Tesla Motors is ending 2025 on a high note, and investor are looking for even bigger things next year as the electric vehicle giant doubles down on artificial intelligence and autonomy.
Despite a rough start to the year as Chief Executive Elon Musk courted controversy at every turn, the stock has rebounded. On Monday it reached a record intraday high of $498.83, before closing that day at $488.73. Shares have rallied 20.2% in 2025 through Wednesday, to top the S&P 500 index's 17.9% gain.
Much of that gain is based on investors' idea of a future dominated by self-driving vehicles and humanoid robots, according to analysts. Among the most optimistic is Wedbush analyst Dan Ives, who thinks Tesla's "monster year ahead" could end with a $3 trillion valuation - nearly double the current market capitalization of $1.6 trillion - and define its future.
It all starts with Tesla's plan for a ride-hailing network that allows consumers to order autonomous vehicles to pick them up and drop them off without the presence of a driver. The company began its "robotaxi" service in June, beginning in its hometown of Austin, Texas.
Tesla currently offers some ride-hailing services in Austin and the San Francisco Bay Area, although there's not much separating it from Uber Technologies or Lyft, Inc.. Its service, for now, offers trips on Model Y sport-utility vehicles equipped with its advanced driver-assistance system, Full Self-Driving, but supervised by an employee.
Musk has made ambitious promises for where Tesla's robotaxi network, which formally began in late June in Austin, would end up by the end of 2025. With just a few days left in the year, it's fairly safe to say Tesla will miss those targets.
"In the past, we've seen Musk overpromise in terms of the timing of when certain products or services might be available," said CFRA analyst Garrett Nelson. "We're expecting that to be the case with robotaxis as well."
Musk has said Tesla plans to operate in at least eight metropolitan areas by the end of the year - with the company naming targets like Phoenix and Las Vegas - and massively expand its current fleet across Austin and San Francisco. Additionally, Tesla is testing unsupervised trips in Austin, where Musk wants to remove safety monitors from vehicles by the end of December.
Despite its goals, Tesla has yet to launch in additional cities and only has about 160 vehicles actively being used, according to a crowdsourced robotaxi tracker. Just a few vehicles have been added to Tesla's network in Austin, where Musk said its fleet would double to about 60 vehicles by the end of the month.
But investors have gotten used to Musk's overpromising over the years. That's partly why they likely won't care about Tesla's robotaxi delays as long as there's some visible progress, according to Morningstar analyst Seth Goldstein.
That's evidenced by Tesla's stock set to end the year around record levels even as Musk's robotaxi targets will likely be missed.
Goldstein noted that one reason for the delays is Tesla's heavy focus on safety, since dangerous incidents could force it to halt testing, which happened with General Motors' former robotaxi division.
"I think they want to be extra cautious, extra careful and make sure that when they enter a market, they do so very effectively," Goldstein said.
Analysts are divided over how much Tesla will grow its robotaxi efforts in 2026. Analysts at Barclays and Truist Securities have said it will be unclear and warned of stock volatility due to how it and rivals like Waymo, backed by Alphabet, expand in the coming months.
Deutsche Bank has said Tesla could have a fleet of over 2,500 vehicles by June, as long as it hits Musk's 1,500 vehicle goal earlier in the year, while analysts at Morgan Stanley and elsewhere have adopted more modest projections. Tesla's Cybercab robotaxi vehicle will also enter production in 2026, although it's unclear when it could be put on U.S. roads.
A 'wild card'
Tesla's robotaxis are built on Full Self-Driving, or FSD, the company's advanced driver assistance program. Although the company has been promoting the package for years and Tesla has collected a sizable amount of data, adoption has been slow.
As of the third quarter, just 12% of Tesla's customers are paying to enable FSD on their vehicles. If Tesla gets its way, it may be able to dramatically increase adoption next year, bringing in additional revenue, training data and possibly boosting sales.
Musk has said Tesla will "hopefully" make FSD available in the United Arab Emirates next month, which would be its first market in the Middle East. He also expects Chinese regulators to fully approve FSD "around February or March," which should help Tesla compete with rivals that offer similar systems.
And FSD approval will be a "wild card" in Europe, Goldstein said. Dutch regulators plan to test the system in February, which could pave the way for approval in the Netherlands.
If FSD wins approval in the Netherlands, other nations in the European Union will have the option to recognize that exemption, according to Tesla. Then the company said it would ask a European Union committee to officially approve the software.
That might help improve sales in the 27 countries that make up the EU, where Tesla sales have dropped about 39% year-over-year through November and the company is facing increased competition from rivals. In China, Tesla's sales are down 9% compared with a year earlier.
Tesla's U.S. sales are predicted to drop 9% in 2025 with what Musk has called a few "rough" quarters ahead for sales. That's largely because the U.S. ended a tax credit that previously incentivized buying electric cars, which has already pushed some consumers to pull back on EVs.
But after a while, that could end up a positive for Tesla, some analysts have said.
"Only brands with strong products, cost discipline, and loyalty are positioned to keep/gain [market] share. That's a good thing for Tesla," wrote George Gianarikas, an analyst at Canaccord Genuity, in a recent note.
Looking ahead
Tesla is also set to begin making two products that could define its future: a line of humanoid robots and a tiny silicon chip.
The market for humanoids could be worth $5 trillion by 2050, with the technology picking up speed in the mid-2030s, according to Morgan Stanley estimates. Musk has proposed selling the Optimus robot for use in factories and households for about $30,000 and said it could one day account for 80% of Tesla's value.
But Tesla has a while to go to make that a reality. The company has had issues designing its robots' hands and forearms, as well as sourcing parts.
"So with cars, you've got an existing supply chain," Musk said in October. "With computers you've got an existing supply chain. With a humanoid robot, there is no supply chain."
A prototype of the third version of Optimus intended for volume production should be ready for a demonstration by March, according to Musk.
CFRA's Nelson and others are looking forward to learning more about Tesla's roadmap for Optimus. But it remains a "back burner-type" product that is unlikely to begin adding to Tesla's earnings in the near future, he said.
Powering those robots - as well as data centers and robotaxis - will be the AI5, a next-generation chip Tesla plans to begin making in late 2026. Musk has claimed the AI5 is a significant improvement over the current AI4, and is better than rival chips from (Nvidia).
"We're going for radical simplicity," Musk said in October. "The net effect is that I think AI5 will be the best performance per watt, maybe by a factor of two or three, and best performance per dollar for AI, maybe by a factor of 10," compared with rival chips.
Also on Tesla's roadmap for 2026 is production of new energy products and a long-awaited update on plans for a next-generation sports car. The all-electric Tesla Semi truck is also expected to enter volume production in the second half of 2026 after years of delays.
