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Tesla stock is down 18% from its peak as the company faces multiple headwinds, including tariffs on imported auto parts that have pressured margins, political controversy involving CEO Elon Musk, and the expiration of federal tax credits that has reduced demand for electric vehicles.
Those challenges have contributed to disappointing financial results for several consecutive quarters, and the situation may not improve significantly this year. Tesla reported 358,023 deliveries in Q1 2026, about 12,000 fewer than Wall Street expected, with the consensus estimate having already been revised downward.
Despite the near-term pressures, Tesla investors received a recent update from Musk. Over the weekend, Musk posted on X: “Try Tesla Robotaxi in Dallas & Houston!” The post included a video showing Model Ys navigating those cities without a driver or a safety monitor in the front seats.
Tesla’s autonomous ridesharing service was introduced in two markets last year—Austin and San Francisco. The company’s robotaxis still require human safety drivers in California, but the addition of Dallas and Houston expands coverage to four markets.
Musk said Tesla plans to bring robotaxis to additional metropolitan areas across three U.S. states in the first half of 2026: Las Vegas, Miami, Orlando, Phoenix, and Tampa. By year-end, Musk said robotaxis would be live in dozens of major cities, adding: “We expect to have fully autonomous vehicles in somewhere between a quarter and half of the United States.”
Musk also emphasized that expansion depends on regulatory approval, warning investors not to expect immediate results. He previously predicted robotaxis would cover half the U.S. population by the end of 2025, but the company did not come close to that target.
Musk suggested autonomous ridesharing could begin to affect Tesla’s financial performance as early as the second half of 2026, saying: “Once it does move the financial needle in a significant way, it will really go exponential from there,” in remarks to analysts last spring.
On the market opportunity, Morgan Stanley analysts estimate the total addressable market could be at least $1 trillion in the U.S. alone, and potentially larger. The analysis cites that light-duty vehicles traveled 3.4 trillion miles in the U.S. in 2024, while ridesharing services charge an average of $1.70 per mile. Even if robotaxis cut the price by two-thirds, the total addressable market would still be almost $2 trillion.
Adoption would likely be gradual, and consumers are not expected to use robotaxis for every trip. Even so, at 25% penetration, Morgan Stanley estimates U.S. robotaxi revenues could reach $250 billion to $500 billion per year in the future.
Morgan Stanley also framed Tesla’s strategy as a platform-building effort similar to how Amazon used its early retail model to expand into adjacent businesses. The firm argues Tesla is using its electric vehicle manufacturing expertise to build physical artificial intelligence platforms that could support autonomous driving and humanoid robotics.
Tesla currently trades at 240 times adjusted earnings, a valuation Morgan Stanley characterizes as highly expensive and tied to growth expectations in these markets. The firm estimates earnings could grow 27% annually to reach $18.18 per share in 2035, driven by contributions from full self-driving software, autonomous ridesharing, and humanoid robots. Under that scenario, Tesla would trade at 22 times forecasted earnings in 2035.
While the stock is not described as cheap, Morgan Stanley’s outlook suggests there could be room for Tesla to grow into its valuation as physical AI demand develops. The article notes that investors would need to be willing to hold the stock for a decade or two to match that timeline.
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