Tesla’s stock is experiencing a surge of bullish sentiment on Wall Street, fueled by growing optimism surrounding the company’s ambitious Robotaxi project. Wolfe Research analyst Emmanuel Rosner recently issued an “Outperform” rating on the stock, forecasting a potential $250 billion in revenue for the Robotaxi business by 2035. This projection, however, comes with caveats, as analysts also acknowledge the significant risks and capital expenditures associated with bringing the autonomous vehicle service to scale.
Rosner’s model hinges on several key assumptions about the future of the ride-hailing market. He estimates that by 2035, autonomous vehicles will account for 30% of the market, with Tesla capturing 50% of the robotaxi fleet. Based on a projected price of $1 per mile, this translates to a potential equity value of $2.75 trillion for Tesla’s Robotaxi operation. As of , Tesla’s market capitalization stood at $1.5 trillion, with the stock trading at $411.69, down slightly from the previous day.
The enthusiasm surrounding Robotaxi is not without its detractors. Several analysts caution that Tesla’s current valuation already reflects a degree of optimism regarding its AI capabilities. The company’s gross margin, currently at 18.03%, and its substantial capital needs for research and development, pose challenges to achieving the projected revenue figures. The company ended 2025 with $44 billion in cash and investments, a 20% increase from the previous year, which will be crucial for funding the expansion of its robotaxi service and the production of its Optimus humanoid robots.
The path to realizing the Robotaxi vision is fraught with challenges. Beyond the technological hurdles of achieving full autonomy, regulatory approvals and the scalability of the fleet remain significant obstacles. Competition from established players like Alphabet’s Waymo, which is already operating robotaxi services in several cities, adds another layer of complexity. Waymo’s existing operations demonstrate a tangible revenue stream, a contrast to Tesla’s current reliance on projections.
Rosner identifies several key catalysts for Tesla in , including the launch of the Optimus humanoid robot in the first quarter and the Cybercab in April, alongside further updates to Tesla’s Full Self-Driving (FSD) software. These launches are viewed as critical validation points for Tesla’s strategic shift towards a high-margin service-based business model. However, Wolfe Research also forecasts potential losses of $500 million in as Tesla scales its Robotaxi infrastructure, suggesting investors may need to overlook near-term earnings pressure.
The broader market context also plays a role. Tesla’s forward price-to-earnings (P/E) ratio currently stands at a high of 200, reflecting substantial investor expectations. This valuation is particularly sensitive given the recent decline in the company’s electric vehicle sales and the ongoing capital expenditures required for its AI initiatives. The high P/E ratio suggests that a significant portion of the potential upside from Robotaxi is already priced into the stock.
Despite the risks, the potential rewards of a successful Robotaxi launch are substantial. Autonomous vehicles represent a potentially transformative market, and Tesla’s established brand recognition and technological expertise position it as a key contender. However, analysts emphasize that the realization of this potential is contingent on overcoming significant technological, regulatory, and financial hurdles. The success of Robotaxi will ultimately depend on Tesla’s ability to navigate these challenges and demonstrate a clear path to profitability.
While the long-term outlook for Robotaxi remains promising, a more conservative approach to Tesla’s stock may be warranted in the near term. Investors should closely monitor the company’s progress in scaling its autonomous vehicle technology, securing regulatory approvals, and achieving profitability. Until these milestones are reached, Tesla’s stock is likely to remain subject to volatility and uncertainty.
