Tesla Stock Performs Despite Challenges

Over the past year, EV-pioneer Tesla ((TSLA Quick QuoteTSLA - Free Report) ) has got the proverbial “kitchen sink” thrown at it with a plethora of reputational issues and controversies, soft car sales, tariff impacts, and missed deadlines. Some of the problems that the Zacks Rank #5 (Strong Sell) stock has faced include:

• Elon Musk Reputation: Earlier this year, Tesla faced boycotts and vandalism from the left after CEO Elon Musk became embroiled in political backlash due to his political work under the “Department of Government Efficiency” (DOGE) cut government programs like US AID. More recently, Musk faced backlash from the right after getting into a social media spat with President Trump over the “Big Beautiful Bill.” (Musk and Trump have since made amends).
• Sales Slump: Tesla sales have fallen across key markets like Europe and China over the past few years while profit margins have declined. Meanwhile, tariff uncertainty has disrupted the Tesla supply chain, threatening to impact gross margins further negatively.
• Intense Competition: Tesla faces competition from subsidized Chinese competitors like Li Auto ((LI Quick QuoteLI - Free Report) ), Nio ((NIO Quick QuoteNIO - Free Report) ), and BYD ((BYDDY Quick QuoteBYDDY - Free Report) ), among others.

Despite the many challenges Elon Musk and Tesla have had to overcome, the TSLA shares are up about 75% over the past twelve months, trouncing the S&P 500’s 9.3% gains.

Image Source: Zacks Investment Research

The reason for the robust performance is that investors are beginning to discount the Tesla’s long-awaited and delayed Tesla Robotaxi. But are investors suffering from “hopium,” or are they justified in doing so?

The First Tesla Robotaxi is Spotted in Austin

Earlier this month, the first driverless Tesla Model Y Robotaxi was spotted in Austin, Texas, the home of CEO Elon Musk. Officially, Musk and the team plan to conduct a limited launch “tentatively” on June 22. Alphabet’s ((GOOGL Quick QuoteGOOGL - Free Report) ) Waymo Robotaxi service has the first-mover advantage over Tesla. Waymo has already launched its geofenced service across several US cities, including Los Angeles, San Francisco, Phoenix, and Austin.

Can Tesla Robotaxis Catch Up to Waymo?

With Waymo conducting approximately a quarter million paid Robotaxi rides per week, it’s easy for investors to get lulled into the notion that Waymo will dominate the Robotaxi market. However, Tesla has three distinct advantages, including:

1. Robotaxi Cost: Unlike Tesla, which mostly relies on AI and cameras for its “Full Self-Driving” capabilities, Waymo relies on expensive lidar technology. In fact, Tesla’s autonomous vehicle cost is ~85% lower than Waymo’s, according to a Bloomberg Intelligence Analysis.
2. Robotaxi Scalability: Waymo aims to manufacture 2,000 Waymo vehicles over the next year. In contrast, Tesla currently produces roughly one million Model Y, FSD-capable vehicles per year. In a recent video, internet personality Farzad Mesbahi explained that “Tesla can manufacture the same amount of Robotaxis that Waymos is looking to manufacture over the next year in about five hours.”
3. Autonomous Technology: Bloomberg technologyhost Ed Ludlow says, “Tesla’s Full-Self Driving (FSD) technology, while classified as Level 2 like most other vehicles offering autonomous features, could be closer to reaching full autonomy than peers. Tesla’s manufacturing capability is a core differentiator vs Waymo, who faces vehicle production constraints. No other incumbent US or European carmaker offers full self-driving capabilities on city roads.”

In conclusion, while Waymo is off to an early start in the Robotaxi wars, Tesla has significant advantages including cost, scalability, and autonomous technology. The Robotaxi war is still in the first inning and when I think of Tesla I can’t help but be reminded of the quote, “Slowly, then all at once.”