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Tesla (NASDAQ: TSLA) remains one of the most volatile stocks out there. Indeed, according to Yahoo Finance, Tesla’s beta is 2.4, indicating that it’s more than twice as volatile as the broader market. That’s highly unusual for a mega-cap stock.
But had someone invested in Tesla a decade ago, then departed to a desert island, they would have made 20 times their money while away. Very few stocks have returned this much over 10 years.
In October 2015, just after our imaginary Robinson Crusoe left for the island, CEO Elon Musk predicted that fully autonomous cars were “about three years” away. That timeline proved overly optimistic, as we’re yet to see full self-driving Teslas on the road.
But according to Bloomberg, the launch date for AI-powered autonomous taxis — or robotaxis — is 12 June in Austin, Texas. It will cautiously involve a small fleet of Model Ys, before ramping up to thousands of cars, if successful.
With Tesla stock currently 31% below its December peak, should I invest now before the robotaxi launch? Let’s find out.
Boiling it down
In 2024, the company’s sales were basically flat on the year before, and analysts don’t expect electric vehicle (EV) sales to grow this year. Profits and margins have weakened, with most of Europe proving a particularly tough market recently.
One bright spot has been the company’s energy storage business, which grew 67% to $2.7bn in Q1. However, the firm did warn that “the current tariff landscape will have a relatively larger impact on our energy business compared to automotive“. So there’s a risk growth tails off in this division over the next year.
A definitive positive is Musk stepping back from politics to focus on business full time. He recently criticised President Trump’s proposed tax and spending legislation, calling it a “disgusting abomination“. I’m sure most shareholders would welcome a less political Musk.
Looking ahead, Tesla plans to begin production of its Semi truck by the end of the year. So that could be a big driver of growth, as it were.
But for me, it all boils down to the robotaxi network now. It’s this huge potential that’s keeping Tesla valued as a $1trn+ company.
Grand vision
It’s easy to get excited about robotaxis. As Musk said in the Q1 earnings call: “Once we can make it…work in a few cities in America, we can make it work anywhere in America. Once we can make it work in a few cities in China, we can make it work anywhere in China, likewise in Europe, limited only by regulatory approvals.”
This is the advantage of having a generalised vison-based AI solution — it’s a theoretically much more scalable technology than LiDAR/pre-mapped routes. And giving Tesla owners the option to add their cars to the network to earn passive income is a revolutionary idea.
My fear here though is that all this potential is already priced into the stock, and then some. It’s trading at a sky-high 12 times sales and 156 times forward earnings.
There’s also the fact that investors often buy the rumour (it’s happening) and sell the news (it’s happened). This dynamic could play out after 12 June.
So while I’ll certainly be keeping an eye on the Tesla robotaxi launch, I won’t be doing so as a shareholder.
