Shares of Tesla (TSLA) are trading higher following its shareholder meeting, which alluded to new offerings coming to market after the approval of Elon Musk's $56 billion pay package. Citi autos equity research analyst Itay Michaeli joins the Morning Brief to discuss why Tesla's product innovation is key to driving growth.

Michaeli notes that there is "a lot of anticipation for the next round of new products from Tesla." He explains that the company has mentioned introducing more affordable EV models, for which investors await two crucial factors: the price point and "the overall design and content of these vehicles." The main concern for investors will be whether these new vehicles can "generate the same type of hype" seen with previous Tesla models. If so, Michaeli believes it could drive substantial growth in the company's share price.

"We want to see a lot of innovation, maybe different design languages. Really whatever it takes... to create a lot of incremental excitement," Michaeli told Yahoo Finance.

Read more about what's next for Tesla here.

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Video Transcript

Tesla shares moving to the upside here of nearly 1.5% after the EV giants shareholder meeting at that meeting.

Musk predicted that Tesla's optimist robots could eventually lift the company's market cap to $25 trillion.

One of the other catalysts that Wall Street is watching for deeper dive in a Tesla growth story.

We are joined by the AM U Auto Parts and analyst here.

Thank you so much for joining us here.

I want to start on what you are anticipating based on what we heard from Musk specifically with regards to new product announcement.

Sometimes it's tough to kind of suss out whether or not Musk's approach is necessarily going to prove to come to fruition.

What did you make of the teasing out of certain new products to come at that meeting?

Absolutely good morning and thank you for having me.

Yeah, there is a lot of anticipation for the next round of new products from Tesla.

Uh last quarter.

They did allude to launching uh more affordable electric vehicles uh off some of the same platforms they have today and leveraging some of the manufacturing capacity they have today and launching these vehicles next year.

There are really two things people are looking for in these vehicles.

The first of course, is the price just given that evs do need to become more affordable and, and you know that there's some opportunity for growth uh at lower price points.

But the second thing that we're particularly looking for is really just the overall design and content of these vehicles.

Because the ultimate question, I think for investors is going to be that will these vehicles generate the same type of excitement we've seen for other high volume vehicles in the past, such as of course, the model three and the model Y if the answer to that question is yes, we do see scope for sentiment to improve as the focus would then turn to these new products driving additional growth uh versus which is really needed just given some of the demand uh headwinds that both electric vehicles of what we're seeing around the world that a Tesla specifically is, is facing given some of the aging out of their current portfolio.

So to two follow up questions on that one, what do you think prices should be at or need to be at to really spark that demand?

We've been talking a lot about lower prices, but I guess more specifically is there a range that you think is critical for Tesla to get to?

And then two, when you talk about the Tesla story specifically and what these new products, what these new uh vehicles need to be equipped with in order to generate that excitement, what do you think needs to be incorporated in order to see uh that excitement play out in the market?

There's a lot of, but whether it's in the interior of the vehicle or, or, or even others uh that, that could just create more of a change.

Right?

When you think about large car companies as they grow, there does need to be different design languages, even different sub brands in those vehicles to really appeal to a wider audience uh around around the world.

Because when you look at different regional tastes and regional consumer preference that they tend to vary not only by, by country, but even within regions in certain countries, including here in the US.

So, you know, we want to see a lot of innovation, maybe different design languages, but really whatever it takes.

Of course, Tesla is very good at innovation and very good at product to create a lot of uh incremental excitement and and price points are are clearly important, but we've been on the view.

Uh the price isn't Tesla's number one issue today, we would actually rank just the overall aging of the portfolio as being maybe a bigger issue for the company today than just price alone.

So of course, we want to see 30 40,000 and eventually even lower than that.

Of course, Tesla's had aspirations to launch a $25,000 ev of course, so we're mindful of the price points.

Uh And of course, the price points relative to the content you're getting, it's all ultimately all about the value for dollars.

Uh But we, we are focused overall on the content on the design, on the innovation um to really undersee whether you know, investors and consumers, of course, can get really excited about new vehicles.

Uh that could be very high volume vehicles for the company.

So it is a very uh significant focal point here over the next few months.

It, I wonder if you can talk a little bit about the path to autonomous vehicles.

And you sort of mentioned the varying global appetite for a variety of things coming from Tesla to what extent is the kind of bifurcation in interest in being in a full self driving vehicle across countries globally, sort of a potential headwind for Tesla moving forward.

You know, it really all depends on, on kind of the different opportunities within how you think about launching autonomous vehicles.

So we are very bullish on the opportunity within autonomous vehicles overall lower cost per mile and new business models and the opportunity not only to increase revenue streams, but even to grab revenue streams that exist in the value chain today and bring a kind of back up to that automaker ecosystem.

I think autonomous vehicles tend to be um often defined as sort of one business model of the so called urban Robo taxi.

But actually, there are a lot of different business models in theory that a company could launch Tesla has a couple of very unique advantages in our view.

One being that we do think that they could probably launch perhaps the cheapest and lowest cost Robo taxi platform out there, not only from a hardware cost perspective, but also from an operating cost and network cost perspective.

And if we're right about that, that could actually lead to potential new opportunities of how to deploy autonomous vehicles.

For example, you might not need to deploy the most dense areas.

You can actually maybe go to relatively easier areas and then maybe even launch some services on your current ecosystem of, of consumer vehicles and Robo taxi vehicles, things like peer to peer uh vehicle landing, things like uh you know, you order something at nine o'clock at night and the vehicle travels to, to get it for you at 2 a.m. Y 2 a.m. because you know, the safest autonomous vehicles aren't gonna be the one driving without any uh person in the vehicle.

Uh I I in relative times where a few people are out on the road, uh and the vehicle can kind of bring you those items that you ordered uh in the morning.

And so there's a lot of different ecosystem effects.

So we think that you can create uh to sell more vehicles, create new revenue streams and ultimately try to supplement uh the consumer fleet with, with Robo Taxi because the number one, you know, factor we think they have to get right uh when they kind of weve that the Robo Taxi day uh is of course the cost and then the vehicle itself.

But ultimately is how are you going to deploy autonomous vehicles in a way that's first and foremost, safe, but also can lead to additional revenue streams?

Maybe people aren't really thinking about today.

And before we let you go, if Tesla is in fact able to do all of that, what is the upside then look like for Tesla?

Yeah, we're still neutral on the stock just given some year term, you know, fundamental headwinds we talked about uh I think our estimates are still actually below consensus.

But if you can turn the story into a, the new evs we talked about and B if the company can craft a credible autonomous vehicle deployment plan that leverages their advantages, we think there is scope for sentiment to improve here in the next few months, it's gonna be a very important few months for them uh to kind of try to reshape the narrative given some of the near term headwinds that they're facing.