Tesla stock hits record on robotaxi hype despite drop in EV sales

What started out as a particularly difficult year Tesla’s investors are in complete celebration.

After a 36% decline in the first quarter, the stock’s worst stretch since 2022, Tesla shares rebounded to hit an all-time high of $489.48.. This tops the previous intraday record of $488.54 reached almost exactly a year ago.

The stock sparked a spark this week after CEO Elon Musk, the world’s richest person, said Tesla was testing self-driving vehicles in Austin, Texas, without passengers on board, almost six months after launching a pilot program with safety drivers.

With the rise, Tesla’s market value rose to $1.63 trillion, making it the seventh most valuable publicly traded company. Nvidia, Apple, Alphabet, Microsoft, Amazon And Metaand a little ahead broadcom. Musk’s net worth is now close to $683 billion ForbesHe is more than $400 billion ahead of Google co-founder Larry Page, who is second on the list.

Bullish investors see this news as a sign that the company will finally fulfill its long-standing promise to convert its existing electric vehicles into robotaxis with a software update.

Tesla’s autonomous driving systems being tested in Austin are not yet widely available, and there are countless safety questions.

It’s been a bumpy year for Tesla; He entered in a seemingly positive position as Musk led the Department of Government Efficiency (DOGE), an effort in President Donald Trump’s White House to significantly shrink the federal government and reduce federal regulations.

But Musk’s work with Trump, his support of far-right political figures around the world, and inflammatory political rhetoric sparked a consumer backlash that continues to weigh on Tesla’s brand reputation and sales.

Tesla reported a 13% decline in deliveries and a 20% decline in automotive revenue in the first quarter. Shares rebounded in the second quarter, but the decline in sales continued and auto revenue fell 16%.

The second half of the year was much stronger. In October, Tesla reported a 12% increase in third-quarter revenue as U.S. buyers rushed to buy electric vehicles and take advantage of federal tax credits that expired at the end of September. The stock is up 40% during this period.

Business challenges remain due to the loss of the tax credit, the ongoing backlash against Musk, and strong competition from lower-cost or more attractive EVs produced by companies such as BYD and Xiaomi in China and Volkswagen in Europe.

Although Tesla introduced more affordable variants of its popular Model Y SUV and Model 3 sedans in October, these have not helped U.S. or European sales so far. Newly narrowed options in the US appear to be undermining sales of Tesla’s higher-priced models. Accordingly Cox AutomotiveTesla’s US sales fell to their lowest level in four years in November.

Despite a challenging environment for electric vehicle makers in the U.S., Mizuho raised his Tesla price target to $530 from $475 this week and maintained his buy recommendation on the stock. Analysts at the firm wrote that reported advances in Tesla’s FSD, or Fully Self-Driving (Supervised) technology, “could support an accelerated expansion of the robotaxi fleet in Austin, San Francisco, and possibly the earlier elimination of the companion.”

Tesla operates a ride-hailing service branded Robotaxi in Texas and California, but for now the vehicles are staffed with drivers or human safety inspectors.

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