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Tesla at a Crossroads: Stock Outlook, Imminent Robotaxi Launch, and Emerging Challenges

General Report June 2, 2025
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TABLE OF CONTENTS

  1. Tesla Stock Analysis and Investor Sentiment
  2. Scheduled Robotaxi Launch and Ongoing Testing
  3. Hardware and Operational Challenges
  4. Competitive Landscape and Market Outlook
  5. Conclusion

1. Summary

  • As of June 2, 2025, Tesla is navigating a complex landscape characterized by both challenges and opportunities. The company is on the cusp of launching its much-anticipated robotaxi service in Austin, Texas, slated for June 12, 2025. This development has garnered significant attention as it is seen as a transformative moment for Tesla, with implications not just for its operational capabilities but also for its position within the fiercely competitive autonomous ride-hailing market. While Morgan Stanley’s analyst Adam Jonas remains bullish, underscoring Tesla's foundational strengths in manufacturing and data collection, investor sentiment is polarized amid ongoing delivery declines and varying analyst price targets, which reflect a wide range of expectations regarding the company’s future performance. Recent statistics reveal a steep decline in vehicle deliveries, pointing to heightened investor apprehension despite a 55% annual stock gain. As the competitive landscape intensifies, notably with Waymo gaining ground on ride-hailing services in San Francisco, the significance of Tesla's upcoming initiatives cannot be overstated.

  • The impending robotaxi launch is just one facet of Tesla's operational strategy. The company is also looking to address significant technical and operational hurdles, including an urgent need for solutions related to its HW3 self-driving hardware, which has left users questioning their investment in Full Self-Driving capabilities. Meanwhile, Tesla's rollout of self-delivery capabilities, designed to streamline the vehicle purchase process, adds another layer of complexity to its operational landscape. Compounding these challenges, regulatory scrutiny on safety measures related to the robotaxi service is an essential consideration in meeting public safety concerns. Furthermore, the removal of Supercharger stations in New Jersey highlights the pressing need for enhanced charging infrastructure, a critical factor in supporting electric vehicle adoption.

  • In addition to internal challenges, external pressures from competitors like BYD, which reported significant sales growth amid aggressive pricing strategies, underscore the urgency for Tesla to maintain its market relevance. The automotive AI hardware sector is also poised for notable expansion, projected to reach USD 40 billion by 2034. Against this backdrop, understanding the broader implications of Tesla's strategies will be pivotal as the company strives to secure its place amidst rapid technological evolution in the automotive industry.

2. Tesla Stock Analysis and Investor Sentiment

  • 2-1. Morgan Stanley’s bullish ‘keep on buying’ recommendation

  • Morgan Stanley's analyst Adam Jonas has reiterated a bullish stance on Tesla stock, advocating that investors should continue 'buying' amid recent market fluctuations and challenges. As of June 1, 2025, despite Elon Musk's distractions from business to political headlines, Jonas emphasized that Tesla's core competencies in manufacturing, data collection, and robotics remain crucial for competing with China's advancements in embodied AI. He assigns an Overweight rating to Tesla with a price target of $410, suggesting an 18% upside from the current trading levels of around $279.50. This recommendation reflects a larger belief in Tesla's long-term potential, particularly as it prepares to launch its robotaxi service on June 12, which analysts view as a pivotal moment for the company.

  • 2-2. Analyst price targets and Overweight ratings

  • Current sentiment among Wall Street analysts remains mixed, with Tesla holding a Hold consensus rating based on a blend of 16 Buys, 10 Holds, and 11 Sells. Analyst price targets exhibit significant variance, ranging from $115 to $465, underscoring the polarization in market outlook regarding the company’s future. Piper Sandler continues to advocate a bullish view with a $400 target, highlighting the importance of Tesla's Full Self-Driving (FSD) software in dictating the company's valuation. Many analysts are maintaining Overweight ratings, reflecting optimism around Tesla's upcoming technological advancements, particularly in the context of the highly anticipated robotaxi launch.

  • 2-3. Effects of delivery declines on share performance

  • Tesla has experienced notable declines in vehicle deliveries across key markets, including a staggering 46% drop in German sales and a 13% decrease in U.S. sales during recent months. This challenging backdrop has raised concerns among investors, yet has not wholly suppressed Tesla's stock performance, which gained 55% over the past year despite these setbacks. The market is largely optimistic about the company's potential growth stemming from AI-driven initiatives like the FSD and the forthcoming robotaxi service. However, the growing disparity between the delivery performance and stock performance raises questions about the sustainability of this optimism, particularly as sales expectations for 2025 have been revised downward from 2.1 million vehicles to 1.7 million.

3. Scheduled Robotaxi Launch and Ongoing Testing

  • 3-1. June 12 Austin robotaxi launch plans

  • Tesla is poised to launch its highly anticipated robotaxi service in Austin, Texas, with an official rollout scheduled for June 12, 2025. This launch marks a significant strategic pivot for the company, as it seeks to carve out a substantial presence in the nascent autonomous ride-hailing market. Reports indicate that Tesla has already initiated comprehensive testing of its driverless Model Y vehicles in the Austin area, an endeavor that has progressed rapidly in recent weeks, showcasing the firm's ambition to position itself competitively against established players such as Waymo and Cruise.

  • Although details surrounding the launch remain somewhat fluid, internal communications have confirmed the June 12 target, prompting a palpable sense of anticipation within both the tech and financial communities. Elon Musk has suggested that the initial phase will involve a pilot fleet composed of 10 to 20 vehicles. The company aims not only to deliver a functional robotaxi service but to innovate within the realm of urban transportation, integrating these vehicles into the everyday fabric of city life. Tesla's unique approach will allow vehicle owners to utilize their Model Ys as both personal cars and revenue-generating robotaxis during off-peak hours, a measure intended to enhance participation in the service.

  • 3-2. Driverless Model Y testing progress in Austin

  • Tesla has been actively conducting driverless testing of its Model Y cars in Austin, a key development as the company finalizes preparations for its robotaxi service. Reports, corroborated by Tesla's own announcements and various news sources, indicate that these testing activities have been largely successful, operating without incident as vehicles navigate public streets autonomously. This level of testing demonstrates Tesla's commitment to advancing its Full Self-Driving (FSD) technology and the feasibility of robotaxi operations.

  • Elon Musk has acknowledged that these tests have been executed a month ahead of schedule, which accentuates Tesla’s aggressive timeline and its goal to push forward in the competitive landscape of autonomous vehicles. The testing phase not only lays the groundwork for Tesla's operational capabilities but also acts as a real-world validation of its FSD technology. The current successes in Austin suggest that Tesla may soon have the operational capacity to challenge existing service providers in urban environments across the United States.

  • 3-3. U.S. regulators’ safety inquiries into robotaxi service

  • As Tesla gears up for the launch of its robotaxi service, it faces significant oversight from U.S. regulations concerning safety and operational capacity. The National Highway Traffic Safety Administration (NHTSA) and other regulatory bodies are closely monitoring the company's developments in Austin, where Tesla has begun autonomous testing without on-board safety drivers. While Texas has maintained relatively lenient regulations concerning autonomous driving, the possibility of federal scrutiny looms large, especially as public safety concerns remain paramount in the deployment of driverless vehicles.

  • Regulatory compliance is a critical hurdle that Tesla must navigate to ensure that its robotaxi service can operate legally and safely. The company will need to demonstrate its commitment to safety and reliability, especially as it aims to expand operations beyond Austin. Addressing potential inquiries from regulators is essential not only for Tesla's immediate plans but also for gaining public trust in its autonomous technology.

4. Hardware and Operational Challenges

  • 4-1. Unresolved support for HW3 self-driving hardware

  • As of June 2, 2025, Tesla continues to face significant challenges regarding its HW3 self-driving hardware. More than four months have passed since the company acknowledged that the HW3 computer would not support its ambitious self-driving aspirations. This admission has left millions of HW3 users in limbo, with no clear path forward for those who invested in the Full Self-Driving (FSD) capability package, which has been a cornerstone of Tesla's marketing strategy since 2016. The situation grows increasingly urgent as the tenth anniversary of Tesla’s initial promise of self-driving functionality approaches, raising concerns over customer trust and legal implications, including several ongoing lawsuits related to the unmet expectations on vehicle capabilities.

  • These HW3 vehicles, originally marketed as capable of future software upgrades to achieve full autonomy, are now seen as reach a technological ceiling without a feasible upgrade pathway. Tesla's shifting focus from retrofitting existing vehicles with new technology to prioritizing its internal fleet and upcoming services like the Robotaxi platform exacerbates customer dissatisfaction.

  • 4-2. Rollout of self-delivery capability

  • Elon Musk has announced that starting next month, Tesla will begin the rollout of self-delivery capabilities for its Model Y vehicles. This initiative aims to streamline the car buying process by allowing vehicles to autonomously navigate to customers' locations, thereby eliminating the need for showroom visits. While this marks a significant innovation in vehicle distribution, it also presents operational complexities, particularly concerning safety and regulatory compliance. Tesla has been conducting extensive testing in Austin, Texas, where the technology is reportedly performing well without any incidents during recent trials.

  • Nonetheless, the ambitious timeline raises questions about the readiness of systems to manage a large-scale implementation. With the forthcoming launch of its Robotaxi service scheduled for June 12, the success of the self-delivery initiative is pivotal, as both services hinge on Tesla's self-driving capabilities and operational reliability.

  • 4-3. New Jersey Turnpike Supercharger removals

  • A pressing operational challenge has emerged following the New Jersey Turnpike Authority's decision to remove all 64 Tesla Supercharger stalls from the highway, effective June 6, 2025. This decision stems from the authority's shift towards partnering exclusively with a third-party charger provider. Despite Tesla's proactive measures to secure additional charging infrastructure off the Turnpike, the removal of these stations is seen as a significant setback for Tesla drivers relying on convenient high-speed charging during their travels across New Jersey.

  • Tesla has expressed its disappointment over this decision, highlighting the importance of expanded charging infrastructure in promoting electric vehicle (EV) adoption. This development underscores the competitive pressures in the EV charging landscape where collaboration with infrastructure partners is increasingly vital for market access.

  • 4-4. Cybertruck refurbishment and buyer complaints

  • In recent reports, serious concerns have been raised regarding the condition of the Cybertrucks being delivered to buyers. Some customers claim that their vehicles have been refurbished rather than newly manufactured, with evidence of wear and tear inconsistent with new vehicles. Instances like exposed vehicles deteriorating in storage environments have prompted buyers to call for greater transparency from Tesla regarding manufacturing dates and vehicle condition prior to acceptance of delivery.

  • This situation is compounded by the decline in Cybertruck sales, with Q1 2025 figures showing a drop to 6, 406 units sold compared to 12, 991 in Q4 2024. Issues with production quality, including recalls and modern vehicle issues, have further dented consumer confidence in Tesla’s newest model. Addressing these complaints effectively is crucial for Tesla as it seeks to restore its reputation and ensure customer satisfaction amid intensified competition and heightened scrutiny in the EV market.

5. Competitive Landscape and Market Outlook

  • 5-1. Waymo’s ride-hailing lead over Lyft in San Francisco

  • As of June 2, 2025, Waymo has established itself as a formidable competitor in the ride-hailing market in San Francisco, surpassing Lyft in terms of gross bookings. According to a report by Mary Meeker, Waymo's rise to this position has been marked by a strategic focus on developing and deploying its autonomous vehicle technology effectively. The data from YipitData indicates that Waymo's market share increased significantly from August 2023 to early 2025, demonstrating its ability to adapt and serve the unique demands of the urban mobility landscape. This shift not only highlights the growing acceptance of autonomous vehicles among consumers but also signifies the intensification of competition within the sector, as traditional ride-hailing services face stiff challenges from autonomous platforms.

  • 5-2. Automotive AI hardware market growth to USD 40 billion by 2034

  • The automotive AI hardware market is witnessing robust growth, with projections estimating its rise to USD 40 billion by 2034, driven by a compound annual growth rate (CAGR) of 10.5%. This growth is largely attributed to the increasing adoption of advanced driver-assistance systems (ADAS) and autonomous driving technologies. As of 2024, this market was valued at approximately USD 15 billion, reflecting a burgeoning interest in integrating AI into automotive applications. Key components such as in-vehicle AI chips and sensor hardware are crucial for enabling sophisticated vehicle features, and the demand for these technologies is escalating as automotive manufacturers seek to enhance safety and efficiency. Despite challenges such as stringent regulatory requirements, the potential for innovation and competitive differentiation through AI is creating dynamic opportunities for companies involved in this sector.

  • 5-3. BYD’s record May sales following price cuts

  • In a notable development within the competitive automotive landscape, BYD Co. experienced its highest monthly sales in May 2025, following aggressive pricing strategies that included significant discounts of up to 34% on certain models. The Chinese automaker reported sales of 382, 476 vehicles for the month, signaling a 30% to 40% week-on-week increase in dealership traffic. This surge can be attributed to BYD's unique ability to maintain competitive pricing due to its vertical integration, which allows the company to produce key components such as batteries in-house at significantly lower costs. However, this pricing strategy also resulted in a decline in BYD's share value and affected the market dynamics, compelling competitors to reevaluate their pricing as the EV market in China faces signs of saturation, with sales growth slowing dramatically.

Conclusion

  • Tesla’s current position is marked by a blend of potential and pitfalls. While analysts express confidence in the long-term outlook, anchored in the promise of Full Self-Driving software and anticipated revenue from robotaxis, the immediate landscape presents several hurdles. Delivery deceleration, unresolved issues with HW3 hardware support, and the complexities inherent in service rollouts require meticulous execution from the company to fortify stakeholder confidence. The upcoming June 12 robotaxi launch in Austin represents a critical milestone for Tesla's ambitions in autonomous transportation. Success in this venture, validated by operational reliability and effective customer service, will be essential to reassessing market perceptions of the brand.

  • Moreover, as Tesla continues to advance, strategic alignment in addressing regulatory requirements and enhancing customer satisfaction will be crucial. The heightened competition from established players like Waymo, which has solidified its market lead, and from rapidly evolving competitors such as BYD, signals an urgent need for innovation and adaptability. Looking ahead, Tesla must prioritize expediting hardware improvements, ensuring compliance with safety protocols, and developing robust infrastructure to maximize opportunities within the growing AI-driven mobility sector. Positioning itself effectively amidst these dynamics will not only sustain investor support but will also enhance consumer trust in Tesla’s commitment to revolutionizing urban transportation.

Glossary

  • Robotaxi: A type of autonomous vehicle designed to transport passengers without a human driver. Tesla's robotaxi service, set to launch on June 12, 2025, aims to innovate urban transportation as part of its strategy to compete in the growing ride-hailing market.
  • Self-Driving: A technology that enables a vehicle to navigate without human intervention. As of June 2, 2025, Tesla's self-driving capabilities are often linked to its Full Self-Driving (FSD) software, which has faced scrutiny due to hardware limitations and regulatory challenges.
  • HW3: Short for Hardware 3, this refers to Tesla's self-driving computer hardware, which currently faces limitations in supporting the full scope of Tesla's autonomous driving goals. Issues with HW3 have left users uncertain about the future of their self-driving capabilities.
  • Full Self-Driving (FSD): A suite of advanced driver-assistance features marketed by Tesla, promoting the capability for a vehicle to operate autonomously under certain conditions. The performance and delivery of FSD have been heavily scrutinized, especially with respect to the HW3 hardware's limitations.
  • Waymo: A subsidiary of Alphabet Inc., developing autonomous driving technology. As of June 2025, Waymo has become a major competitor in the ride-hailing market, surpassing Lyft in terms of gross bookings, particularly in cities like San Francisco.
  • BYD: A leading Chinese automotive manufacturer notable for its aggressive pricing strategies and significant sales growth in the electric vehicle market. By May 2025, BYD had achieved record sales following substantial price cuts, highlighting competitive pressures in the EV landscape.
  • Supercharger: A high-speed charging station network developed by Tesla, aimed at facilitating EV charging. The removal of Supercharger stations in New Jersey, effective June 6, 2025, raises concerns about the availability of charging infrastructure for Tesla drivers in that region.
  • Cybertruck: Tesla's all-electric pickup truck, which has recently faced buyer complaints regarding quality issues and refurbishment concerns. The Cybertruck's delivery discrepancies amid declining sales have sparked discussions about consumer trust in Tesla's manufacturing processes.
  • National Highway Traffic Safety Administration (NHTSA): The U.S. governmental agency responsible for overseeing road safety and vehicle regulations. As Tesla prepares for its robotaxi launch, the NHTSA's scrutiny over safety measures related to autonomous vehicles emphasizes the importance of regulatory compliance.
  • Automotive AI Hardware: A sector involving the integration of artificial intelligence technologies into vehicle systems. This market is projected to grow to USD 40 billion by 2034, driven by advances in autonomous driving technologies and the adoption of advanced driver-assistance systems (ADAS).
  • Delivery Declines: A significant drop in vehicle deliveries that Tesla has experienced, notably a 46% decrease in Germany and 13% in the U.S. This decline poses challenges for the company's stock performance and overall investor sentiment as of June 2025.

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