Electric automaker Tesla (TSLA) is working to improve its self-driving system to fix a braking problem. Tesla stock fell 4.42% on Wednesday to close at $589.89.
CEO Elon Musk tweeted that the revamped autopilot software may be released in the next few months. However, the executive cautioned that it is difficult to accurately predict the timing of a new product’s availability.
The coming update is expected to bring many advancements to Tesla’s self-driving feature. Notably, it will resolve the problem of Tesla cars on autopilot randomly applying the brake, particularly when driving under an overpass or bridge.
To fix the autopilot software’s inconsistent braking problem, the company decided to remove radar and instead rely on cameras for vision.
“We had to focus on removing radar & confirming safety,” said Musk.
Tesla will offer the enhanced autopilot software on subscription. That will be an alternative to the one-time payment of $10,000 the company has been charging drivers for its self-driving technology. Tesla plans to begin selling the subscription in about a month. (See Tesla stock analysis on TipRanks)
Wedbush analyst Daniel Ives reiterated a Buy rating with a $1,000 price target on Tesla stock. Ives’s price target implies 69.52% upside potential to the current price.
The analyst noted that Tesla’s China car sales dropped sequentially in April as the company struggled with safety issues, but China remains an important market for Tesla. Also, the analyst stated that the cars sold well in Europe in April, as demand there has been strong.
“We believe overall China demand is on a 300k+ annual run rate and is poised to represent roughly 40% of deliveries for Tesla by 2022,” commented Ives.
Consensus among analysts on Wall Street is a Hold based on 11 Buy, 6 Hold, and 7 Sell ratings. The average analyst price target of $645.95 implies 9.50% upside potential to current levels.
TSLA scores a 3 out of 10 on TipRanks’ Smart Score rating system, indicating the stock is likely to underperform the market.
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