Key Morningstar Metrics for Tesla
- Fair Value Estimate: $300.00
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
Tesla TSLA CEO Elon Musk said the company is testing its ride-hailing robotaxis in the Austin, Texas, area without safety monitors in the vehicles. Tesla shares reacted positively to the news, with the stock up 4% on Dec. 15 at the time of writing.
Why it matters: Tesla is in the early testing of its robotaxi product in select US cities. In its current form, Tesla has an employee (referred to as a safety monitor) in the vehicle during a ride. Removing the safety monitor is a signal the software is improving and testing is progressing.
- The progress is in line with management’s guidance during its third-quarter earnings call that Tesla would be able to remove the safety monitors in the next several months.
The bottom line: For now, we maintain our $300 fair value estimate for narrow-moat Tesla. We maintain our outlook for a full robotaxi launch throughout the United States in 2028, which includes no safety monitors, has no geofencing, and features dedicated robotaxi vehicles.
- At current prices, we view Tesla shares as overvalued, trading around 60% above our fair value estimate and in 2-star territory. We think the market is assigning too high of a valuation to Tesla’s robotaxi business.
- We forecast Tesla will successfully launch its robotaxi product and grow to a 30% market share of ride-hailing rides in the US and Canada over the next decade. Yet, as autonomous rides drive prices down, we see smaller profits and free cash flows versus the market implied valuation.
