Tesla shares rose more than 6% on Wednesday following the rollout of new software updates for its vehicles and CEO Elon Musk's announcement of progress on the company's forthcoming AI5 chip [1]. Musk stated on his social network X that the AI5 chip has reached a key engineering milestone and is nearing production. Tesla plans to build two advanced chip factories in Austin, Texas, in partnership with SpaceX, with one factory dedicated to chips for vehicles and robots and another for chips used in orbital data centers. Intel has recently joined the Tesla-SpaceX Terafab project [1].
The stock spike was also driven by an upgrade from UBS analysts, who shifted their rating on Tesla shares from sell to hold and raised the price target by about a dollar to $352. UBS analysts, led by Joseph Spak, noted that Tesla's work on a new, smaller SUV is a 'welcome development,' given their view that Tesla's current light-duty vehicle offerings are 'too limited.' Tesla's current lineup includes the Model 3 sedan, Model Y SUV, and Cybertruck, while the company has stopped selling its flagship Model S and X vehicles to transition part of its Fremont, California factory to produce its humanoid robot, Optimus, which is now in development [1].
Tesla's Spring software update introduced features that make it easier for customers to subscribe to the premium Full Self Driving (Supervised) option, priced at $99 per month in the U.S., and to view usage statistics on their touchscreens. FSD (Supervised) can handle some steering, lane changes, and parking under active driver supervision, but does not make Tesla vehicles autonomous. The company is testing a small number of driverless vehicles in its Robotaxi ride-hail service in Austin, Texas [1].
Additionally, the update enhanced the in-vehicle capabilities of the AI chatbot Grok, developed by Musk's xAI and now owned by SpaceX. Drivers can activate Grok hands-free by saying 'Hey Grok' in Tesla EVs. Musk has promised for over a decade that Tesla is close to delivering driverless, 'robotaxi-ready' vehicles, but this has not yet materialized, although the systems have continued to evolve [1].
CONCLUSION
Tesla's stock experienced a significant boost driven by software innovations, chip development milestones, and a positive analyst upgrade. The company's strategic partnerships and product expansion plans signal ongoing technological advancement and market optimism. However, full autonomy for Tesla vehicles remains a future goal rather than a current reality.