Chicago, IL – June 3, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Tesla TSLA, Alphabet GOOGL and BYD Co Ltd. BYDDY.
Robotaxis — once a sci-fi fantasy — are now becoming a reality. And Tesla, the world’s most valuable EV company, is finally stepping into the arena. The company is preparing to launch its first robotaxi service in Austin, TX, with a tentative start date of June 12.
Using its in-house app, Tesla will allow users to hail a driverless ride, powered entirely by its Full Self-Driving (FSD) software. Tesla CEO Elon Musk recently shared that the company has already begun testing Model Y vehicles — with no one in the driver’s seat — on public roads in Austin — and with no reported incidents. He also claimed these vehicles will even deliver themselves to customers starting next month.
While all this sounds exciting, it’s worth pausing to take a closer look. Tesla has not shared enough information about how this robotaxi service will actually work. For instance, how many vehicles will be deployed? Will they operate in all weather conditions? And how safe are these driverless Tesla cars really? Given Tesla’s history of bold promises and delayed rollouts, investors would be wise to keep expectations in check.
TSLA stock started off 2025 on a rough note, facing a lot of challenges. But over the past month, shares have jumped 23%— likely fueled by optimism surrounding the upcoming robotaxi launch. The hype may already be priced into the stock. Whether Tesla can deliver on the promise remains to be seen.
So, should you buy the stock ahead of this major milestone? Let’s take a deeper look.
As Tesla’s robotaxi service prepares to hit the road, competitors like Alphabet already hold an early lead in the driverless race. Alphabet’s Waymo currently dominates the U.S. robotaxi market. Waymo is already running commercial services in four U.S. cities—delivering over 250,000 paid rides per week. In fact, Alphabet has committed to investing $5 billion into Waymo over the coming years.
Waymo has also taken a much more cautious and transparent approach compared to Tesla. It has spent months collecting street-level data, testing its vehicles in controlled environments, and publishing detailed safety studies. Tesla, in contrast, has largely relied on the bold statements of CEO Elon Musk, with little public data or independent safety validation to back them up.
Even U.S. regulators are looking for more clarity. The National Highway Traffic Safety Administration (NHTSA) has sent Tesla several questions about the upcoming launch. This comes as Tesla’s earlier driver-assist features—Autopilot and FSD—have been linked to hundreds of incidents and over 50 reported deaths.
One area where Tesla could have a competitive edge is cost. Waymo’s vehicles are built with high-end sensors like LiDAR and radar, bringing the per-vehicle cost to around $180,000. Tesla’s robotaxis, on the other hand, rely solely on cameras and computer vision, cutting estimated production costs to about $50,000. If Tesla's tech proves to be safe and reliable, that pricing advantage could make it easier to scale the service.
Still, despite the buzz, many critical questions remain unanswered as Tesla approaches its robotaxi debut. Besides, the company is already facing growing challenges in its core EV business.
Tesla is facing declining deliveries across key markets as competition intensifies, from both legacy automakers and aggressive new EV entrants. CEO Elon Musk’s political involvement has also drawn criticism, distracting attention from core business operations. Although Musk has since stepped back from his role in the government's Department of Government Efficiency (DOGE), much of the reputational damage may already be done.
As Tesla’s sales lose momentum, China’s EV giant BYD Co Ltd. is gaining ground fast. In the first quarter of 2025, BYD delivered 416,388 battery electric vehicles, beating Tesla’s 336,681 units for the second consecutive quarter, cementing its position as the world’s top EV maker. With rapid expansion and cutting-edge technology, BYD is posing a serious challenge to Tesla’s long-held dominance, while Tesla’s brand image appears to be losing some of its shine.
To boost demand, Tesla has been offering deep discounts. However, this strategy is weighing on its automotive profit margins. Musk already walked back the company’s 2025 vehicle growth target from 20–30% to more modest expectations on the fourth-quarter earnings call. Now, amid global tariff uncertainty and persistent challenges in China, Tesla hasn’t even reaffirmed those lowered targets. The company says it plans to revisit its 2025 delivery guidance in its next quarterly update.
Discouragingly, estimates for Tesla have also been southbound.
From a valuation perspective, Tesla appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 10.69, higher than its industry’s 2.77.
This premium is difficult to justify based on fundamentals alone. The market is pricing in major breakthroughs in high-risk, unproven areas like autonomous driving and humanoid robotics—bets that are far from guaranteed to pay off.
Tesla’s upcoming robotaxi launch may sound like a game-changer, but the details remain murky, and the risks are real. While the company’s cost-driven approach could offer scale advantages down the road, it still lags competitors like Waymo in real-world testing, regulatory transparency, and public trust.
Meanwhile, Tesla’s core EV business is showing signs of strain, with falling sales, shrinking margins, and intensifying global competition. Add in a premium valuation that hinges on the success of unproven technologies like FSD and robotics, and the case for Tesla looks even weaker.
Despite a recent upside in the stock, much of the robotaxi optimism appears already priced in. Until Tesla shows tangible progress on both the tech and execution fronts, it’s too early to invest. For now, this looks more like a time to lock in gains—not double down.
Tesla currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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