Key Highlights
- Morgan Stanley analyst Andrew Percoco increased Tesla’s Q2 delivery projection to 413,000 units, exceeding the Street consensus of 406,000
- European Tesla registrations soared 107.9% year-over-year in June; Chinese domestic deliveries jumped 82% month-over-month from April
- Despite the upgrade, Morgan Stanley kept its Hold rating with a $415 price target due to energy storage deployment concerns
- CEO Elon Musk announced new FSD hardware rollout for AI3 vehicle owners, potentially boosting $99/month subscription revenue
- Increasing operational integration between Tesla and SpaceX fuels speculation about possible merger within 12–18 months
Shares of Tesla (TSLA) advanced approximately 1.22% during Monday’s session, building on premarket momentum of 0.7% that pushed the stock to $382.38 — buoyed by an optimistic analyst note from Morgan Stanley that provided fresh fuel for bullish investors.
Andrew Percoco, an analyst at Morgan Stanley, lifted his second-quarter delivery forecast for Tesla to 413,000 vehicles, a significant increase from his previous projection of 373,000 units. This revised figure sits comfortably above the Wall Street consensus estimate of 406,000 deliveries.
The upward revision stems from robust recoveries in both European and Chinese markets, regions that had previously presented headwinds for Tesla’s performance throughout the past year.
Across Europe, Tesla vehicle registrations increased 47% on a year-over-year basis in April. Early data for June revealed an even more impressive surge, with registrations climbing 107.9% year-over-year to reach 28,610 units, according to figures from the European Automobile Manufacturers’ Association.
The Chinese market has similarly demonstrated renewed strength. Domestic deliveries rose 23% year-over-year in May and experienced an 82% sequential jump from April, breaking a two-month streak of annual declines.
Tesla is scheduled to announce its second-quarter delivery figures on July 2. Analysts surveyed by FactSet are anticipating approximately 409,000 vehicles, representing an improvement over the 384,000 units delivered during Q2 2025.
While raising his delivery estimate, Percoco maintained his Hold rating alongside a $415 price target — representing potential upside of roughly 9.3% from current trading levels. He highlighted Tesla’s energy storage division as a potential weak spot, noting project delays experienced during the first quarter.
Energy Storage Business Faces Headwinds
Percoco anticipates Tesla will deploy 11.8 GWh during the second quarter, falling short of Wall Street’s consensus estimate of approximately 14.3 GWh. However, he forecasts improvement during the latter half of the year, with full-year deployments projected at around 55 GWh — consistent with broader market expectations.
Analyst sentiment on TSLA remains divided. According to TipRanks data, the stock carries a Moderate Buy consensus rating derived from 11 Buy recommendations, 15 Hold ratings, and 3 Sell ratings. The average analyst price target stands at $403.49, suggesting approximately 6.3% upside potential. The stock has declined 15.6% year-to-date.
Monday’s positive price action received support from broader market strength, with S&P 500 and Dow futures advancing 0.7% and 0.3%, respectively.
Full Self-Driving Hardware Upgrade and SpaceX Integration
CEO Elon Musk generated additional buzz over the weekend by announcing via Twitter that Tesla is deploying an enhanced version of its Full Self Driving hardware to vehicle owners equipped with AI3 — the onboard computing system first introduced in 2019. The upgrade holds particular significance considering AI3 possesses approximately 15% of the memory bandwidth found in the more advanced AI4 system.
For Tesla, this development creates a strategic opportunity: AI3 vehicle owners may now find greater value in subscribing to the company’s $99/month FSD service.
Musk also highlighted that SpaceX’s Grok 4.5 AI model is being deployed across both Tesla and SpaceX operations, emphasizing the increasing operational synergies between the two companies. The organizations are partnering on AI initiatives leveraging unused Tesla computing capacity, and are jointly developing a semiconductor manufacturing facility dubbed TeraFab.
Market observers have been discussing the possibility of a Tesla/SpaceX merger occurring within the next 12 to 18 months. SpaceX executed what became the largest IPO in history during early June.
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