RBC Capital Lowers Tesla Price Target to $480

RBC Capital reiterated an Outperform rating and lowered its price target on Tesla (NASDAQ: TSLA) to $480 (from $500).

Our view: A potential Tesla/SpaceX combination would create a compelling “vertical integration from orbit to ground” ecosystem spanning connectivity, autonomous vehicles, and humanoid robotics that could be difficult to replicate.

The Terafab collaboration would be the most tangible near-term synergy, with potential chip cost savings of well over $1T by 2050 relative to external sourcing based on our estimates.

We lower our TSLA PT to $480 from $500 and reiterate our Outperform rating. (See also our accompanying industry note.)

Vertical integration from orbit to ground. We believe the strategic rationale for a potential SPCX/TSLA combination (which had been recently reported in unconfirmed media reports – Reuters) would be grounded in operational synergies that extend beyond traditional cost savings.

The most concrete near-term opportunity is likely the Terafab chip collaboration — joint development of proprietary silicon for Tesla’s autonomous vehicles, Optimus, and SpaceX’s AI datacenter infrastructure — eliminating costly duplication across two compute-intensive companies.

More broadly, the potential combination would create a uniquely powerful “vertical integration from orbit to ground” ecosystem — spanning Starlink’s 10M + subscriber connectivity platform, Tesla’s autonomous vehicle fleet, and Optimus — that could prove difficult to replicate, in our view.

The combination would also address a key financial tension: SpaceX’s negative FCF through at least 2030E (RBCe) would be backstopped by Tesla’s cash generation, while SpaceX’s long-term growth trajectory is additive to Tesla shareholders waiting for robotaxi and Optimus to mature.

Terafab collaboration could lead to substantial cost savings. We estimate Tesla’s proposed Terafab facility, developed in collaboration with SpaceX, could cost $55B with potential to expand to $119B, comprising ~$10B for facility shell, ~$35B in wafer processing equipment, and remainder in packaging, utilities, chemical systems.

Key potential procurement bottleneck is ASML’s EUV lithography tools, where TSMC and Samsung sit at front of the queue.

A Tesla/SpaceX combination could meaningfully improve procurement terms, leading to potential cost synergies.

The economic rationale for vertically integrating chip manufacturing look compelling: we believe Tesla is targeting a cost per chip of ~$3K, ~10% of ~$30K market price for an NVIDIA inference chip.

Assuming 2 chips per vehicle and 1 per Optimus unit, we estimate chip-related expenses could rise from ~$10B in 2026 to ~$150B by 2050, compared to ~$1.5T by 2050 if sourced externally, implying vertical integration savings of well over $1T.

A $480 offer price could be compelling for TSLA shareholders. We lower our intrinsic value for TSLA to $417/sh from $446/sh, largely driven by cuts to our robotaxi forecast, where we reduce our non-Tesla robotaxis estimate given TSLA’s continued emphasis on vertical integration (cont’d on p2).

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