Tesla's EV Sales Stumble as Market Pivots to Robotaxi Dreams

Tesla’s electric vehicle business is facing headwinds that industry advisors and analysts can’t ignore. The company’s fourth-quarter 2025 deliveries hit 418,227 units, falling short of Wall Street consensus expectations by roughly 2% and marking a concerning 16% year-over-year decline. For the full year, Tesla delivered 1.64 million vehicles, representing a 9% drop from 2024.

The Core Business Under Pressure

The decline reflects a challenging landscape for EV makers. The Trump administration’s elimination of the $7,500 federal EV tax credit—a key purchase incentive—has dampened consumer demand. Meanwhile, global competition intensified as BYD recently surpassed Tesla as the world’s largest EV manufacturer.

Tesla’s delivery mix tells an interesting story: 97% of fourth-quarter shipments were Model 3 Sedans and Model Y SUVs, while the Model S, Model X, and Cybertruck combined contributed minimal volume. Market advisors note this concentration risk, though the company maintains it reflects strategic prioritization.

Where Investors Are Really Looking

Despite EV softness, Wall Street has largely moved past these concerns. The real attention has shifted to Tesla’s emerging robotaxi operations and Optimus humanoid robots—initiatives that many believe will reshape the company’s value proposition.

Tesla’s self-driving robotaxi fleet soft-launched in Austin and San Francisco last year, with expansion to five additional cities planned. A significant milestone came in mid-December when CEO Elon Musk confirmed that some Austin robotaxis achieved fully autonomous operation without supervision. According to market analysis, Tesla’s manufacturing advantage could allow it to deploy robotaxis at substantially lower costs than competitors like Waymo.

Leading analysts paint an ambitious picture: Wedbush’s Dan Ives projects Tesla robotaxis operating across 30 cities by end-2026. Meanwhile, Ark Invest’s Cathie Wood maintains a $2,600 price target for 2029, with the robotaxi business potentially comprising 90% of Tesla’s enterprise value and earnings by that date. The Optimus humanoid robots represent an additional upside scenario, with broader production potentially saving consumers significant time on household tasks.

The Valuation Question

Tesla’s $1.5 trillion market capitalization increasingly depends on these future growth drivers. However, market advisors highlight a critical tension: the stock trades at over 200 times forward earnings—a premium that assumes flawless execution on robotaxis and humanoid robots.

The fundamental challenge remains unresolved: Can Tesla perfect autonomous vehicle technology and achieve meaningful adoption rates? The timeline and commercial viability of these initiatives remain uncertain. At current valuation multiples, the risk-reward calculus presents material downside scenarios that conservative investors should carefully consider before increasing exposure.

The coming months will be crucial in determining whether Tesla can justify its lofty valuation through concrete progress on robotaxi deployment and Optimus commercialization.