Key Morningstar Metrics for Tesla
- Fair Value Estimate: $250
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
On June 22, select Tesla TSLA customers began testing the company’s robotaxi service. Tesla shares were up slightly in premarket trading on June 23.
Why it matters: Non-Tesla employees testing the ride-hailing service is another step toward the robotaxi entering commercial service. The test also featured a ride-hailing app. This supports our view that the firm will successfully enter the robotaxi ride-hailing market.
- The test highlighted the improvement needed before Tesla can launch a full robotaxi service. For example, employees sat in passenger seats as safety monitors. Additionally, the service currently will not test from midnight to 6 a.m., or in the rain.
- The testing area was also limited to a geofenced part of Austin, Texas, roughly half the size of Waymo’s operating area. Given that geofencing is not a part of its long-term plan, we view this as a sign that Tesla is still in an earlier testing phase.
The bottom line: We maintain our $250 fair value estimate for narrow-moat Tesla. We view the shares as overvalued, currently trading a little more than 30% above our fair value estimate and in 2-star territory.
Coming up: Tesla is set to report second-quarter deliveries in early July. Based on April and May data showing a sales decline, we think Tesla is likely to see a second straight quarter of lower deliveries.
- We expect Tesla will continue to test robotaxis from now until its earnings call in mid- to late July. We hope to hear an update from management on the key steps for Tesla’s path to full robotaxi commercialization.
