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

Tesla’s progress in autonomy, specifically Full Self-Driving (FSD), has been of high value to RBC Capital over the company’s car business. Analyst Tom Narayan from RBC Capital believes that Tesla’s one-month free FSD trial could serve as a catalyst in the second quarter of 2024. He stated that the trial could potentially bring more customers into showrooms and increase the FSD attachment rate, ultimately leading to higher deliveries.

Narayan also highlighted that autonomy is more significant than Tesla’s car business and emphasized that the FSD free trial might play a crucial role in the Tesla 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 Tesla Model 3 and Model Y vehicles, amounting to 369,783 units, while other models like Cybertruck, Model S, and Model X accounted for 17,027 deliveries. RBC Capital identified various factors that might have influenced Tesla’s Q1 deliveries, including factory shutdowns at Giga Berlin due to an arson attack, shipping challenges caused by the Red Sea conflict

By Riley Johnson

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