As Tesla stock rises on more robotaxi claims, what should investors do?

Tesla stock’s up 4% after Elon Musk – again – announced that robotaxis are imminent. But is this really happening and does it really matter?

| More on:

Image source: Tesla

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Elon Musk announced Wednesday (29 January) that unsupervised Full Self Driving will be arriving in the US within six months. And Tesla (NASDAQ:TSLA) stock’s up 4% as a result.

Even by Musk’s standards, this is bold. But the Tesla CEO’s been inaccurately forecasting the imminent launch of a robotaxi network for years, so should investors think this time’s any different?

Sales and profits 

For Tesla, keeping investors focused on the prospect of driverless vehicles – and not on its car sales – is probably a good thing. The results for the fourth quarter of 2024 were disappointing.

Expectations were low going into yesterday’s report. But the results still fell short of even those, as record vehicle deliveries resulted in an 8% drop in automotive revenues. Realistically, this probably doesn’t matter. Even if the results had been better than anticipated, car sales aren’t why Tesla’s market-cap‘s almost 14 times that of Ford and General Motors combined.

The reason also isn’t energy storage or affordable vehicles. The current share price is a reflection of investors believing the firm’s going to achieve its robotaxi ambitions – and they have to be right.

Is this really happening?

A lot has to happen for the kind of autonomous vehicles Tesla shareholders are imagining to become a reality. The most obvious thing in the company’s way is regulatory approval. 

This has the potential to be an ongoing issue. The proposal to start in Texas (where regulatory barriers are low) makes a lot of sense, but launching into different states will bring new challenges.

On top of this there’s still the issue of the technology itself. Tesla’s latest footage shows its cars driving themselves from the factory to the loading dock, but this isn’t new.

Showing it can operate in closed environments – as it did last year – is one thing. But there’s a big difference between this and driving around a town or a city. 

What if it doesn’t happen?

Given Musk’s track record and the challenges ahead, investors would have to be extremely brave to bet on Level 5 autonomous vehicles by June. The good news though, is that they don’t have to. 

If – for whatever reason – Tesla falls short of its targets, the stock might go down. But its shareholders will need to work out whether the robotaxi network has been delayed (yet again) or cancelled. Further delays probably don’t matter. Despite its CEO’s announcements, the company achieving its ambitions a year late will still make the stock an excellent investment at today’s prices.

The story’s different however, if Tesla doesn’t get there at all. In that situation, no amount of efficiency in car manufacturing’s going to make the business worth the current share price.

What should investors do?

Investors are doing exactly the right thing (and have been for some time). Rather than looking at the share price, they’re trying to figure out the underlying business, which is what will ultimately matter.

Given its CEO’s track record on robotaxi predictions, I think Tesla is way too hard to forecast – and that ought to make investors at least hesitate. But even if the firm misses its 2025 targets, I think the story still has a way to go.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Stephen Wright has positions in General Motors. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young Caucasian woman with pink her studying from her laptop screen
Investing Articles

Time to buy Nvidia shares before fresh all-time highs?

Nvidia shares began 2025 at an all-time high before a big drop in the last week or two. Our writer…

Read more »

Investing Articles

A top FTSE 100 share to consider for a Stocks and Shares ISA starter portfolio!

While not without risk, a lump sum in this FTSE 100 trust could prove a great way for Stocks and…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

I asked ChatGPT to name the best 5 UK shares to build wealth over 50 – and here they are!

Harvey Jones is looking to build a balanced portfolio of UK shares to fund his final years, and asked ChatGPT…

Read more »

Investing Articles

£10k invested in Scottish Mortgage shares after the DeepSeek crash is now worth…

Harvey Jones thought his Scottish Mortgage shares were heading for a bumpy ride when DeepSeek emerged last month. Then he…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

1 ex-penny stock up nearly 400% in my Stocks and Shares ISA! 

This writer is starting to take notice of a small-cap stock that is 'up' significantly in his ISA portfolio over…

Read more »

Investing Articles

The FTSE 100 index hits new highs! But will Legal & General shares outperform it in 2025?

Legal & General's share price has rocketed almost 8% so far in 2025. Can it continue to outstrip the surging…

Read more »

Investing Articles

Up another 8% in a week! So what’s stopping me from buying IAG shares? 

Harvey Jones is desperate to add high-flying IAG shares to his portfolio before they climb even higher but there's a…

Read more »

Happy couple showing relief at news
Investing Articles

The Bank of England’s slashed its growth forecast but the FTSE 100 doesn’t seem to care!

On the day the UK’s central bank halved its forecast for growth in 2025, the FTSE 100 reached a record…

Read more »