Barclays upgrades Tesla: autos, energy storage and Robotaxi improve alongside potential acquisition premium
Barclays raised its Tesla price target from $370 to $450, primarily reflecting a potential SpaceX acquisition premium, while also taking a positive view of vehicle deliveries, energy storage demand and Robotaxi progress; shareholder votes, profits and cash flow remain key constraints.
Original source：BarclaysFirst published on Unhidea：Original source date：
Key takeaway
Barclays believes the potential acquisition premium and improvements in core businesses together make Tesla more attractive, but obstacles remain to securing approval for a deal and converting operating growth into profits.
Why is Barclays upgrading now?
Barclays upgraded Tesla from equal weight to overweight and raised its price target from $370 to $450, approximately 21% above the 23 October 2026 closing price of $372.22. The bank views the potential acquisition premium as the main driver of the higher target, with progress in autos, energy storage and Robotaxi also providing support.
The target is based on a probability-weighted scenario analysis for 2030, discounted over 4 years at 4%, and raises the base-case price-to-earnings multiple from 85 to 95 times.
Why might a SpaceX merger bring a premium, and what are the hurdles?
The two companies have formed special committees to discuss a merger. Barclays believes a deal could provide vertical integration across AI software, chips and robotics, while Musk’s desire to strengthen his control is also an important motivation.
The bank considers an all-stock acquisition of Tesla by SpaceX the most likely structure. At valuations of approximately $2 trillion for SpaceX and $1.8 trillion for Tesla, a price of $450 per Tesla share would represent a premium of about 20% to the share price at the time, and Musk would have approximately 53% of the voting power in the combined company.
The deal requires approval from more than half of the outstanding voting power of both companies, with abstentions counted as votes against. Even if Musk votes his approximately 20% Tesla stake in favor, support from approximately 35%–40% of the remaining outstanding shares would still be needed; Barclays expects the vote to pass, but considers it far from certain. An earlier proposal for Tesla to invest in xAI won 54% of votes cast for or against, but these represented only 38% of all outstanding voting power, below the approval threshold.
Where are the auto and energy storage businesses improving?
Vehicle deliveries are expected to return to growth after two consecutive years of declines. Barclays raised its 2026 delivery forecast from approximately 1.65 million vehicles before the second-quarter delivery figures were released to 1.8 million, and its 2027 forecast from approximately 1.82 million to 1.92 million; Tesla’s passenger vehicle order backlog reached a four-year high at the end of the third quarter.
FSD adoption among vehicles delivered in North America in the third quarter exceeded 75%, up approximately 20 percentage points from the second quarter. Barclays believes FSD can both drive demand and support margins; Shanghai exports now account for approximately 25%–30% of global sales, and the geographic mix also supports margins.
In energy storage, management said Megapack capacity for 2027 was nearly sold out and guided for improvements in future average selling prices and margins; this reverses its view at the start of the year that margins would come under pressure from competition, policy and battery tariffs. Barclays sees data-center demand as one reason and expects the ramp-up of the Houston factory to drive at least 50% year-on-year growth in energy storage deployments in 2027.
How far is Robotaxi progress from making a financial contribution?
As of 18 October, Tesla had completed approximately 3.1 million cumulative miles of unsupervised driving across 6 operating cities, up from approximately 400 thousand miles at the second-quarter earnings report in mid-July; the California Bay Area was excluded because operations there still have supervision.
Unsupervised driving totaled approximately 560 thousand miles in the latest week, compared with approximately 70 thousand miles in mid-July. Austin expanded markedly after Cybercab launched in early September, reaching approximately 438 thousand miles in the latest week, more than 5 times its highest weekly total before launch.
Barclays believes these figures show the business is beginning to scale faster, but expects Robotaxi’s financial contribution to remain insignificant in the near to medium term, with its effect on the share price driven more by operational progress.
Why has improving growth not yet led to higher overall earnings forecasts?
Barclays expects revenue to rise from $94.827 billion in 2025 to $115.442 billion in 2027, while adjusted earnings per share fall from $1.66 to $1.28 over the same period; its 2027 forecast is also below the Bloomberg consensus of $2.20.
Cash flow is also under pressure: the bank expects capital expenditure to rise from $8.527 billion in 2025 to $24.243 billion in 2027, while free cash flow moves from $6.22 billion to negative $6.145 billion. Improving operating prospects and rising investment spending therefore appear together in the model.
