Goldman Sachs Affirms Neutral on Tesla, $345 Price Target

Goldman Sachs analyst Mark Delaney reiterated a Neutral rating and $345 price target on Tesla (NASDAQ: TSLA)

“Tesla is scheduled to report 4Q24 results on 1/29 after the market close.

We believe key topics and focus items will include: 1) Automotive non-GAAP gross margin excluding regulatory credits: We expect Tesla’s automotive non-GAAP gross margin excluding regulatory credits to remain a key focus for investors, and we’re modeling the automotive non-GAAP gross margin to be 15.0% in 4Q (compared to the 17.1% Tesla reported in 3Q24, or ~15.6% in 3Q24 excluding the FSD deferred revenue release).

We believe there will be several puts and takes to gross margin in 4Q qoq, including the incremental incentives Tesla used to support 4Q growth, higher tariffs in 4Q, but also higher sales volumes, and we believe lower materials costs.

Based on FactSet/Visible Alpha Consensus Data for total gross margin, we believe our non-GAAP automotive gross margin is ~50-100 bps below sell side consensus.

Per our investor discussions, we believe our 15.0% estimate is in line with/near the lower-end of expectations.

2) Vehicle delivery outlook for 2025, with Tesla having previously guided to 20-30% yoy growth: We believe a key debate in the market will be whether Tesla can grow more meaningfully in 2025/2026, driven by a refreshed Model Y and a new lower cost model or models (Tesla expects to offer a new model from mid 2025).

Recall the company is targeting 20-30% yoy growth in deliveries in 2025 (we’re currently modeling 12% growth, below Visible Alpha consensus at 14%).

We expect Tesla will maintain this target on the earnings call, and also speak to good pre-order demand for the new Model Y.

We believe that how quickly production of the new Model Y ramps, and when Tesla launches new model(s) will be key variables in terms of how fast Tesla grows.

While Tesla may somewhat cannibalize sales of the current 3/Y with new variants depending on the degree of differentiation, net net as new model(s) fully ramp we’d expect them to add at least 100K to Tesla’s annual volumes.

We also believe the implications of the potential removal of the $7.5K EV purchase tax credit under the IRA to be a focus for investors.

As discussed in our 2025 outlook report, our forecast assumes the $7.5K federal IRA tax credit will be removed this year.

3) Progress with FSD and AI-related efforts: We believe investors will be looking for management commentary and data on progress with FSD (full self driving), including the performance of V13 (which we think shows meaningful improvement compared to V12).

We continue to believe the FSD data suggests that Tesla is among the leaders with its AI technology for the auto market, but also that Tesla is unlikely to reach its goal of being safer than a human driver in 2Q25 (as we discussed in detail in our recent note from 1/15).

On robotaxis specifically, Tesla is targeting to deploy a robotaxi service in Texas and/or California in 2025 using Model 3/Y vehicles, and expects to start production of its Cybercab robotaxi in 2026 (although we note that the company has historically been optimistic with its timelines).

We expect Tesla to begin very limited robotaxi operations in 2H26, in part by making use of more tools than FSD on consumer cars (e.g. location specific maps and/or model training, as well as remote assistance).

We expect robotaxis to contribute ~$115 mn to 2027 revenue and be relatively neutral to consolidated EPS.

4) Growth in other segments, including Services and Energy: Tesla deployed 11.0 GWh of energy storage products in 4Q, above the 3Q level of 6.9 GWh and consistent with commentary on its 3Q call for Energy deployments to more than double yoy in 2024.

Recall Tesla has previously noted that given the large-scale nature of some projects, deployments by quarter could be lumpy.

While we acknowledge energy shipments can be lumpy due to the nature of project size and timing, we continue to expect Energy to grow as the company ramps capacity.

Profitability in the Energy segment has also been very strong recently.

5) Progress with Optimus and expectations on ramp timing: Tesla has highlighted improved dexterity of its Optimus robot, and per an X post at the end of November, Optimus’ new hand and forearm have double the number of degrees of freedom (DoFs) compared to previous robots (there’s now 22 DoFs on the hand and 3 on the wrist/arm).

Recall that in an X post from June 2024, Tesla said that it had deployed two Optimus robots performing tasks in the factory autonomously.

Furthermore, on its 2Q24 EPS call, Tesla commented that it expects to have the first version of Optimus in limited production starting in early 2025 (for Tesla consumption) and then to produce several thousand Optimus robots by the end of the year and deployed in the Tesla factories.

The company also said on X in early January per Barron’s that it could ship 10X more units in 2026, and 10X again in 2027.”

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