The dawn of 2025 painted a bright picture for Tesla (NASDAQ: TSLA) with stocks priced at $428. However, during CEO Elon Musk’s tenure within the Trump administration’s Department of Government Efficiency (DOGE), his focus was divided, leading to a slippage in Tesla’s stock privilege. His return to the automotive enterprise saw a partial recovery, yet Tesla’s shares have declined approximately 20% this year and were valued at $325 as of June 16.
Such a markdown has provoked speculation amongst investors regarding the appropriateness of investing in Tesla at this juncture. A swift juxtaposition of the manufacturer’s strengths and weaknesses provides valuable insight. In light of current circumstances, refraining from purchasing the stock may be a prudent course of action.
It’s true that Musk lays ambitious objectives for his companies, some considered lofty or even extravagant. Despite potentially overpromising and under-delivering on launch dates, nobody can shy away from Tesla’s undeniable triumphs in the electric vehicle sector, where many predicted it would crumble.
Lending credibility to Musk’s predictions about Tesla’s shift towards robots and autonomous vehicles might indeed be worthwhile. The lucrative nature of both sectors is hard to dispute. Analysts at Morgan Stanley projected that the humanoid robot industry would be worth around $5 trillion by 2035.
Whether Tesla can tap into a healthy portion of this market, say 10%, is dependent on its ability to stay ahead of the game. With an aim to manufacture 5,000 Optimus bots this year and 50,000 next, is testament to the fact that Tesla is setting itself up to be a prominent player in the robotics market.
Then we shift our attention to the subject of autonomous vehicles (AVs). Tesla’s plans for a Robotaxi service in Austin, Texas faced a temporary hold. It’s easy for skeptics to point to this delay as a traditional Tesla gaffe, however, Tesla’s long-term vision is to construct its own autonomous vehicles, and concurrently, allow owners to lease out their Teslas for AV services.
Tesla’s wager is that these EVs will stake a claim to a chunk of the burgeoning $2 trillion (by 2030) AV market. Given that the brand leads the EV sector in the U.S., it isn’t entirely farfetched for it to find a unique spot in the nascent domain of autonomous vehicles.
However, in spite of its potential, significant apprehensions surround Tesla’s future. The primary concern lies in a dip in Tesla’s baseline operations, the selling of electric vehicles. During the first quarter of 2025, automotive revenue plummeted by 20% and net income decreased dramatically by 71%, amounting to $0.12 per share.
Possibly, the decline is associated with the damage Tesla’s brand faced when Musk accepted the position at DOGE, endorsing certain ideologies that were at odds with the expectations of Tesla’s customer base. Future brand recovery remains uncertain and the timescale for the same is undetermined.
The complicating factor tormenting the brand is the drop in EV sales in the U.S., and concurrent foreign competition. Indeed, Tesla’s international EV sales are diminishing under the pressure of competitors from places like China, as companies such as BYD are surging ahead in some markets.
In light of these uncertainties and potential setbacks, Tesla’s endeavor to bank its future on robots and AVs emerge as risky moves. Both arenas are largely untested waters and there are no assurances that once Tesla potentially creates suitable technology, there will be substantial market demand for its bots or autonomous vehicles.
If you’re contemplating buying stock in Tesla, it’s advisable to adopt a ‘wait and watch’ strategy. You’d need to observe how Tesla’s plans for autonomous vehicles and its prospects in robotics develop. It’s necessary for vehicular sales to bounce back, net income to burgeon and for Musk to demonstrate his commitment to Tesla before it’s safe to invest.
While it’s not a definitive no-go on Tesla, it’s undeniable that there are plenty of hurdles the company needs to clear before becoming a preferred choice for investors. Meanwhile, it’s necessary to acknowledge that these challenges do not entirely discard Tesla’s potential to excel in the fields of AVs and robotics.