It's been another week, and Bank of America analysts are mixed on Tesla (TSLA) following a major development with a novel technology. The same BofA analysts delivered new insights following CES, and Citibank analysts gave some positive insight about Stellantis.
SpaceX and Tesla founder Elon Musk speaks during an America PAC town hall on October 26, 2024 in Lancaster, Pennsylvania. Samuel Corum/Getty Images
Bank of America analysts make "Actually Smart" decision following 'ASS' probe
Elon is going to want to change that name.
On January 7, we reported that the National Highway Traffic Safety Administration (NHTSA)'s Office of Defects Investigation (ODI) has initiated an investigation into Tesla's ironically titled Actually Smart Summon, or what Musk insists be called 'ASS.'
Despite the name inspired by crass, unbecoming elementary humor, Tesla's 'ASS' is a technology meant to bring futuristic self-driving technology to its owners; by allowing them to 'summon' their EVs from a distance to their current location.
Sound clever, right? Since the feature was unleashed onto the general public in late 2024, Tesla's 'ASS' has been documented in videos shared on social media where it puts drivers in situations that lead to collisions and accidents, as well as times where the feature works smoothly and leads bystanders and other drivers to gawk at Tesla that are "driving themselves."
However, like Tesla's supposed "Full Self-Driving," its 'ASS' is not entirely perfect. On January 7, the NHTSA's Office of Defects Investigation said it received one direct complaint of a crash that occurred when said feature was in use and viewed three media reports of similar incidents. In all the instances documented, all the vehicles failed to detect obstacles or parked cars, and drivers failed to stop their cars in time using the app.
Despite referencing the feature in the report's title, Bank of America Analyst John Murphy's latest report saw him downgrade Tesla stock but raise its price target from $400 to $490.
Despite writing that the stock is "trading at a level that captures much of our [long term] potential," he noted that there are "catalysts" that carry as much significant risk as potential benefit.
In the report, he named the launch of a low-cost model by the end of the first half of 2025 and the launch of the robotaxi as potential catalysts with "execution risk," alongside other ventures like increased Chinese production of its Megapack beginning in Q1 2025 and FSD.
He also listed increased competition in China, weaker EV demand, product launch delays, changes in EV regulation and incentives, as well as the risk of government policies not changing in favor of autonomous technology.
In addition, he noted that Tesla's vehicles need to gain a new look in order to compete.
"Tesla will need to refresh its vehicles to spur incremental demand. Demand growth has been adversely impacted over the last year or so by slowing EV penetration, but we believe the aging of its vehicle lineup has also been a factor," Murphy said.
"[...] Tesla released the updated Model 3 in late 2023 and is on track to launch the new Model Y in early 2025. These updates include relatively modest exterior changes, and more meaningful changes may be needed to drive a meaningful boost to demand. Meanwhile, the Model S and Model X are aging and could also use a refresh."
In an appearance on CNBC's The Exchange on January 10, Murphy noted that vehicle launches are something that the company has historically struggled with.
"On vehicles launches, that's probably the greatest risk," Murphy said. "That's something that historically, the company has struggled with as there haven't been that many new-vehicle launches. This is somewhat new to them; the [Model X], [Model S], [Model 3] and [Model Y] and there the Cybertruck; none of those have gone that well in the past.
DETROIT, MICHIGAN - JANUARY 10: Michigan Secretary of State Jocelyn Benson rides in a Jeep Rubicon at an indoor Jeep test track at the 2025 Detroit Auto Show at Huntington Place on January 10, 2025 in Detroit, Michigan. The Detroit Auto Show opens to the public on January 11th and runs through January 20th. (Photo by Bill Pugliano/Getty Images)Bill Pugliano/Getty Images
Citi sees the light for Stellantis
In 2024, Chrysler, Dodge, and Jeep parent Stellantis STLA has been through more than just the wringer — they have seen the mop bucket, the dirty floor, and much more.
However, in light of the new leadership change, a lineup of new products to be launched in 2025, and the installation of a new figurehead sometime within the first half of this year, there is room for some optimism.
One of those shining a light is analyst Harald Hendrikse at Citibank, who, on January 10, raised the stock's target price from $12.72 to $13.46 and maintained its "hold" position.
Despite the stock being down about 38% and being the worst-performing European auto marque last year, Stellantis has some advantages over other rivals. First, its 14-brand strong alliance gives it a lot of leeway and a robustly strong U.S. market exposure, as well as no heavy reliance on a Chinese market that is affecting other Detroit-based contemporaries like General Motors and Ford.
With this in mind, he feels these catalysts could drive early 2025 gains despite known uncertainty over earnings and free cash flow recovery.
Honda presented the world premiere of the Honda 0 Saloon and Honda 0 SUV prototypes at CES 2025, showcased on the third day of the Consumer Electronics Show (CES) in Las Vegas, Nevada, on January 9, 2025. Anadolu/Getty Images
BofA analysts shed insight into auto tech at CES
Despite literally having the word 'Electronics' in its name, the annual Consumer Electronics Show in Las Vegas has recently become a new venue for automakers and auto technology companies to show off their latest and greatest in a unique setting.
Even though the event is held in casino-adjacent venues, if one were to bet that this year's CES would be a beehive of new cars or auto tech, Bank of America analysts observe that their bets may not pay off as heavily as last year.
In a report led by analyst John Murphy, he shared that BofA folks came home with a few key takeaways during their visit to CES.
"Companies are continuing to invest in the transition to EVs, but there is a greater focus on driving efficiency and cost. There are also fewer OEMs investing in full AV tech, although there continues to be a focus on ADAS systems," Murphy wrote. "Further, suppliers are updating their strategies for China given the tough market conditions, and increasing vertical integration to have more control over cost, functionality and the supply chain."
Murphy notes that Chinese firms in the auto sector are moving in hyperdrive, so much so that the speed at which new innovations and technology emerge is more important than the quality and what the actual technology entails.
"Speed-to-market is critical given the high level of competition in China, even as it means less time is spent on quality control and testing of new technology. Competition there is also encouraging OEMs to differentiate their product and add content."
"In response to the market conditions, suppliers are aiming to bring products to the market 30% faster, but also make them 30% less expensive."
One auto-related technology that is proliferated at CES is ADAS, or Advanced Driver Assistance Systems, the broad term for near-autonomous technologies. Murphy notes that "Incumbent OEMs have largely given up on developing their own full AV technology," with companies like Waymo and Tesla being the only big players.
Despite this, ADAS tech is being adapted to be packaged efficiently for auto companies to use in their products, as perfecting the technology is being held to a higher importance than actual technology breakthroughs.
"As an example, suppliers are looking to consolidate ECUs and even run infotainment (non-safety critical) and ADAS (safety-critical) systems from one box and one chip. Level 2/2+ ADAS is generally viewed to be commoditized, and suppliers are increasingly having more discussions on Level 2++. Level 3 adoption is expected to be low until after 2030 as consumers have yet to recognize the benefits of the technology."
