TSMC could reportedly own and operate a Texas factory or provide tech and expertise under another ownership deal.
- TSLA rose 1% overnight after Musk confirmed discussions with TSMC about potential cooperation on Terafab.
- Gene Munster expects 15% delivery growth next year, saying that Tesla’s value and FSD advantages will pressure traditional automakers.
- Morningstar maintained its $450 fair value estimate, implying a 21% upside from current levels, and forecasts 10% delivery growth this year.
Shares of Tesla, Inc. (TSLA) rose 1% overnight late Sunday after CEO Elon Musk confirmed talks with TSMC over his Terafab chipmaking project, while analysts weighed Tesla’s delivery beat and the growth potential of its self-driving tech.
TSLA stock rose about 5% on Friday to close at $370.59, its best day in a month. Despite the rally, shares ended the week down 0.4%, their worst weekly performance in over a month.
Musk Confirms TSMC-Terafab Talks
“Just discussions, but something may come of it,” Musk said on X on Saturday, responding to a report that Taiwan Semiconductor Manufacturing Co. was exploring cooperation with Terafab, Tesla's semiconductor project with SpaceX. The report, citing undisclosed sources, said that TSMC could help operate the project’s semiconductor factories in Texas.
One potential arrangement would have TSMC own and operate a factory, with SpaceX/Terafab contributing equity, guaranteed purchase agreements or both. Another would give SpaceX/Terafab majority ownership, while TSMC provides technology and operational expertise.
Musk also replied “True” to a post saying that TSMC’s contribution would supplement Terafab’s broader ambitions. The post described a goal of producing one terawatt of computing capacity annually. The talks bring a potential manufacturing partner into focus as Musk pursues semiconductor capacity for his companies’ rising AI requirements.
Munster Sees An ‘EV Ice Age’ For Rivals After Delivery Beat
Tesla delivered 486,532 vehicles in the third quarter, including 478,237 Model 3 and Model Y vehicles and 8,295 other models. Production totaled 464,391 vehicles, while energy storage deployments hit 13.7 gigawatt-hours.
Deliveries fell about 2% from the year-earlier quarter, when the expiration of the U.S. $7,500 EV tax credit pulled purchases forward. Tesla will report third-quarter results after the market closes on Oct.21.
“It’s going to get ugly for traditional car makers,” Deepwater Asset Management managing partner Gene Munster said on Friday in a note titled “Let’s Set Aside the Pleasantries, Tesla Is Going to Crush Traditional Automakers.” He highlighted Tesla’s resilience against a difficult year-over-year comparison and sharper declines in Ford and General Motors’ EV sales.
Munster estimated that excluding 45,000 purchases pulled forward by last year’s expiring U.S. EV tax credit would imply about 8% delivery growth in the latest quarter. He expects Tesla’s vehicle value and Full Self-Driving (FSD) tech to drive 15% growth next year, above the 9% consensus forecast. “The EV winter is ending for Tesla,” he said, warning that traditional automakers face an “EV ice age” amid profitability and autonomy challenges. However, lower gasoline prices could weaken near-term EV demand.
Morningstar Calls TSLA ‘Slightly Undervalued’
Morningstar maintained its $450 fair value estimate, implying a 21% upside from current levels, and called shares “slightly undervalued.” The firm forecasts about 10% delivery growth this year, ending two consecutive annual declines, with FSD helping attract buyers. At the Oct.21 earnings report, Morningstar will watch for updates on robotaxi expansion, Cybercab, FSD version 15 and Optimus, identifying autonomous driving and humanoid robots as Tesla’s long-term growth pillars.
On the other hand, The Future Fund’s Gary Black highlighted Tesla’s 486,500 deliveries against the 462,000 consensus, but said its unsupervised autonomy rollout “has fallen far short of management’s guidance.” Black contrasted Tesla’s approvals in six Texas and Florida metropolitan areas with Waymo’s authorization for public driverless rides in 15 U.S. metros.
How Do Retail Traders Feel About TSLA?
On Stocktwits, retail sentiment for TSLA has been ‘bullish’ over the past three months amid ‘normal’ message volume.
One user said, “$SPCX perpetually bullish on Elon and anything he's involved in. $TSLA”
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Another user said, “Tesla FSD feels like magic $TSLA”
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So far this year, Tesla's stock has lagged its "Magnificent Seven" peers, making it the group's worst performer, down about 18%.
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