Investing.com -- RBC Capital raised its price target for Tesla (NASDAQ:TSLA) to $387 from $323 in a note Friday, citing growing confidence in the company's autonomous vehicle (AV) ambitions and its operational advantages over legacy automakers.
The bank highlighted Tesla's progress in Full Self-Driving (FSD) technology and its vertically integrated manufacturing as key drivers of long-term value.
Following a tour of Tesla's Giga Texas facility in Austin, RBC analysts expressed optimism about the company's ability to scale its autonomous capabilities and maintain a competitive edge.
"The sessions gave us increasing confidence in Tesla's ability to achieve its autonomy goals and highlighted the comparative advantage it has over both legacy ICE and EV makers in building cars," RBC noted.
Tesla's FSD technology, which recently launched a hands-free iteration in the U.S., now represents $102 per share in RBC's valuation of the company.
The analysts anticipate growing demand for premium AV features, particularly among robotaxi operators and high-end consumers. "We raise our FSD pricing in the outer years," said RBC, saying increased robotaxi usage takes share from mass-market users.
Robotaxis are another significant component of RBC's outlook, contributing $136 per share to Tesla's valuation. RBC expects Tesla to leverage its end-to-end control of the robotaxi ecosystem, including software, vehicles, and applications, to achieve a cost advantage over competitors.
The analysts also believe Tesla could partner with ride-hailing firms like Uber (NYSE:UBER) or Lyft (NASDAQ:LYFT) to expand its market share.
Furthermore, they believe Tesla's manufacturing prowess further bolsters its valuation.
"Thanks to vertical integration, Tesla enjoys one of the best cost structures in the auto industry," RBC stated, raising its multiple on Tesla's vehicle revenues to 1x.
The firm acknowledged potential challenges, including policy shifts under a Trump administration, but sees Tesla gaining market share from other EVs.
RBC reiterated its Outperform rating, emphasizing Tesla's "secular growth engines" and improved risk/reward profile.