) is expected to be substantial “given the lack of a driver,” analysts said. "With this sizable cost advantage, TSLA’s robotaxi service could offer rides at a much lower price to the consumer and still have higher margins,” they added. The valuation of Tesla’s Full Self-Driving (FSD) technology is also significant, with BofA estimating it could reach $480 billion. BofA highlights that FSD is still in the early stages of monetization but notes increasing adoption, particularly among Cybertruck buyers, where uptake has risen to around 60% in 2024 from 22% in early 2023. The firm projects that 23 million vehicles could be equipped with FSD by 2030, growing to 75 million by 2040. It also emphasizes that FSD could generate substantial EBIT annually and yield higher margins than Tesla’s core automotive business. “Our FSD valuation doesn’t reflect potential upside from licensing to other OEMs,” analysts point out. Looking forward, analysts see multiple catalysts that could drive Tesla’s stock, but execution risks remain elevated, contributing to the downgrade. Key catalysts include the introduction of a low-cost model in the first half of 2025 and another new model later that year, the launch of the robotaxi service by mid-2025, and the ramp-up of Megapack production in Shanghai starting in the first quarter. Other potential drivers include updates on FSD subscriptions, the scaling of Tesla’s humanoid robot Optimus, with a goal of 1,000 units by the end of 2025, and the risk of less favorable policy changes. Further, BofA notes the possibility of a capital raise, which they view positively as it could accelerate growth. Tesla opens lower after BofA cut rating on 'high' execution risk, valuation View all comments (1)