• TD Cowen's Itay Michaeli reiterated a Buy rating and $509 price target on Tesla following an extensive tour of Giga Texas and testing of FSD V14.
  • The analyst found FSD performance "smooth" and highlighted Cybercab innovations that could drive RoboTaxi operating costs down to approximately $0.30 per mile.
  • Significant software headroom remains on Hardware 4, with V14 representing a 10× parameter increase and further gains expected with AI5/6 iterations.

TD Cowen analyst Itay Michaeli came away from a recent tour of Tesla's Giga Texas facility with reinforced confidence in the company's autonomous driving roadmap, maintaining an Outperform rating and $509 price target on the stock. The visit included hands-on testing of the latest Full Self-Driving software and detailed observations of production activity at the Austin facility.

Michaeli reported that FSD Version 14 performed "smoothly" during testing, marking continued progress in Tesla's autonomous driving capabilities. The assessment noted particularly strong performance in complex urban environments, though specific route details weren't disclosed. The analyst's testing aligns with broader industry observations of incremental but meaningful improvements in Tesla's autonomous stack.

Perhaps the most significant takeaway centered on Tesla's RoboTaxi economics. Michaeli's analysis suggests Cybercab innovations could drive operating costs down to approximately $0.30 per mile, creating what he described as a "substantial revenue opportunity" ahead of the planned April 2026 launch. This cost structure would position Tesla competitively against current ride-hailing services while offering fully autonomous capabilities.

At Giga Texas, the analyst observed robust production activity with both inbound and outbound vehicle lots reportedly full. The facility's preparations for a 50% production increase, as previously outlined by CEO Elon Musk, appeared to be well underway according to people familiar with the matter who were briefed on the tour details.

The software analysis highlighted that Tesla's current Hardware 4 platform still has "major headroom" for performance improvements. Version 14 represents a 10× increase in parameters compared to previous iterations, with further computational gains expected as the company progresses to AI5 and AI6 hardware configurations. This suggests Tesla's autonomous capabilities could see step-function improvements even without major hardware refreshes.

Tesla's community engagement efforts at Giga Texas were also noted, with the facility regularly hosting military personnel, first responders, and business owners. These outreach initiatives appear to be part of a broader strategy to build stakeholder support ahead of the planned RoboTaxi service launch.

When reached for comment, Tesla representatives directed inquiries to publicly available materials about the company's autonomous driving progress. The company typically doesn't provide detailed responses to individual analyst reports.

The $509 price target represents significant upside from current trading levels and reflects the analyst's view that the market hasn't fully priced in Tesla's potential in autonomous mobility services. Michaeli's assessment joins a growing chorus of analysts recognizing the transformative potential of Tesla's RoboTaxi ambitions, though timing and regulatory approval remain key variables.

Tesla shares showed muted reaction to the report in early trading, with investors likely awaiting more concrete milestones in the company's autonomous driving deployment. The company faces increasing competition in both electric vehicles and autonomous technology, but its integrated approach to hardware and software development continues to differentiate its strategy from competitors.