Tesla’s robotaxi initiative has hit a significant milestone, but the stock’s valuation leaves little room for mistakes.
Tesla’s robotaxis have commenced operations in Austin, with no safety monitors present in the vehicles, according to CEO Elon Musk’s remarks on X this week.
This development marks an important step for the electric vehicle sector. The pilot version of Tesla’s self-driving ride-sharing service, known as Robotaxi, debuted in Austin last summer. Initially, the robotaxis weren’t fully autonomous and had a safety operator ready to intervene if necessary. Now, Tesla seems to be moving towards deploying these vehicles without safety operators.
News about the robotaxis has piqued investor interest, causing the stock to rise more than 4% on Thursday.
With growth stocks buzzing, are you considering an investment?
Progress in Robotaxis
Since launching in Austin last summer, Tesla’s robotaxi service has shown consistent improvement. The company announced in its Q3 2025 update that it has broadened both the geographic reach and the number of vehicles available in Austin. Additionally, they’ve initiated a ride-hailing service in the Bay Area, utilizing the same robotaxi technology.
Eliminating human monitors from the vehicles is a noteworthy advancement. This change might be the clearest indication for investors that Tesla’s robotaxi venture could succeed. The absence of safety riders suggests that Tesla is confident its system can manage a variety of real-world situations without needing immediate human intervention.
The optimistic outlook for Tesla’s stock hinges on the belief that, eventually, nearly all of its vehicles—save for older models lacking the necessary equipment—will be capable of self-driving. The company equips every vehicle with hardware it believes will be essential for full autonomy. Currently, Tesla’s cars are able to operate with supervised automated capabilities, which resemble self-driving but still require active driver engagement and occasional intervention. Once Tesla perfects its software, vehicle owners could not only enjoy a genuine self-driving experience but also utilize their cars in robotaxi services, potentially generating revenue for themselves and Tesla.
Valuation and Market Challenges
On the other hand, Tesla’s core business is facing challenges. In 2025, the company delivered over 1.6 million vehicles, which is a decrease from approximately 1.8 million in 2024, representing a 9% drop year-on-year.
Recent trends are not encouraging either. Deliveries in Q4 2025 dropped to 418,227 from 495,570 in Q4 2024, marking a year-over-year decline of about 16%.
Moreover, Tesla’s financial performance has been underwhelming. While fourth-quarter figures aren’t finalized yet, the third-quarter net income fell by 37% from the previous year to roughly $1.4 billion.
The struggles in Tesla’s core business might explain its high price-to-earnings ratio of around 300, which reflects the market’s expectation that Tesla will soon solve the autonomy challenge, leading to substantial sales and profit growth.
However, there are risks linked to this optimistic scenario. The software might not advance as quickly as hoped, possibly delaying the widespread launch of the Robotaxi service. Even with technological advancements, the expansion rate could be affected by safety results and regulatory considerations. Lastly, the financial prospects of Tesla’s self-driving technology and robotaxi service might not live up to investors’ expectations.
So, with the news of Tesla testing a robotaxi without a safety driver, should this growth stock be on your radar? It certainly bolsters the long-term positive outlook, but I believe investors should tread cautiously. With the stock already reflecting high growth expectations and delivery numbers looking shaky, I personally would hold off on buying at this time, hoping for a more favorable entry point later on.
