Tesla shares climbed over 7.6 percent on Wednesday following announcements from Chief Executive Officer Elon Musk regarding the company artificial intelligence chip advancements. Musk shared on the social media platform X that the upcoming AI5 chip has reached a crucial engineering milestone and is nearing mass production.
Musk also detailed a partnership between Tesla and SpaceX to construct two advanced chip manufacturing facilities in Austin, Texas. One plant will focus on chips for vehicles and robots while the other will produce components for orbital data centers. Intel recently joined this collaborative initiative known as Terafab to further solidify the supply chain.
Analysts at UBS provided additional momentum by upgrading Tesla from a sell rating to neutral on Tuesday. The firm raised its price target by roughly one dollar to $352. The analysts highlighted the development of a smaller sport utility vehicle as a welcome development for expanding market reach given the relatively limited product lineup.
The current vehicle roster primarily consists of the Model 3 sedan, the Model Y sport utility vehicle, and the Cybertruck. Tesla recently halted sales of its flagship Model S and Model X vehicles to repurpose assembly lines at the Fremont factory in California. This space will now support the production of the Optimus humanoid robot currently in development.
A recent spring software update also contributed to the stock performance. The update introduces several new features including a simplified subscription process for the Full Self-Driving Supervised service and on-screen usage statistics. The system costs $99 per month in the United States and manages certain steering, lane change, and parking tasks under driver supervision without making the vehicles fully autonomous.
The company is simultaneously testing a limited fleet of driverless vehicles in Austin for a future Robotaxi ride-hailing service. The spring update integrates the Grok artificial intelligence chatbot originally developed by xAI and now held by SpaceX. Drivers can activate hands-free controls using a voice command.
Musk has promised fully autonomous vehicles for over a decade, a target that remains unmet. Market observers maintain that the continued evolution of hardware and software capabilities is essential for Tesla to achieve its long-term autonomous driving ambitions.