Tesla Stock Slips Despite $500 Price Target as FSD Delays and Spending Stay in Focus

Key Takeaways

• Tesla shares closed down 0.74% at $375 on October 8, extending their pullback after a rally following stronger-than-expected quarterly deliveries.
• Dan Ives initiated coverage with a $500 price target, while UBS raised its target to $391.
• European FSD approvals, investment spending, and Tesla’s upcoming earnings report on October 21 remain central to the valuation debate.

Tesla Shares Retreat After the Delivery Rally

Tesla stock fell 0.74% to close at $375 on October 8, as investors weighed bullish analyst calls against uncertainty over the company’s autonomous-driving plans and future profitability. This decline followed a 0.75% drop on the previous day, marking a second consecutive session of losses.

The pullback came after a strong response to Tesla’s third-quarter delivery report, where shares rose 4.65% on October 2, followed by gains of 2.20% on October 5 and 0.51% on October 6. Despite the recent decline, Thursday’s close remained above the $354.11 recorded before the delivery announcement, indicating that some initial optimism was still reflected in the price.

The broader market offered limited support, with the Nasdaq and S&P 500 finishing lower as AI-related stocks struggled, although Treasury yields retreated and oil prices eased during the session. This context highlights the ongoing concerns about technology-sector returns, even as some immediate cross-asset pressures moderated.

Analyst Targets Highlight Different Expectations for Tesla

Dan Ives, now at Yorkville Ives, initiated Tesla coverage with an Outperform rating and a $500 price target. His investment thesis focuses on software, autonomous driving, robotaxis, robotics, and energy storage, which he believes will expand Tesla’s business beyond vehicle manufacturing.

UBS raised its target to $391 from $385 while maintaining a Buy rating, acknowledging the importance of sentiment and expectations about Tesla’s future businesses in driving the stock. Relative to Thursday’s $375 close, these targets imply approximately 33.3% and 4.3% upside, respectively.

The difference in targets illustrates a central challenge in valuing Tesla. Investors who assign substantial value to future autonomy and robotics revenue may reach a very different conclusion from those who place greater weight on current earnings. For the bullish case to strengthen, commercial progress must demonstrate how these opportunities could translate into revenue, margins, and cash generation.

European FSD Progress Remains Uneven

Europe presents a mix of potential expansion and regulatory uncertainty for Tesla’s Full Self-Driving (FSD) technology. Slovakia has indicated it is moving towards recognizing FSD (Supervised), but this should not be treated as a completed approval. If finalized, this recognition could broaden Tesla’s European availability.

At the EU level, the anticipated October vote on wider authorization did not proceed as expected, with further discussions scheduled instead. December has been identified as the next potential voting window, which could affect how quickly Tesla might expand access to its paid driving software.

However, regulatory permission and customer adoption are separate milestones. Wider availability would still leave questions about subscription uptake, pricing, and the resulting contribution to earnings. FSD (Supervised) requires active driver supervision, meaning its availability does not equate to fully autonomous operation.

Musk Reaffirms Plans to Build and Operate Terafab

On October 7, Elon Musk announced that his companies would build and operate the planned Terafab AI chip complex, addressing speculation about Taiwan Semiconductor Manufacturing Company’s (TSMC) potential role. Musk indicated that TSMC could potentially sublease part of the facility, while Tesla and SpaceX would retain responsibility for the project.

Terafab is intended as a Texas chipmaking venture to support the companies’ AI requirements. This announcement reinforces Musk’s ambition to gain greater control over computing infrastructure, but it also brings execution and funding into sharper focus. Building semiconductor manufacturing capacity involves more than securing a site; commercial viability depends on technology, production efficiency, and the ability to deliver usable chips at scale.

For Tesla shareholders, unresolved financial questions include the company’s share of expenditure, the timing of investment, and when the project could generate measurable benefits. Musk’s statement clarifies his intended operating structure without resolving these questions.

Lemonade Expands Insurance Support for Older Tesla Hardware

Lemonade announced on October 8 that its insurance product would support Tesla vehicles equipped with Hardware 3 and FSD (Supervised) v14 Lite in Arizona, Colorado, and Tennessee. Eligible drivers can receive a 30% discount on miles driven with the system engaged, while those using Hardware 4 with FSD v14.2 or newer continue to qualify for a 50% discount.

This expansion could improve the ownership proposition for some existing Tesla customers, although its financial significance for Tesla remains uncertain, as an insurance discount does not directly establish additional software sales or subscription revenue.

The lower closing price of Tesla shares does not isolate the market’s response to this announcement, as several company developments and broader market influences were at play during the session.