Proactive Investors - Tesla Inc (NASDAQ:TSLA) shares moved higher on Friday after a turbulent week for the electric vehicle (EV) maker ahead of its highly anticipated Robotaxi event on October 10.
Earlier this week, Tesla announced that it was recalling 27,000 CyberTrucks over a rearview camera issue that increased the risk of a crash and said it would be discontinuing its Model 3 Sedan in the US.
Wedbush analysts highlighted that the Model 3 Standard Range Rear-Wheel Drive (RWD), priced at roughly $39,000, uses lithium iron phosphate (LFP) battery cells sourced from China which fall under the recent Biden Administration tariffs on Chinese imports.
These Chinese imports include a 100% tariff on EVs and 25% on EV batteries and key minerals.
“Most importantly vehicles that contain Chinese-made components such as LFP battery cells are ineligible for the $7,500 federal tax EV credit,’ the analysts wrote in a note to clients.
“Now we would see Tesla buyers/consumers continuing to look for the Model 3 Long Range RWD, which retails for $42,000 but is $35,000 once applying the EV tax credit. With this Model 3 RWD removed, Tesla is no longer selling any cars with LFP cells.”
The China tariffs are seen as a “double-edged sword” for Tesla and other US automakers focused on EVs.
“On one hand this protects US automakers from lower-priced Chinese EVs hitting the market that would be a major competitive threat from BYD, Nio, Xpeng (NYSE:XPEV) and others,” Wedbush’s analysts wrote.
“However, the battery and component technologies sourced from China make this a moving target on the battery front to navigate this ever-changing tariff environment and raw materials landscape for Tesla in particular.”
These developments come before Tesla’s widely anticipated Robotaxi event next Thursday.
Analysts expect Tesla CEO Elon Musk to unveil game-changing autonomous technology at the event.
They anticipate updates on the rumored “Cybercab” Robotaxi, the Next-Gen Platform, and advancements in Full Self-Driving (FSD) and AI technology.
Additionally, they expect insights on Cybercab scalability, cost-per-mile estimates, a Tesla ride-sharing app, and a Generation 1 demonstration of the innovative technology aimed at transforming urban transportation.
“With very few industry events as widely anticipated as this, we believe Musk will address the near-term pain points seen by investors and the company’s long-term vision as Tesla goes through its second transformation not seen since the Model 3/Y production overhaul,” they wrote.
“We continue to believe AI/FSD represents a $1 trillion of value alone for Tesla over the coming years...next week it's time for Musk to have a watershed unveiling event to kick this AI era off at Tesla.”
Wedbush repeated its ‘Outperform’ rating and $300 price target on Tesla.
Shares of Tesla added 2.4% at about $246 in the late morning on Friday. The stock is roughly flat in the year to date.