Goldman sees 10% downside for Tesla even after China self-driving progress

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Tesla shares could cool following Monday’s rally as obstacles remain to achieving full self-driving technology in China, according to Goldman Sachs. The electric-vehicle maker’s stock climbed more than 15% Monday, marking its best day since 2021 after clearing a key regulatory hurdle for rolling out advanced driver-assistance technology in China. But Goldman analyst Mark Delaney has a $175 price target, which implies a 9.8% downside from the stock’s last closing price. Delaney said there will still need to be specific improvements made to the technology to satisfy the local government before deployment. However, he said there’s reason to think that it could be developed faster than Goldman expects in its base case. “While we believe a lot of the engineering that Tesla has done would be applicable globally, we believe the company would need local enhancements for the product,” Delaney, who has a neutral rating, wrote to clients. “Importantly, Tesla will also need to navigate government rules on data access, localization, and AI which could complicate technology sharing within/outside of China.” Delaney also said the pace at which Tesla can update its driver-assistance technology should directly impact how much it will change the business in China. But he said the technology should not be viewed as an “eyes-off/unsupervised product” in its current state, meaning Tesla has its work cut out. Tesla shares opened down more than 3% on Tuesday. Despite Monday’s rally, Tesla stock is still down almost 22% in 2024 as the company contends with sales challenges.

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