A Motley Fool analyst forecasts that Tesla's stock will fall below a $1 trillion valuation before the end of 2026, citing declining electric vehicle sales and an elevated price-to-earnings ratio. The prediction comes amid challenges in Tesla's core business, despite excitement around future products like the Cybercab robotaxi and Optimus humanoid robot. Tesla currently holds a $1.5 trillion market cap, the seventh-largest among U.S. companies.
Tesla's electric-vehicle sales have declined for two consecutive years, impacting its revenue and earnings. In 2024, the company delivered 1.79 million EVs, a 1% drop from the prior year. Deliveries fell further to 1.63 million in 2025, a 9% year-over-year decrease, leading to a 10% reduction in automotive revenue and a 47% plunge in earnings per share to $1.08.
The company plans to discontinue its premium Model S and Model X vehicles to focus on higher-volume, cheaper models like the Model 3 and Model Y. This shift aims to compete with low-cost rivals such as China's BYD, which outsold Tesla globally for the first time in 2025. BYD's entry-level Dolphin Surf EV sells for under $27,000 in Europe, compared to over $40,000 for Tesla's Model 3.
Tesla's stock trades at a price-to-earnings ratio of 377, far exceeding other $1 trillion-plus companies. For context, the U.S. has 10 such firms: Nvidia at $4.4 trillion, Apple at $3.8 trillion, Alphabet at $3.6 trillion, Microsoft at $3 trillion, Amazon at $2.3 trillion, Meta Platforms at $1.6 trillion, Tesla and Broadcom at $1.5 trillion each, and Berkshire Hathaway and Walmart at $1 trillion.
Future initiatives include the Cybercab robotaxi, unveiled last year and slated for mass production in 2026, relying on full-self-driving software currently approved only for unsupervised use in Austin, Texas. Broader rollout faces regulatory hurdles. Meanwhile, Tesla aims to ramp up Optimus robot production in its Fremont, California factory, with CEO Elon Musk projecting that such robots could outnumber humans by 2040. Ark Investment Management estimates robotaxis could generate $34 trillion in enterprise value by 2030.
Analyst Anthony Di Pizio argues that continued EV sales shrinkage or delays in these projects could lead to a 34% stock decline, exiting the $1 trillion club. Tesla derives 73% of revenue from passenger EVs, where demand is softening.
