If you’re pondering whether to buy Tesla stocks, recent developments suggest it might be a prime opportunity.
Despite a 7% dip in market value this year due to industry-wide challenges, inflation, and the phasing out of EV subsidies in major markets like China, Tesla is making bold moves that could significantly enhance its growth potential.
Here’s a detailed look at why buying Tesla stocks could be a savvy investment choice right now.
Why is Tesla a big deal for investors
Tesla, the frontrunner in the electric vehicle (EV) market, is navigating through a challenging year.
However, recent announcements from its AI division have renewed investor interest. The company’s new product roadmap reveals aggressive advancements in Full Self-Driving (FSD) technology, positioning Tesla for substantial future growth.
Tesla’s new product roadmap
Tesla’s latest product roadmap has investors buzzing with excitement.
The highlight of its new strategy remains in the launch of its FSD technology in the highly anticipated Cybertruck later this month. This move is expected to significantly enhance the Cybertruck’s appeal and functionality.
By October, Tesla plans to upgrade its FSD software to include new features such as automated parking and reversing. These enhancements will make the technology more versatile and user-friendly.
Perhaps the most thrilling news is Tesla’s plan to roll out FSD in Europe and China by Q1 2025. This global expansion marks a significant milestone for the company, opening up new revenue streams and market opportunities.
These updates not only underline Tesla’s commitment to innovation but also make a compelling case for buying Tesla stocks, as these advancements are likely to drive future growth.
The upside of FSD and margin expansion
One of the strongest arguments for buying Tesla stocks is the company’s strategic pricing and potential for margin expansion through its FSD software. Here’s a closer look at how this could benefit investors:
- Price adjustment and subscription Model: Last April, Tesla reduced the price of its FSD software from $12,000 to $8,000. Additionally, Tesla now offers a subscription model for $99 per month. This pricing strategy aims to increase the adoption of FSD technology and boost recurring revenue.
- Profit Margins: In 2023, Tesla’s average gross profit per vehicle was $8,431. With FSD software potentially adding around $8,000 per sale to the bottom line, the profit margins from software sales could rival those from vehicle sales. This highlights Tesla’s potential for significant profitability, especially as FSD becomes a more integral part of its product lineup.
According to Deepwater Asset Management, Tesla is on track to generate $102 billion annually from FSD software and subscriptions by 2032. This is a substantial increase from the $8.8 billion in total operating profits reported in 2023.
This massive profitability potential emphasizes the importance of the global FSD launch and its impact on Tesla’s financial health.
Robotaxi: A major growth driver
Another exciting development for Tesla is the upcoming robotaxi launch. Scheduled for October 10 in Los Angeles, this event will showcase Tesla’s latest advancements in autonomous driving technology.
Although the prototype launch was delayed to ensure thorough testing, it promises to be a significant step forward.
What to expect from Robotaxi market growth
The robotaxi market is on a rapid growth trajectory.
Research firm Markets and Markets estimates that the global robotaxi industry, valued at just $400 million in 2023, will skyrocket to nearly $46 billion by 2030, with a staggering compound annual growth rate (CAGR) of 91.8%.
Frost & Sullivan also projects robust growth, with the robotaxi fleet expected to exceed 724,000 units by 2035.
Tesla is well-positioned to lead this burgeoning market. The company’s advanced autonomous driving technology and growing regulatory support worldwide will play a crucial role in its success.
For instance, new regulations and pilot programs in places like the UK, Beijing, and Dubai are expected to boost the adoption of robotaxis.
Cathie Wood’s Ark Invest has forecasted that Tesla stock could reach $2,600 by 2029, with the robotaxi business contributing significantly to Tesla’s revenue. According to Ark, 63% of Tesla’s revenue in 2029 will come from the robotaxi sector.
This makes buying Tesla stocks an attractive option for investors looking to capitalize on the company’s long-term growth potential.
Navigating cost control
While Tesla’s diversification into AI and other sectors is promising, the company faces some short-term challenges.
Tesla shares have fallen over 50% from their all-time highs and have underperformed compared to other tech giants. This decline is partly due to a significant drop in consensus estimates and the need for better cost control.
Morgan Stanley’s Adam Jonas emphasizes that while Tesla’s core auto business faces margin pressures, the company’s broader diversification strategy helps mitigate these risks.
Tesla’s focus on cost control and expanding its revenue streams are essential for improving its financial performance and making the company more attractive to investors.
Fierce competition in China
Tesla also faces significant competition in China, the world’s largest EV market.
XPeng Inc. is currently leading in autonomous driving in China, offering features comparable to Tesla’s FSD system for free. This competitive pressure highlights the need for Tesla to continue innovating and expanding its global presence.
Should you buy Tesla stocks?
Despite the competitive landscape and short-term challenges, Tesla’s long-term prospects are looking increasingly promising. With groundbreaking advancements in FSD technology, a rapidly growing robotaxi market, and strong analyst support, buying Tesla stocks could be a smart move for investors aiming to benefit from the company’s future growth.
Many Wall Street analysts have a positive outlook on Tesla. Morgan Stanley’s Adam Jonas has reiterated Tesla as a top pick among U.S. automakers, setting a price target of $310. Wedbush Securities analyst Dan Ives considers Tesla to be undervalued and predicts the company could achieve a $1 trillion valuation in the near future.
With an average price target of $211.46 from 31 Wall Street analysts, there’s potential for a modest upside of 0.35% from the current market price.
This reinforces the argument for buying Tesla stocks as a long-term investment.
How to buy Tesla stocks
If you’re considering adding Tesla to your investment portfolio, now might be the perfect time to take action. You can use FlexInvest to do it seamlessly and in minutes.
- Sign up: Visit the FlexInvest website to download the mobile app and complete the sign-up process.
- Fund your account: Transfer funds into your new FlexInvest account to purchase Tesla stocks. With FlexInvest, you can start investing with as little as €5.
- Search for Tesla: Use FlexInvest’s search function to find Tesla (TSLA) and review its stock information.
- Do your own research: Before making any purchase, do your homework on Tesla’s financial health, recent performance, and future prospects. Understanding the company’s position will help you make informed investment decisions.
- Place your order: Decide how much you want to invest in Tesla shares and place your order.
As simple as that, buying Tesla stocks could be a rewarding investment, especially given the company’s promising future prospects.
By choosing FlexInvest as your investment platform, you’ll benefit from fractional shares, commission-free transactions, and free analyst ratings to help you make the most of your investment.
Whether you’re new to investing or an experienced trader, FlexInvest provides everything you need to buy Tesla stocks and manage your investment portfolio effectively.
Information in this post is for general informational purposes only. It cannot and should not be considered as suggestions or recommendations regarding investing or financial decisions.
