Tesla's delivery is "mixed blessings"; Goldman Sachs raises target price but warns of short-term challenges, with FSD/Robotaxi as key variables

According to the Zhitong Finance APP, Goldman Sachs published a research report stating that based on the better-than-expected delivery data for the second quarter, it has raised Tesla's (TSLA.US) 12-month target price from $285 to $315. The firm emphasized that Tesla's automotive business will face challenging fundamental conditions in the short to medium term, but in the long run, profit growth from Full Self-Driving (FSD)/Robotaxi and the launch of new products is expected to improve earnings, maintaining a "neutral" rating on the stock.

Deliveries Exceeded Expectations but Declined Year-on-Year

The report pointed out that Tesla's global vehicle deliveries in the second quarter of 2025 reached 384,000 units, a quarter-on-quarter increase of 14%, but a year-on-year decline of 13%. Although the delivery volume was below the market consensus expectation of 394,000 units, it still exceeded Goldman Sachs' previous forecast of 365,000 units, outperforming investor expectations. In terms of production, the output for the quarter was approximately 410,000 units, a quarter-on-quarter increase of 13%, remaining basically flat year-on-year.

Among them, Model 3/Y remains the mainstay, with second-quarter deliveries of 374,000 units, a quarter-on-quarter increase of 15%, but a year-on-year decline of 12%; demand for high-end models and Cybertruck is weak, with deliveries of models such as S/X/Cybertruck only reaching 10,000 units, a quarter-on-quarter decline of 19% and a significant year-on-year drop of 52%; the proportion of leasing has also decreased, with leased vehicles accounting for only 2% of deliveries, down from 4% in the first quarter.

By region, although sales in the Chinese market were close to Goldman Sachs' expectations, the year-on-year decline in the U.S. and European markets was more pronounced. Deliveries in the U.S. market declined by about 15% year-on-year, while the European market saw a year-on-year decline of about 30%, mainly due to a decrease in consumer favorability towards the Tesla brand. The Chinese market experienced a slight year-on-year decline in the single-digit percentage range, mainly due to intensified competition, with some consumers possibly waiting for lower-cost models.

Key Challenges and Future Outlook

Regarding the key points of concern for investors, Goldman Sachs highlighted the following aspects:

Vehicle Delivery Outlook: There is controversy in the market regarding the trend of Tesla's vehicle deliveries, with key factors including the timing of new model releases and the differentiation in functionality and cost compared to existing models. Tesla had planned to launch a low-cost new model in the first half of 2025, but this has not yet been realized. Additionally, the electric vehicle consumer credit policy under the U.S. Inflation Reduction Act (IRA) may be canceled later this year, which could also impact Tesla's delivery volume. Based on the better delivery results in the second quarter, Goldman Sachs has raised its delivery forecast for 2025 from the previous 1.575 million to 1.594 million (an 11% year-on-year decline), while estimates for 2026 and 2027 remain unchanged at 1.865 million and 2.15 million, both below market consensus data.

Automotive Profit Margin: Investors will continue to focus on Tesla's non-GAAP gross margin for vehicles (excluding regulatory credits). Goldman Sachs now expects this gross margin to be 12.7% in the second quarter of 2025, up from the previous estimate of 12.5% and also higher than the 12.5% in the first quarter of 2025, mainly due to increased sales. However, pricing and tariffs will continue to exert pressure on profit margins Robotaxi and FSD Progress: Despite mostly positive feedback from early users, there have been some reports that fell short of expectations, leading the National Highway Traffic Safety Administration (NHTSA) to request relevant information from Tesla. Goldman Sachs believes that Tesla's deployment approach in Austin and initial operational issues indicate that growth in this business will be relatively slow in the short term, but the autonomous driving market presents greater opportunities in the long term. Additionally, investors are eager to understand the progress of FSD for personal vehicles and when "hands-free" driving can be achieved. Goldman Sachs expects that Tesla will limit unsupervised use of FSD for consumers for at least some time, but may allow "hands-free" operation in specific situations (such as on good weather highways) in the coming years, which could help enhance the commercialization potential of FSD.

Other Business Growth: Tesla's energy storage product deployment is projected to be 9.6 GWh in 2025, 9.4 GWh in 2024, and 10.4 GWh in the first quarter of 2025. Goldman Sachs continues to believe that Tesla's energy deployment growth will be more robust, but its profit margins may be pressured by tariffs on lithium iron phosphate (LFP) batteries previously sourced from China. Tesla announced in June on the X platform that its LFP factory in the U.S. is nearing readiness to begin production.

Optimus Robot Progress and Mass Production Timeline Expectations: Tesla stated during the Q1 2025 earnings call that the Optimus robot is still being manufactured as planned on the Fremont pilot production line, with management expecting thousands of Optimus robots to be operational in Tesla factories by the end of this year, with a cumulative production of 10,000 units by 2025. However, media reports indicate that Tesla's head of the Optimus business, Milan Kovac, recently left the company, and there are reports that Tesla has currently paused Optimus production.

Rivian: Delivery Volume Meets Expectations, Production Limited by Model Updates

Additionally, Goldman Sachs mentioned Rivian (RIVN.US) second-quarter delivery and production data in its report. The firm noted that Rivian delivered 10,661 vehicles, a 23% increase quarter-over-quarter but a 23% decrease year-over-year, which is roughly in line with market consensus of 10,700 units, slightly below Goldman Sachs' previous expectation of 11,000 units. The company produced 5,979 vehicles in the quarter, a 59% decrease quarter-over-quarter and a 38% decrease year-over-year. Rivian stated that production in the second quarter was limited as it prepared for the launch of the 2026 model expected later in July. Furthermore, the company reiterated its delivery guidance of 40,000 to 46,000 units for 2025.

Goldman Sachs slightly adjusted Rivian's delivery expectations for 2025 from 43,000 units to 42,500 units, while maintaining expectations for 2026 and 2027 at 55,000 units and 92,000 units, respectively. Earnings per share expectations for 2025, 2026, and 2027, including stock-based compensation, remain unchanged at -$3.00, -$5.10, and -$2.75, respectively, while the earnings per share expectations excluding stock-based compensation remain at -$2.35, -$2.40, and -$2.00. Goldman Sachs maintains a "Neutral" rating on Rivian, with a 12-month target price of $14 unchanged