RBC Capital places higher value on Tesla’s Full Self-Driving technology than its core car business

Tesla’s progress in autonomous driving, specifically Full Self-Driving (FSD), has caught the attention of RBC Capital, with analyst Tom Narayan placing a high value on this aspect of the company. He believes that Tesla’s upcoming one-month free trial could serve as a catalyst in the second quarter of 2024, bringing more customers into showrooms and increasing the FSD attachment rate. This could ultimately lead to higher deliveries for the company.

Narayan also expressed that while autonomy is significant for Tesla, its car business is equally important. He stated that the FSD trial could play a crucial role in Tesla’s investment thesis in the long term, especially following the Q1 delivery miss. Despite his positive outlook on Tesla, Narayan acknowledged that current sentiments towards the company are negative due to softer-than-expected deliveries.

In Q1 2024, Tesla experienced an 8.5% year-over-year decline in deliveries, totaling around 386,810 vehicles. The majority of deliveries comprised Model 3 and Model Y vehicles, accounting for 369,783 units or approximately 95% of total sales. Other models like Cybertruck, Model S and Model X accounted for approximately 17 thousand units or about 4% of total sales during this period.

RBC Capital identified various factors that might have influenced Tesla’s Q1 deliveries such as factory shutdowns at Giga Berlin due to an arson attack, shipping challenges caused by Red Sea conflict and pre-buy activities in Q4 2023 before tax credits expired for Model 3 under IRA. Additionally, they speculated on how an EV demand slowdown in US would impact Tesla’s deliveries going forward.

Looking ahead into future years RBC Capital forecasted that by 2035 Tesla will sell around 2.5 million vehicles annually in North America and Europe combined which is roughly equivalent to China market size today . They also predicted that by then ,Model Y will be one of their top selling cars with annual sales figure of around 800 thousand units while Model S & X will contribute about half a million units each annually .

By Aiden Johnson

As a content writer at newspoip.com, I have a passion for crafting engaging and informative articles that captivate readers. With a keen eye for detail and a knack for storytelling, I strive to deliver content that not only informs but also entertains. My goal is to create compelling narratives that resonate with our audience and keep them coming back for more. Whether I'm delving into the latest news topics or exploring in-depth features, I am dedicated to producing high-quality content that informs, inspires, and sparks curiosity.

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