Tesla's shares have surged 219% since 2020, reaching a $1.4 trillion market capitalization, even as the company faces declining sales and intensifying competition in the electric vehicle sector. Analysts predict a 4% sales drop and nearly 30% earnings decline in 2025. However, optimism surrounds Tesla's robotaxi division, potentially worth over $1 trillion.
Tesla has become one of the world's most valuable companies, with its stock more than tripling in value since 2020 to achieve a 219% gain. Despite this, the company encountered difficulties in 2025, including a sales decline amid slipping market share. According to Reuters, Tesla's U.S. EV market share fell to 38% in August, the first time below 40% since October 2017 when Model 3 production ramped up. Factors include CEO Elon Musk's controversial public opinions drawing consumer backlash and a lack of new major models in nearly five years, eroding its early-mover advantage.
Wall Street anticipates further challenges, with sales expected to fall 4% and earnings down nearly 30% in 2025. The end of the federal EV tax credit, worth up to $7,500, will impact demand in 2026. Competitors like Rivian plan models starting under $50,000, pressuring Tesla's Model 3 and Model Y, which account for over 90% of its vehicle revenue.
Bright spots emerge in Tesla's robotaxi service, launched in Austin, Texas, earlier this year. Analyst Dan Ives of Wedbush Securities, after testing it, stated: "We believe Tesla and Musk are heading into a very important chapter of their growth story as the AI revolution takes hold, and the robotaxi opportunity is now a reality on the doorstep." He estimates the AI and autonomous driving opportunity at least $1 trillion for Tesla.
Cathie Wood's ARK Invest projects a $5 trillion to $10 trillion global robotaxi market, with Tesla's business potentially representing 90% of its enterprise value by 2029. The firm highlights Tesla's AI, manufacturing, and data advantages for U.S. dominance. Investors now view Tesla more as a technology provider than an automaker, sustaining stock gains despite EV struggles.