Tesla’s future rests on a highly ambitious wager: It plans to transform itself from an electric car manufacturer into a major artificial intelligence technologies firm. The company’s new vision, encompassing robotic taxis and humanoid robots, is reshaping investment expectations in dramatic fashion – and has engendered one of the most hotly contested stock pricing controversies on Wall Street.
We’re seeing a classic car company with some challenges to overcome. This was noted by a Bloomberg analyst. This was true since the expiration of the federal tax credit of up to $7,500, which was valid all along, a near-term sales contraction of as much as 38% in overall U.S. sales of EVs was anticipated by analysts. Tesla’s substantial 497,000 deliveries of vehicles in Q3 by Tesla was attributed to buyers wanting to take advantage of the tax credit before its expiry, a 7.5% year-over-year growth. “Yeah, we probably could have a few rough quarters… Q4, Q1, maybe Q2,” Elon Musk predictably forecasted regarding the coming sales effects of the expiration of the tax credit. Effectively, Tesla has just raised the price of its premium brands through leasing and introduced “Standard” versions of its Y and 3 models, trimmed down with smaller batteries and less features in an offer to cut prices by $5,000 to $5,500. However, through such measures just to maintain market share, it appears that the Company’s auto gross margins have been decreased even further to 15.6% from 17.05% in the previous year period.
In this context, Tesla’s AI projects are being portrayed as a new growth engine for Tesla. Tesla is piloting its autonomous robotaxi without safety drivers in Austin, Texas. Tesla’s Full Self-Driving (FSD) solution, at version 13, boasts a camera-centered sensor stack and neural networks that have been trained on data from over 2 million cars, with a total FSD mileage of 1.3 billion miles. ARK Invest’s analysis shows that Tesla is collecting autonomous driving data at least 110 times faster than Waymo, which could result in faster regulatory breakthroughs for Tesla’s solution. Another significant force behind this technology front is its stress on safety considerations. In this context, according to ARK Invest, Tesla’s solution operates 5 times safer than a human-driven Tesla and 16 times safer than the average car operating with FSD.
Cathie Wood is absolutely sure about the revolution and projects a stock price of $2,600 in 2029, which is a staggering 436% surge from the end of late 2025, and thinks that just the robot taxi market represents an $8-10 trillion opportunity in itself. Wood’s plan is that Tesla will own and operate the robot taxi fleet in the beginning and retain all profits per mile but later hand over the ownership to third-party companies at an ~80% market share in Cathie Wood’s plan. According to Cathie Wood’s plan, in the ARK scenario, near-90% of Tesla’s enterprise value and earnings in 2029 will come from robot taxies with EVs contributing ~10%. Even the worst case in Wood’s Monte Carlo simulation projects a stock price of $2,000 with a bull case at $3,100.
Second, the Optimus Robot: While it’s also not a driving engine in the ARK model for the shorter-term timeline, it can be said that it’s another area with very high potential. Elon Musk’s projection is that it could account for 80% of the value of Tesla’s business in the end. There are still some technological challenges that would need to be overcome. For example, for these robots to be useful as humanoids would require them to have very high control capabilities for balance, dexterity for manipulation tasks, and low power consumption for actuation. But Tesla’s strength could lie with the integration of solutions it already possesses in the areas of AI chips, manufacturing, and robotics. In the area of industry applications, the Optimus Robot could substitute up to 10% to 20% of the manpower that performs some specific tasks. This would save them $3-4 billion every year by 2029. For the general market of humanoid robots that they could get into later, they could open the door on a market worth a combined $24 trillion with half of that from the manufacturing industry.
Tesla stock prices ensure this is absolutely a speculation play on their AI capabilities. The reason why Tesla stock prices are this lofty is their forward P/E of 296, which is uniformly higher compared to the overall automobile industry of 19.33 and even most tech stocks in this sector. It has been estimated that Tesla’s $1.6 trillion stock price breakdown shows $500 being referred to as the “Musk premium,” named for Musk’s commitment to his moon shot ideas, and another $250 billion being estimated on the discounted cash flow method.
The competition is heating up, says Mavadia. Waymo, Baidu, and Xpeng are moving on their automation plans; and the LiDAR-embedded models in Rivian cars hint at the possible weaknesses in Tesla’s reliance on cameras only. It has not been approved yet to deploy on a full scale, said Mavadia, a voice in the wilderness, and public concern about its safety is another hold-back on this developing tech. In electric vehicles, continues Mavadia, talking about Tesla and their electric vehicles specifically, Tesla’s share of the pie is steadily being eroded by the likes of the Chinese company BYD and others like Xiaomi and Volkswagen.
Now Tesla’s hard goal here is very simple: From hard sales on their cars to a stable and very lucrative software business in AI in their hard-to-reach areas of business enterprise and even beyond this it could turn into a behemoth in software and services, and completely justify their stock prices for Tesla and other stock prices of their competitors. There could be a possible complete readjustment in stock prices if they fail to meet their targets of such a lofty goal such as this forecasted positively by Wood here in this article. It’s a stock dilemma: It could easily qualify to be a visionary in the trillion-dollar business of the clouds but purely on its own separate premise and ideology on its innumerable and endless aerosol patterns on its virtually limitless scientific horizons to spell out its clear eventual grave business and scientific realities in its very decreasing stock prices to completely justify its stock prices on far-off and hazy stock visions to beat its far-off and hazy scientific ends in their very opposing ends!
