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 the 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 October 21 earnings report remain central to the valuation debate.

Tesla Shares Retreat After the Delivery Rally

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

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

The broader market offered limited support. The Nasdaq and S&P 500 finished lower as AI-related stocks struggled, although Treasury yields retreated and oil prices eased during the session. That distinction matters: Tesla’s decline occurred amid continuing 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 centres on software, autonomous driving, robotaxis, robotics and energy storage expanding Tesla’s business beyond vehicle manufacturing.

UBS raised its target to $391 from $385 and maintained a Buy rating. Its assessment also acknowledged the importance of sentiment and expectations about Tesla’s future businesses in driving the stock.

Relative to Thursday’s $375 close, the two targets imply approximately 33.3% and 4.3% upside, respectively. These are calculations based on analyst targets, rather than predictions of the next trading move.

The difference illustrates a central challenge in valuing Tesla. Investors assigning substantial value to future autonomy and robotics revenue can reach a very different conclusion from those placing greater weight on current earnings. For the bullish case to strengthen, commercial progress needs to establish how those opportunities could translate into revenue, margins and cash generation.

European FSD Progress Remains Uneven

Europe continues to present a combination of potential expansion and regulatory uncertainty for Tesla’s Full Self-Driving technology.

Slovakia has signalled that it is moving towards recognising FSD (Supervised), but the reported steps should not be treated as a completed approval. The development could broaden Tesla’s European availability if the recognition process is finalised.

At the EU level, the expected October vote on wider authorisation did not proceed as originally anticipated. The October committee agenda instead provided for further discussion, with December identified as the next apparent opportunity for a decision. December is therefore a possible voting window, rather than a confirmed approval date.

For investors, the timing affects how quickly Tesla might expand access to its paid driving software. Country-level recognition can provide incremental progress, while a broader authorisation could create a larger commercial opportunity.

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) also requires active driver supervision; its availability does not mean the vehicle can operate autonomously.

Musk Reaffirms Plans to Build and Operate Terafab

Elon Musk said on October 7 that his companies would build and operate the planned Terafab AI chip complex, addressing speculation about Taiwan Semiconductor Manufacturing Company’s potential role.

Musk indicated that TSMC could potentially sublease part of the facility, while Tesla and SpaceX would retain responsibility for building and running the project. Terafab is planned as a Texas chipmaking venture intended to support the companies’ AI requirements.

The announcement reinforces Musk’s ambition to gain greater control over computing infrastructure. 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, the 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 those 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. Drivers using Hardware 4 with FSD v14.2 or newer continue to qualify for a 50% discount on those miles. Lemonade uses vehicle data, with customer permission, to distinguish software-assisted driving from manually driven miles.

The expansion could improve the ownership proposition for some existing Tesla customers. Its financial significance for Tesla itself remains uncertain, however, because an insurance discount does not directly establish additional software sales or subscription revenue.

Tesla’s lower closing price also does not isolate the market’s response to this announcement. Several company developments and broader market influences were in play during the session.