Goldman Sachs Holds Neutral Stance on Tesla, Views Software Scalability as Key to Valuation

Goldman Sachs reiterated its "Neutral" rating on Tesla (TSLA), maintaining a 12-month price target of $360 per share. In a research note, the investment bank stated that while Tesla's new Cybercab could establish a significant cost advantage in the robotaxi market, the company's ability to scale its autonomous driving software geographically will be the ultimate driver of its business prospects and valuation.

Goldman's Analysis: Cost vs. Scale

Analysts at Goldman Sachs highlighted Tesla's focus on low-cost vehicle manufacturing, which, combined with its vision-based perception system, could bolster the economics of its robotaxi service. The bank estimates that if Tesla can produce the Cybercab within its target cost range of $20,000 to $30,000, it could achieve a $0.05 to $0.30 per-mile cost advantage over competitors with vehicle costs ranging from $50,000 to $100,000.

However, Goldman emphasized that the more critical question for investors is the scalability of Tesla's AI-driven software. The report notes that expanding the operational area of the robotaxi service is essential for generating more revenue and amortizing vehicle costs over more miles. This makes the software's economic contribution potentially more significant than the vehicle's price itself.

Cybercab Launch and Regulatory Scrutiny

Tesla officially launched its Cybercab on September 3 in Austin, Texas, initiating paid ride-hailing services in a limited area. The two-seat vehicle is designed for full autonomy, lacking a steering wheel, pedals, or mirrors. The company also announced its robotaxi fleet had surpassed 1 million unsupervised miles.

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The launch was quickly followed by a regulatory challenge. Hours after the event, the U.S. National Highway Traffic Safety Administration (NHTSA) announced a compliance review of approximately 1,000 Cybercabs. The probe focuses on Tesla's self-certification process for meeting federal motor vehicle safety standards. The news sent Tesla shares down 5.92% to $354.08 on September 4, erasing roughly $88 billion in market value a day after the stock had rallied 5.42% on the launch news.

Divided Market Sentiment

Wall Street remains sharply divided on Tesla's outlook. According to LSEG data, 24 analysts rate the stock a "Buy" or higher, 23 have a "Hold" rating, and 7 recommend "Sell."

This divergence is reflected in a wide range of price targets:

• GLJ Research reiterated a "Sell" rating with a price target of just $24.86, citing what it calls a severe market overvaluation with a P/E ratio of 328.
• Morgan Stanley maintains an "Equal-weight" rating with a $400 price target.
• StoneX reiterated its "Buy" rating following the Cybercab launch, with a price target of $475.