Tesla Shares Rise Following Barclays Upgrade

Tesla shares rose approximately 6% on Monday after Barclays upgraded the electric vehicle manufacturer and raised its price target, pointing to a combination of improving operating performance and the possibility of a merger with SpaceX.

Lead analyst Dan Levy moved his rating to Overweight from Equal Weight and increased his target to $450 from $370. At the time cited in the report, Tesla was trading at $395.39, up $23.17, or 6.22%.

Levy said the combination of improving core business performance, progress in robotaxi operations and the potential premium from a SpaceX transaction created an attractive risk-reward profile.

The revised outlook reflects both Tesla’s existing operations and a possible corporate transaction. However, the merger remains under discussion, and the valuation premium anticipated by Barclays depends on a deal proceeding.

SpaceX Merger Could Reshape Shareholder Control

Elon Musk disclosed on SpaceX’s earnings call that both companies had established special committees to discuss a potential combination. He also said there was considerable merit in bringing the businesses together.

Barclays considers an all-stock acquisition of Tesla by SpaceX the most likely structure. Under its illustrative scenario, a transaction at $450 per Tesla share would represent a 20% premium and require SpaceX to offer approximately 3.1 of its shares for each Tesla share.

The proposed structure would leave Musk with approximately 53% of the combined company’s voting power, according to Barclays. Musk currently owns about 48% of SpaceX and holds approximately 82% of its voting power through super-voting Class B shares. He owns around 20% of Tesla and has previously said he wants to hold approximately 25%.

Levy described Musk’s desire to consolidate control as a crucial factor behind the potential transaction.

Shareholder approval remains a significant consideration. Barclays said approval would require more than 50% of total outstanding shares, with abstentions counting as votes against the proposal. The bank expects a merger vote could pass but does not consider approval certain. Its $250 downside case assumes no transaction occurs.

Vehicle Deliveries and Full Self-Driving Progress

Barclays also identified improving fundamentals in Tesla’s core automotive business. The company is forecast to increase deliveries in 2026 following two consecutive annual declines.

The bank projects deliveries of 1.80 million vehicles in 2026 and 1.92 million in 2027. Full Self-Driving adoption has also increased: the system was included in more than 75% of North American deliveries during the third quarter, approximately 20 percentage points higher than in the second quarter.

Exports from Tesla’s Giga Shanghai facility account for around 25% to 30% of global volume, providing another important component of its manufacturing and distribution network.

Energy Storage and Robotaxis Add Growth Potential

Tesla’s energy storage business is another area of strength. Management said the company was nearly sold out of Megapack capacity for 2027, supported by demand from data centers. Barclays expects deployments to grow by at least 50% next year as Megafactory Houston increases production.

Robotaxi operations have also expanded. As of October 18, Tesla’s fleet had recorded approximately 3.1 million unsupervised miles across six cities, up from around 400,000 miles in mid-July. Weekly miles increased from approximately 70,000 to 560,000 over the same period.

Barclays does not expect robotaxis to make a material financial contribution in the near to medium term. However, the bank believes operational progress across existing cities could influence investor sentiment toward the stock.

What Investors Should Watch Next

The main variables are whether SpaceX and Tesla advance merger discussions, whether shareholders ultimately approve a transaction and whether Tesla sustains improvements in deliveries, energy storage and robotaxi operations.

For investors, the distinction between operating performance and merger-related expectations remains important. Tesla’s core business may continue to improve, but the additional valuation premium envisioned by Barclays depends on a transaction that has not yet been finalized.