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Tesla robotaxis to ‘transform society more than anything else’: RBC

A Tesla electric vehicle is seen at a Tesla electric vehicle charging station in Northbrook, Ill., Wednesday, May 10, 2023. (AP Photo/Nam Y. Huh)
A Tesla electric vehicle is seen at a Tesla electric vehicle charging station in Northbrook, Ill., Wednesday, May 10, 2023. (AP Photo/Nam Y. Huh) (ASSOCIATED PRESS)

Tesla’s plan to develop a fully-driverless taxi without pedals or a steering wheel has prompted RBC Capital Markets to raise its price target on the company’s shares by more than 40 per cent.

In a note to clients on Thursday, analyst Tom Narayan predicted “robotaxis” and autonomous vehicles in general could “transform society more than anything else in our lifetimes,” saving “millions of lives and trillions of hours.” He raised his price target on Nasdaq-listed Tesla shares (TSLA) from US$212 to US$305, while maintaining an “outperform” rating.

CEO Elon Musk has said a robotaxi will be ready for launch in 2024, his latest timeline for an autonomous ride-sharing vehicle originally planned to hit the market in 2020. His envisions a cheaper cost per mile than public transportation.

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“Given how much value and convenience they offer and low pricing, given the elimination of the driver, we see consumers switching away from private car ownership,” Tom Narayan wrote on Thursday. “We anticipate private cars being banned in many cities around the globe.”

Narayan says increasing sales volumes at a lower profitability, coupled with a greater focus on autonomous driving, is a winning strategy for the American automaker. Over time, he says, robotaxis could make up 70 per cent of Tesla’s value, with sales of autonomous driving software and vehicle sales representing the remaining 30 per cent.

Tesla recently struck deals allowing Ford (F) and General Motors (GM) vehicles to use Tesla's Supercharger network. Narayan says this shows the company's ability to leverage its products to create partnerships.

"Many believe this will serve as a trojan horse and enable software licensing in the future," he wrote.

Earlier this week, Tesla’s stock snapped its longest-ever winning streak. Shares fell 0.76 per cent to $254.80 at 12:36 p.m. ET on Thursday.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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