Written by: Rita

Trends Guide

Tesla delivered 4.801 million vehicles in the second quarter, exceeding Bloomberg consensus by 21%. With multiple catalysts such as accelerated deliveries, expansion of FSD-recognized countries, and the start of production for the third generation of Optimus, JPMorgan believes that the positive feedback loop formed by the automotive and energy storage business should drive up the stock price. However, the neutral rating remains unchanged. The truth behind this is that the current buying price for investors has already priced in profit expectations for 2035 and beyond. JPMorgan raised EPS for 2026 and 2027 to $2.15 and $2.20, respectively, but the 2030 target EPS of $7.50 implies a compound growth rate of over 50%. Short-term outperforming expectations cannot change this timing mismatch.

Delivery volume leads in Europe, U.S. lagging

Tesla delivered 4.518 million vehicles in June alone, totaling 4.801 million for the second quarter. This is 14% higher than JPMorgan's expectation of 4.2 million vehicles and 21% higher than the Bloomberg consensus of 3.975 million vehicles. This is a significant lead in volume, not a marginal improvement.

However, the delivery data itself is not the whole story. JPMorgan specifically highlighted geographic differences. Europe saw a year-on-year increase of 105% in June, France +56%, Sweden +43%, Norway +39%; China increased by 24% year-on-year; Australia +89%. The U.S. market is lagging, with a year-on-year decrease of 27% in June.

Tesla's growth power is shifting globally. Regions with lower EV penetration (Europe, Australia) are scrambling to install, while mature markets (U.S.) face saturation pressure. JPMorgan pointed out that Berlin's capacity release has decreased by 20% year-on-year, indicating ongoing supply chain bottlenecks. The strong sales in June reflect a release of accumulated demand, not a breakthrough in production capacity.

FSD and Optimus stories are advancing, but none have materialized yet

The second focus of the research report is on autonomous driving and robotics. FSD has been approved in Belgium, Denmark, Lithuania, Estonia, and the Netherlands, attracting European user adoption. Production of the third generation Optimus robots begins in July, contributing output starting in August.

JPMorgan believes that the acceleration of self-driving, automobile sales, and energy storage deployment forms a positive feedback loop. The logical chain seems complete: FSD safety data accumulation, expansion of recognized range, increased user adoption rates, data from connected fleets feeding back to AI models, and further improvement in safety. The same applies to Optimus: in-house validation, benchmarking against AWS/KIVA level industrial AGI potential, and future cost structure optimization.

However, the implicit assumption is that all catalysts are realized synchronously and without setbacks. In reality, FSD requires 2-3 years from testing to large-scale adoption, with high regulatory uncertainty. Optimus also faces a long chain of production ramp-up, cost control, and application validation.

JPMorgan explicitly states in the risk section that if the deployment of Optimus falls short of expectations or FSD regulatory approval is slow, the company faces dual shocks of EPS downward revision and expanding capital expenditure. The positive feedback loop is a story of "if," not "already" a reality.

Energy storage consistently exceeds expectations, but forecasting errors remain

JPMorgan expected 11.0 GWh for energy storage in June, while Tesla achieved 13.5 GWh. The consensus set by the company was 13.8 GWh, while JPMorgan's outperforming expectation was revised down to -2%.

What do these seemingly contradictory figures indicate? It is likely that JPMorgan's previous conservative assumptions are out of step with the actual market demand and Tesla's execution exceeding historical patterns. However, 13.5 GWh is still slightly low within the company's consensus, indicating that while the energy storage business is growing rapidly, its maturity is still in the building phase, leaving significant room for forecasting errors.

Behind the $475 target price is the profit from 2035 supporting it

JPMorgan uses a mixed valuation method. Based on the long-term profits projected for 2030, a P/E ratio of 75 times is applied (considering a 50% margin and high growth), plus individual valuations for Robotaxi and Optimus using the Sum-of-the-Parts method, ultimately leading to a target price of $475 for December 2027.

The assumptions priced in at $475 are: a 2030 EPS of $7.50, significant profit contributions from the Robotaxi business after 2029, and Optimus scaling deployment becoming a main driver after 2028.

There are risks to the realization of these expectations. JPMorgan lists six downward risks, among which Musk's strategic leadership and execution ability are particularly sensitive. If the progress of Optimus or Robotaxi stagnates, or the policy environment reverses, the current pricing's upside potential will vanish.

Idiosyncratic factors account for 40% of the stock price performance drivers, which is relatively high within the industry. Tesla's stock price largely relies on the realization of individual stories rather than being driven by systematic factors. Deviations in the storytelling phase might lead to a rapid correction in stock price.

Trends Perspective

The second quarter delivery data exceeds expectations, but the victory has unique background: the scramble to install in Europe and Australia is a phased release of supply chain adjustments, not a new normal. The substantial logic for JPMorgan to maintain a neutral rating is the insistence on valuation equilibrium. Neutral is not skepticism towards delivery growth rates, but a recognition that pricing has already outpaced fundamentals. Investors have already purchased into the EPS expectations for 2035, and even more Q2 outperformances will not change the timing mismatch between purchase price and realization price.

What is truly worth paying attention to is when the two long-term catalysts, Optimus and Robotaxi, will be commercialized. A compressed timetable (Optimus realizing significant profit contributions in 2027 instead of 2028) provides upward breakout potential for the current $475 pricing. If the timetable is extended or the economic model is proven to be less than expected, the neutral rating risks will turn into downward pressure.

Disclaimer

This article is a compilation and interpretation of third-party brokerage research reports by Trends Research. The ratings, target prices, earnings forecasts, and related judgments quoted in this text are solely the views of the analysts at those brokerages and represent the positions of their respective institutions, not those of Trends Research, and do not constitute any investment advice.

The market has risks; decisions must be independent. This article should not be used as the basis for buying or selling any securities.