Tesla's Robot and Robotaxi Timelines Overly Optimistic, Citizens Says in New Report

Citizens has initiated coverage of Tesla (TSLA) with a Market Perform rating, arguing that current valuation expectations incorporate an overly optimistic timeline for the launch of the company's ambitious Optimus robot and Robotaxi ventures.

In a note published Thursday, analyst Andrew Boone acknowledged Tesla's significant potential in what the firm calls "physical AI," but cautioned that the "grand vision will take time to achieve."

Skepticism on Future Products

Citizens expressed specific concerns about the execution and technology behind Tesla's next-generation products. The firm anticipates the Optimus robot project will encounter "a new level of production complexity," likely leading to delays and increased spending as Tesla enters a new investment cycle.

Regarding the Robotaxi business, the note voiced doubts about Tesla's camera-only autonomous system. Citizens suggested this approach may not be as effective as competing systems that use a combination of LiDAR, radar, and cameras. The firm warned this could lead to "significantly more incidents than current leading AV driving systems," potentially creating liability issues or service disruptions.

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Financial Outlook and Valuation

Reflecting this cautious stance, Citizens' financial projections for Tesla are below market consensus. The firm's revenue estimates for 2027 and 2028 are 4% and 12% below consensus, respectively.

Despite the near-term concerns, Citizens noted that Tesla's premium valuation is warranted due to its long-term optionality and key assets. The firm cited Tesla's leading autonomy models, proprietary silicon, advanced manufacturing, and battery technology. Based on Wednesday's closing price of $394.06, Citizens calculated that Tesla trades at a multiple of 70.2 times its 2028 estimated EV/EBITDA.