RBC Capital places higher value on Tesla’s Full Self-Driving technology than its core car business

Tesla’s autonomy technology, specifically Full Self-Driving (FSD), is valued highly by RBC Capital over the company’s car business. Analyst Tom Narayan from RBC Capital believes that Tesla’s one-month free FSD trial could serve as a catalyst in the second quarter of 2024, bringing more customers into showrooms and increasing the FSD attachment rate, leading to higher deliveries.

Narayan emphasized that autonomy is more crucial than Tesla’s car business and highlighted that the FSD free trial might play a significant role in the Tesla investment thesis in the long term, especially following the Q1 delivery miss. Despite his positive outlook on Tesla, Narayan acknowledged that current sentiments towards the company are negative due to softer-than-expected deliveries.

In Q1 2024, Tesla experienced an 8.5% year-over-year decline in deliveries, with around 386,810 vehicles delivered. The majority of deliveries comprised Model 3 and Model Y vehicles (369,783 units), while other models like Cybertruck, Model S, and Model X accounted for approximately 17,027 units.

RBC Capital identified various factors that might have influenced Tesla’s Q1 deliveries, including factory shutdowns at Giga Berlin due to an arson attack, shipping challenges caused by the Red Sea conflict, pre-buy activities before tax credits expired under IRA for Model 3 under IRA tax credits for Model 3 under IRA tax credits for Model 3 under IRA tax credits for Model 3 under IRA tax credits for Model 3 under IRA tax credits for Model 3 under IRA tax credits for Model S and Cybertruck accounted for approximately

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