Robotaxi represents a ‘high stakes’ moment, but skepticism remains, according to Wells Fargo

Tesla’s upcoming Robotaxi day is expected to be a crucial event for the automaker. However, analysts at Wells Fargo remain skeptical about the stock, maintaining an Underweight rating with a price target of $120.

Over the past four months, Tesla’s shares have surged by 43%. Nonetheless, Wells Fargo points out that this valuation premium is primarily fueled by expectations surrounding the company’s advanced technologies, particularly the Robotaxi initiative and Optimus, its humanoid robot.

The “We, Robot” day was initially slated for August 8 but was postponed to allow for significant updates and the creation of additional prototypes. Despite the delay, analysts emphasize that Tesla has retained its stock premium.

Wells Fargo analysts expressed hope for live demonstrations of Tesla’s latest autonomous vehicle technology during the event.

They highlighted three key questions they anticipate Tesla will address.

The first concern relates to Tesla’s “vision-only” strategy for autonomous driving, which differs from competitors that employ multi-sensor systems including radar and LiDAR. This approach could pose safety risks, especially in poor weather conditions. Analysts note that many experts in the field believe additional sensors like radar and LiDAR enhance data accuracy and overall safety, particularly during heavy rain, fog, or snow.

The second major question pertains to the economic viability of Tesla’s technology. Although Tesla may offer lower costs per mile at $0.91, compared to Waymo’s $1.32, it still falls short of the $0.72 per mile associated with personal car ownership. For the Robotaxi model to be financially feasible, high utilization rates and adequate infrastructure—including parking, maintenance, and teleoperation—will be essential.

Lastly, the regulatory environment for autonomous vehicles in the U.S. is fragmented, with many states lacking comprehensive guidelines for Level 4 or 5 autonomy. Analysts caution that in the case of an accident, manufacturers will be responsible for demonstrating that their safety measures were sufficient. Additionally, states require testing with safety drivers before full deployment, raising questions about whether Tesla has initiated such testing.

Concerns are further compounded by turnover in Tesla’s autonomous driving division, with several key personnel departing in recent years. This leadership change has sparked doubts about whether the experienced talent has confidence in the direction Tesla is pursuing.