Shares of Tesla, Inc. (NASDAQ: TSLA) slipped 0.3% overnight heading into Friday after Citizens initiated coverage with a cautious outlook on the company’s two most anticipated growth drivers.
Citizens launched coverage of TSLA with a “Market Perform” rating and no price target, citing the firm’s potential in physical AI as the primary reason for initiating at this time.
The research firm said the building blocks for robotics to materially advance are now in place, as AI and world models improve, faster chips enable better edge compute, and new robotic capabilities continue to emerge.
Citizens acknowledged that Tesla holds the necessary assets to advance physical AI, including leading autonomy models, its own silicon, advanced manufacturing, state-of-the-art batteries, and CEO Elon Musk’s engineering capabilities.
The firm called the automation of the physical world one of the largest opportunities across its coverage universe, but warned that Tesla’s “grand vision will take time to achieve.”
With a conservative stance on Tesla’s new growth engines, Citizens said its 2027 and 2028 revenue estimates sit 4% and 12% below consensus, respectively, suggesting the market may be pricing in faster progress than is realistic.
Citizens also flagged that Optimus will introduce a new level of production complexity, with delays and higher spending expected as Tesla enters what the firm described as an Optimus investment cycle.
That cautious view aligns with recent comments from Musk himself, who said on X: “No, Optimus production will be extremely slow at first, as everything is new. This is not like making a car.”
Tesla is converting former Model S/X manufacturing space at Fremont for initial Optimus production, with limited output expected to begin in late July or August 2026, while a larger dedicated factory at Giga Texas targets higher-volume production around summer 2027.
Musk has previously noted that Optimus includes 10,000 unique parts, making early output rates difficult to predict, with early units expected to focus on simpler factory tasks before expanding into more complex applications.
On the Robotaxi front, Tesla’s rollout continues at a deliberately controlled pace, with its Miami fleet now operating unsupervised, following earlier launches in Austin, Dallas, and Houston.
Miami’s initial geofence covers a compact area in western Miami-Dade County, excluding downtown Miami, Miami Beach, the airport, and most of Coral Gables, reflecting a cautious expansion strategy.
Tesla’s Robotaxi service remains far from mass scale, with only about 59 vehicles operating across Austin, Dallas, and Houston as of last month, alongside long wait times, cancellations, and limited availability weighing on broader commercialization.
Despite the cautious analyst note, TSLA rallied 3% on Thursday and was tracking toward a second consecutive winning week, though the stock remains down about 10% year-to-date, making it the second-worst performer among its “Magnificent Seven” peers.
Retail sentiment on Stocktwits remained “bullish” amid normal message volume, with one user writing: “$TSLA This Quarter is going to be a very solid Earnings + Cybercabs news + Optimus in the 2h half of the year!!”
Tesla’s next major catalyst is its Q2 earnings report, scheduled for release after market close on July 22.
