High Gas Prices Could Boost Tesla and EV Market, Analyst Suggests

Stifel has reaffirmed its bullish stance on Tesla (NASDAQ: TSLA), highlighting the electric carmaker's impressive margins and the upside from rising gasoline prices. Analyst Stephen Gengaro points out Tesla's fourth-quarter gross profit soared to $5.01 billion, well above expectations, with margins ticking up to a two-year high despite tariffs and fixed-cost challenges.

Gengaro draws attention to Tesla's advancements in Full Self-Driving (FSD) and Robotaxi projects, which remain pivotal to the company's long-term value proposition. The automaker now boasts roughly 1.1 million paying FSD subscribers worldwide, transitioning future growth toward subscription models that trade short-term margin softness for recurring, higher-margin revenue streams.

Contemplating the broader picture, Stifel underscores the macroeconomic backdrop, noting that ongoing volatility in the Iran conflict and consequent elevated petrol prices may act as a catalyst for electric vehicle adoption. The logic: high fuel expenses make EVs more appealing to consumers looking to lower running costs.

The Robotaxi service, currently active in the San Francisco Bay Area and Austin, has plans to expand into multiple major cities including Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas over the next several months. This rollout is seen as a potential game-changer in autonomous mobility services.

On the capital expenditure front, Tesla is budgeting over $20 billion in 2026. This funding supports operations and builds across a diverse portfolio of facilities such as a lithium refinery, LFP battery factory, and several vehicle and robotics production sites including the Cybercab, Semi, new Mega, and Optimus factories. Expansion of AI computing power and the Robotaxi & Optimus fleets are also on funding plans.

Stifel's revised EBITDA forecasts anticipate $16.7 billion in 2026 and $21.9 billion in 2027 for Tesla, reflecting confidence in the company's growth trajectory and the broader expansion of EV penetration globally. These projections suggest that Tesla is positioned to capitalize not just on vehicle sales but also on emerging technologies and recurring revenue from software and services.

Fuel price dynamics remain an unpredictable factor amid geopolitical tensions. Should gasoline remain costly, electric vehicle makers like Tesla could stand to benefit indirectly. But whether this encouragement translates into sustained market gains or temporary spikes remains an open question.

As Tesla ramps up both production and technological capabilities, the balance between managing capital outlays and capturing margin improvements will be a key element to watch. The market may be in for a bumpy ride with so many moving pieces, from tariffs to raw materials to regulatory shifts, all influencing the final outcome in this electrified revolution.