In a welcome break for all TSLA stock investors, the stock rose by more than 2% after some great news about Tesla were reported. For instance, Tesla (NASDAQ: TSLA) recently received high praise from the U.S. AI giant Nvidia (NASDAQ: NVDA), as Nvidia’s CEO, Jensen Huang, told reporters in a Yahoo Finance interview that what Tesla is doing with autonomous driving is incredible, as the automaker continues to push forward with developing its full self-driving capabilities.
Additionally, the automaker released a new vehicle safety report that showcased incredible results, and it was also reported that Tesla is working hard to diversify and expand its supply chain away from China, amid increasing tensions between the country and the United States.
Tesla’s Expanding Partnership with Nvidia
While it might be true that there’s some skepticism from consumers when it comes to fully autonomous cars, this doesn’t change the fact that all cars will have fully autonomous self-driving one day in the future, and this is the vision Elon Musk and Jensen Huang share. Therefore, it’s no surprise that Nvidia’s chief financial officer, Colette Kress, said that Nvidia boosted Tesla’s expansion of its AI training cluster to 35,000 H100 GPUs during the chipmaker’s Q1 earnings call, which led to a significant performance boost for the EV giant’s latest autonomous driving software.
According to Kress, Tesla’s use of Nvidia’s AI infrastructure paved the way for the breakthrough performance of Tesla’s FSD version 12, their latest autonomous driving software based on vision. Back in August 2023, Tesla deployed a 10,000-unit Nvidia H100 GPU cluster to expedite the training of its full self-driving technology and at the time, Musk said that the “H100 is 3 times faster than A100 in their tests.”
In addition to that, last month, it was reported that Tesla plans to ramp up its AI developments by installing 85,000 Nvidia H100 chips by the end of this year, since these chips play a crucial role in Musk’s AI endeavors, encompassing the creation of sophisticated robots such as the Optimus Bot and Robotaxis, as well as the Dojo supercomputer.
Therefore, given that Nvidia is going to start offering its new Blackwell chips this year, which are the company’s most powerful chips for AI, Musk is definitely going to double down on them. The reason behind this is obvious, since Musk previously said that the Hopper chips were faster than Ampere chips, and given that the long-waited Blackwell chips are able to be up to 2.5 times faster when it comes to training AI models and up to 5 times faster in inference, Tesla will definitely go for the new chips to speed up the process of training the FSD software and improve it immensely overall.
New Vehicle Safety Report Boosts TSLA Stock
Tesla has released its Q1 2024 Vehicle Safety Report, which includes data on crashes involving Tesla vehicles, both when Autopilot was engaged and when the advanced driver-assist system was disabled, and according to the data, Teslas on Autopilot crash significantly less than vehicles that did not have the system engaged.
The company reported that they recorded one crash for every 7.63 million miles driven in which drivers were using Autopilot technology. On the other hand, for drivers who were not using Autopilot technology, they recorded one crash for every 955,000 miles driven. This shows that autonomous driving is the future for humanity as Huang put it in his interview, where we will have almost zero accidents, resulting in no loss of lives.
As Tesla solidifies its position as the full self-driving market leader, it’s set to benefit greatly. In fact, this market is projected to grow from $1.9 trillion in 2023 to $13.6 trillion by 2030, exhibiting a compound annual growth rate of 32.3% during the forecast period.
Tesla & China
It’s safe to say that Tesla will acquire the largest share when it comes to the fully autonomous vehicles market, given that its self-driving software is ahead of other technologies, and this will likely be made clear in August when Robotaxis are showcased in China.
But despite this, according to a report from Nikkei, Tesla is requesting its suppliers to begin manufacturing components and parts outside of China and Taiwan as early as 2025. The report, which cited sources from Tesla’s supply chain, especially suppliers of printed circuit boards, panels, and electronic controllers for models sold outside of China, said that suppliers have recently received requests from Tesla to avoid China and Taiwan.
The reason behind this is the increasing geopolitical risks in the Greater China region prior to the U.S. presidential election. Similarly, the report also indicated that other American car manufacturers such as General Motors (NYSE: GM) and Ford (NYSE: F) are also instructing their suppliers to explore relocating their production lines away from China and Taiwan. However, Tesla’s operations in China will likely not be affected by the rising tensions between the two countries.
The company is comfortably building a mega factory in Shanghai, and Robotaxis will be tested in China first. China definitely values the presence of Tesla and encourages the company to invest more in the country, so Tesla investors shouldn’t be too worried about Tesla in China.
TSLA Stock Forecast
Shares of TSLA stock have plummeted significantly in 2024. From a valuation perspective, Tesla trades at around 63.3 times forward earnings, and while this is way higher than Chinese EV companies like BYD (OTCMKTS: BYDDF) and Li Auto (NASDAQ: LI), investors may see this loss of share value as a buying opportunity.
And they might not be incorrect, in spite of all the apparent market headwinds, as Tesla has demonstrated the ability to rebound when shares have taken a significant beating. In fact, in 2022, Tesla shares fell 65%, as many investors sought to decrease their exposure to technology and emerging sectors equities. However, by the end of 2023, Tesla shares more than doubled in value.
All in all, while TSLA stock has severely underperformed the market, there are high chances that the EV maker could rebound, which makes the current price at around $179 a great opportunity to enter now before the next Tesla catalyst, which will be the Robotaxi reveal in August, and that will definitely send TSLA stock much higher.
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