Bank of America revamps Tesla forecast before earnings

Tesla (TSLA) CEO Elon Musk, whom JPMorgan CEO Jamie Dimon once called “our Einstein”, has had plenty on his plate lately.

SpaceX’s (SPCX) latest Starship launch was aborted, sending the stock tumbling below its IPO price to $123.99 on Friday, 45% below its post-listing peak, according to Barrons.

But the stock market’s giving Musk little time to cry a river, with attention already shifting to Tesla’s looming second-quarter earnings report on July 22, 2026.

In a surprising turn of events, though, Tesla is entering earnings with stronger deliveries, an expanding robotaxi footprint, and expectations around Optimus and energy storage.

However, the headline figures might not be what matters most.

In a note shared with me, Bank of America analysts suggest the important change is developing beyond the obvious earnings figures, raising the stakes for Tesla’s outlook.

The big question is whether Tesla can turn those promises into numbers that investors can finally underwrite after multiple forgettable quarterly reports of late.

Bank of America raises Tesla estimates before the company reports second-quarter earnings

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BofA revamps Tesla outlook ahead of earnings

Bank of America just bumped its Tesla forecasts across 2026 through 2028 following the EV behemoth’s stronger-than-expected delivery performance.

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The bank also reiterated its Buy rating and $460 price target, implying nearly 17.6% upside from Tesla’s July 17 close of $391.06.

BofA lifted its 2026 revenue estimate to $107.8 billion from $103.4 billion, raised its 2027 estimate to $126.2 billion from $120.4 billion, and raised its 2028 estimate to $144 billion from $137.2 billion. EPS estimates jumped to $2.13, $2.71, and $3.39, respectively, representing increases of nearly 7%, 4% and 4%.

Clearly, BofA feels much more confident in Tesla’s near-term recovery as deliveries improve and robotaxi deployment expands.

Its quarterly model also points to acceleration, with adjusted EPS reaching $0.51 in Q2, $0.54 in Q3, and $0.68 in Q4.

The central thesis is that Tesla is entering the early monetization phase for robotaxis, FSD, Optimus, and energy storage.

Robotaxi is the immediate catalyst

BofA analysts identified Robotaxis as the primary catalyst that is spearheading Tesla’s bull case.

For perspective, Tesla currently has robotaxi operations in five core markets following its July 3 launch in Miami, with four additional markets reportedly in preparation.

However, Tesla has fallen short of its original target of nine cities by the first half of 2026, so it technically reached only five of the nine markets by the deadline. On top of that, San Francisco also continues to use a safety driver, so all five markets aren’t operating at the same level of autonomy.

Nevertheless, its Texas fleet surged by over 100 vehicles in one month, reaching 175, which is an impressive feat, but the absolute number remains modest. Investors will be focusing on repeatability and consistency as Tesla expands operations.

Moreover, BofA highlighted 22 reported incidents through mid-June, with no serious injuries or fatalities. Though somewhat encouraging, the mileage isn’t comparable to that of Waymo, with 2,000 incidents occurring over more than 200 million miles.

BofA’s pricing study found Tesla was 21% cheaper than Waymo, Uber, and Lyft in San Francisco, but Tesla’s estimated arrival times were three to four times longer.

Though one interpretation is that demand is exceeding supply, it could also reflect limited fleet density, geographic coverage, or dispatch efficiency.

Automotive results are improving

Naturally, the most obvious bright spot for Tesla was its surprising beat on Q2 deliveries as reported by TheStreet.

It reported roughly 480,000 deliveries, about 18% above the roughly 406,000 consensus estimate and up 25% year over year.

BofA compared the numbers with the estimated global battery-electric vehicle growth of 15%, suggesting Tesla gained around 95 basis points of global BEV share.

Also, Tesla’s share of the U.S. EV market reportedly rose 50 basis points year over year to 46.1%, and that share is expected to hold up as legacy automakers scale back lower-margin EV production.

Also, what’s heartening is that the increase in deliveries didn’t require another major round of price reductions, although pricing remains well below its 2022 peak.

On top of that, Tesla’s bull case gets additional support from the humanoids.

Musk gushed about them during the Q1 earnings call, saying,

“I think Optimus will be our biggest product, not just Tesla’s biggest product ever, but probably the biggest product ever.”

Tesla plans initial Optimus production at Fremont by late July or August, with Texas output expected in 2027.

BofA sees a gradual ramp, with meaningful volumes unlikely before then. Meanwhile, Tesla’s 25-GWh NatPower Megapack deal reinforces energy storage as a more established growth engine.

Tesla’s upside case comes with expensive assumptions

One of the big conundrums I’ve had over the years with Tesla is that it’s impossible to value it as a car company anymore.

BofA’a own $460 price target isn’t anchored to just Tesla’s auto earnings.

The bank values the automotive business at 8-times long-term enterprise value (equity value + net debt) to EBITDA, then applies separate DCF models running through 2040 to Robotaxi, FSD, Optimus, and Energy.

That builds a valuation story around assumptions investors can’t really test at this time. Additionally, BofA uses a 10.2% WACC (weighted average cost of capital) and 4.5% terminal growth rate for Robotaxi. Its FSD model assumes 4% long-term vehicle growth, 3% annual subscription growth and an international opportunity equal to the U.S. market.

Optimus carries even more aggressive inputs at 40% penetration of U.S. manufacturing and 35% of U.S. households. Energy is modeled with an 11.2% WACC and 3% terminal growth.

Particularly with the DCF analysis, the more it’s stretched out, the more the output depends on small changes in discount rates, terminal growth, and long-run margins. As my colleague Vuk Zdinjak noted, conventional DCF work focuses on roughly five to 10 years.

Extending Tesla’s model through 2040 makes the $460 target harder to audit, especially since BofA doesn’t disclose the values for each SOTP component.

Furthermore, the operating forecast is much less forgiving than the headline upside suggests.

Margins recover 4.6% in 2025 to 8.2% by 2028 but are still behind their 2024 levels until the final year. Another major concern is that the company’s free cash flow figure is expected to swing from a positive $6.2 billion in 2025 to a negative $10.3 billion in 2026 and remain negative through 2028.