HSBC Warns Tesla Stock Could Plunge 70% Amidst FSD Concerns

Tesla's valuation has long relied on its potential in areas beyond EV sales, such as autonomous driving and robotics. However, recent challenges raise questions about these future revenue streams.

The NHTSA investigation into Tesla's FSD system is a critical development. The probe focuses on incidents where FSD reportedly failed to detect deteriorating camera visibility, leading to accidents, including one involving a pedestrian fatality. This investigation could lead to stricter regulations or require significant modifications to Tesla's autonomous driving technology.

In the EV market, Tesla is facing increased competition, particularly in China and Europe. BYD, for example, has surpassed Tesla in sales in certain regions, signaling a shift in market dynamics. Additionally, the expiration of the $7,500 tax credit in the US has affected the entire EV industry, adding to Tesla's challenges.

Given these factors, if Tesla's value becomes more dependent on its car sales, a significant market cap correction could occur. Comparisons with other major automakers like BYD ($144 billion market cap) and Toyota ($274 billion market cap) suggest substantial downside risk if Tesla is viewed primarily as an EV company.

What is HSBC's price target for Tesla?

HSBC has a 12-month price target of $119 for Tesla, which implies a 70% drop from the current share price.

Why is Tesla's FSD under investigation?

The NHTSA is investigating Tesla's FSD system due to concerns about its safety in low-visibility conditions and reported failures to detect visibility issues before accidents.

Who are Tesla's main competitors in the EV market?

Tesla's main competitors include BYD in Europe and various EV brands in China.

Do you think Tesla can overcome these challenges and maintain its high valuation? Share your thoughts in the comments below!

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