 billion.
Valuation Concerns Persist Despite Robotaxi Potential
In its comprehensive modeling, UBS assigned a valuation of approximately $99 per share specifically to the robotaxi segment. However, even after integrating this substantial potential into a broader sum-of-the-parts valuation framework, the firm maintains a skeptical outlook on Tesla's current market valuation. UBS's core argument is that the market has already aggressively priced in a significant portion of the anticipated growth stemming from autonomous driving capabilities and other futuristic technologies, including humanoid robots.
Cautious Stance on Fully Valued Stock
While acknowledging Tesla's strong strategic positioning and innovative drive, UBS continues to advocate a cautious investment stance. The firm's assessment suggests that TSLA stock is currently fully valued when measured against its fundamental financial metrics and the inherent execution risks associated with its ambitious projects. This perspective underscores a belief that, despite the exciting long-term prospects, the stock's present price may not offer sufficient upside given its underlying fundamentals and the challenges of realizing its future vision.