Track market-moving stories before they get noisy

An Australian judge said he may order Tesla (TSLA.O) to give an independent expert access to its internal engineering platforms as ​part of a class action against the Elon Musk-led carmaker, a move ‌designed to bypass a drawn-out discovery process that has dogged the case.

The lawsuit, filed in February 2025, alleges Tesla's Model 3 and Model Y vehicles suffer from "phantom braking" and that ​the advertised self-driving capability and battery range were overstated.

Federal Court judge ​Tom Thawley suggested appointing an independent expert after lawyers for the ⁠applicants, representing some 10,000 Tesla owners, complained the documents Tesla had turned ​over failed to capture crucial technical information they needed to run the case.

Bringing ​in an independent expert who was endorsed by both sides "would eliminate the discovery issue because they would have, if they needed access to something, the power to get access", Thawley ​told the court on Tuesday.

He added that he would not necessarily keep ​the court-appointed expert away from certain material "just because one of the parties doesn't like that ‌idea".

The ⁠matter is yet to go to trial as the parties clash over the discovery process.

Tesla says it has handed over thousands of documents in good faith but that its engineers use live, continuously edited software platforms that do ​not keep point-in-time records ​or simulate ⁠paper documents.

Thawley said a single court-appointed expert in each relevant field with access to the systems themselves would be cheaper ​and faster than fighting over documents, and told the ​parties he ⁠would consider ordering it over their objections.

Lawyers for both sides said they would seek instructions on the suggestion of an independent expert, but Fiona Roughley, representing the ⁠applicants, ​said the idea made sense.

Imtiaz Ahmed, who represents ​Tesla, said his side would think about the suggestion, noting its systems were highly confidential.

The matter ​returns to court on November 12.

Focused Alpha LLC acquired a new position in shares of Tesla, Inc. (NASDAQ:TSLA – Free Report) in the 2nd quarter, according to its most recent filing with the Securities & Exchange Commission. The fund acquired 4,547 shares of the electric vehicle producer’s stock, valued at approximately $1,913,000.

A number of other hedge funds have also made changes to their positions in TSLA. Chapman Financial Group LLC acquired a new stake in Tesla in the 2nd quarter valued at $26,000. Friedenthal Financial lifted its stake in shares of Tesla by 66.7% during the first quarter. Friedenthal Financial now owns 75 shares of the electric vehicle producer’s stock worth $28,000 after purchasing an additional 30 shares in the last quarter. Turning Point Benefit Group Inc. purchased a new stake in shares of Tesla in the third quarter worth about $30,000. Texas Capital Bancshares Inc TX purchased a new stake in shares of Tesla in the third quarter worth about $31,000. Finally, Sarver Vrooman Wealth Advisors acquired a new stake in shares of Tesla in the fourth quarter valued at about $37,000. Hedge funds and other institutional investors own 66.20% of the company’s stock.

Insider Transactions at Tesla In other news, CFO Vaibhav Taneja sold 2,606 shares of the business’s stock in a transaction on Monday, June 8th. The shares were sold at an average price of $402.20, for a total transaction of $1,048,133.20. Following the completion of the transaction, the chief financial officer owned 22,039 shares of the company’s stock, valued at approximately $8,864,085.80. The trade was a 10.57% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which can be accessed through the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders own 19.90% of the company’s stock.

Tesla Price Performance NASDAQ:TSLA opened at $348.75 on Monday. The company has a current ratio of 1.94, a quick ratio of 1.55 and a debt-to-equity ratio of 0.09. The stock has a 50 day moving average of $360.33 and a 200-day moving average of $384.92. The firm has a market capitalization of $1.38 trillion, a PE ratio of 322.92, a price-to-earnings-growth ratio of 17.61 and a beta of 1.83. Tesla, Inc. has a 52 week low of $297.38 and a 52 week high of $498.83. Tesla (NASDAQ:TSLA – Get Free Report) last announced its quarterly earnings results on Wednesday, July 22nd. The electric vehicle producer reported $0.33 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.50 by ($0.17). Tesla had a return on equity of 3.82% and a net margin of 3.67%.The company had revenue of $28.24 billion during the quarter, compared to the consensus estimate of $26.42 billion. During the same period last year, the business posted $0.33 EPS. The company’s revenue for the quarter was up 25.5% on a year-over-year basis. Analysts predict that Tesla, Inc. will post 0.88 EPS for the current year.

Analysts Set New Price Targets Several equities analysts recently commented on TSLA shares. Citigroup reissued a “market perform” rating on shares of Tesla in a research report on Monday, August 24th. Glj Research reaffirmed a “sell” rating on shares of Tesla in a research report on Tuesday, August 18th. Royal Bank Of Canada reiterated an “outperform” rating and set a $500.00 price objective on shares of Tesla in a research note on Tuesday, July 28th. Truist Financial set a $370.00 target price on shares of Tesla and gave the stock a “hold” rating in a research report on Thursday, July 23rd. Finally, Canaccord Genuity Group set a $410.00 price target on shares of Tesla and gave the company a “buy” rating in a report on Thursday, July 23rd. One research analyst has rated the stock with a Strong Buy rating, twenty-two have issued a Buy rating, nineteen have assigned a Hold rating and four have issued a Sell rating to the company’s stock. According to data from MarketBeat.com, Tesla presently has an average rating of “Hold” and a consensus price target of $401.74.

Check Out Our Latest Stock Report on TSLA

Key Stories Impacting Tesla Here are the key news stories impacting Tesla this week:

Positive Sentiment: Tesla is expanding its robotaxi operation beyond Austin and Miami, with longer service hours and a larger unsupervised fleet. State regulators have also approved permits for Tesla to operate robotaxis, supporting the company’s strategy to monetize autonomous driving. Tesla robotaxi expansion Positive Sentiment: Tesla is preparing an August Cybercab rollout beginning with employee rides, while Cybercab production has reportedly started. Investors view the vehicle and robotaxi network as potential long-term revenue opportunities not yet fully reflected in the stock. Cybercab rollout Positive Sentiment: Optimus humanoid robot production has reportedly begun at Tesla’s Fremont facility, and the company is installing additional robotics manufacturing lines. The development strengthens the long-term artificial-intelligence and automation narrative, although meaningful financial benefits may take time. Optimus production Positive Sentiment: Commercial truckmaker Einride expects to receive approximately 75 Tesla Semi trucks in 2026, with the remainder of its 500-truck order scheduled for 2027. The timeline provides evidence of commercial demand, though deliveries will be spread over several years. Einride Tesla Semi order Neutral Sentiment: Tesla announced a September 24 Semi event that could provide updates on autonomous trucking and production plans, making it a potential catalyst but offering no immediate earnings impact. Tesla Semi event Negative Sentiment: Tesla is voluntarily recalling about 3 million vehicles in China over door handles that may fail after severe crashes and inadequate driver-attention monitoring. The recall adds regulatory, cost and reputational risks to the company’s autonomy push. Tesla China recall Negative Sentiment: Criticism intensified after a vehicle using Tesla’s latest FSD software reportedly nearly drove into a train, renewing concerns about system reliability and the gap between supervised assistance and fully autonomous driving. Tesla FSD incident Negative Sentiment: Analysts and investors continue to question Tesla’s valuation because weak margins and traditional EV risks are not easily reconciled with a price-to-earnings ratio above 300. Toyota’s rising electrified-vehicle volume and broader EV competition further challenge Tesla’s automotive leadership. About Tesla (Free Report)

Tesla, Inc (NASDAQ: TSLA) is an American company that designs, manufactures and sells electric vehicles, energy generation and energy storage products. Founded in 2003 by Martin Eberhard and Marc Tarpenning, Tesla grew into a vertically integrated mobility and clean‑energy company with Elon Musk serving as its chief executive officer. The company’s stated mission is to accelerate the world’s transition to sustainable energy, reflected in its combined focus on electric drivetrains, battery technology, renewable energy products and software.

Tesla’s automotive business includes a lineup of battery‑electric vehicles and related services.

See Also Five stocks we like better than Tesla Strike a Balance Between Growth and Stability With These 3 Names Ready to Rally Rubrik’s AI Security Bet Could Power the Next Leg Higher Apple’s Foldable iPhone Could Be a Catalyst, But Not a Cure-All Snowflake Is Up Nearly 50% in 2026—What Are Short Sellers Betting Against? Want to see what other hedge funds are holding TSLA? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Tesla, Inc. (NASDAQ:TSLA – Free Report).

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On paper, Tesla (TSLA -1.71%) looks extremely expensive right now. The stock trades at roughly 330 times trailing earnings and around 180 times forward earnings, with a PEG ratio of close to 6.9, one of the highest multiples among large caps. That is not cheap by any normal metric, and it explains why people keep asking whether it is time to sell.

Underneath that valuation, Tesla is still a real operating company with tens of billions in revenue each quarter. In the second quarter of 2026, Tesla generated about $28.24 billion in total revenue and $398 million of operating income, although the operating margin dropped to 1.4% as the company pushed hard on new projects and absorbed higher costs. Automotive revenue was about $20.52 billion, up roughly 23% year over year, and the energy business added more than $3.14 billion, growing double digits even as margins in that segment reset lower.

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The unique moves Tesla is making this year What should keep you from selling is what Tesla is doing in 2026. Management is rolling out the most concrete roadmap yet for Full Self-Driving (FSD) and robotaxis, targeting unsupervised FSD on customer vehicles by Q4 2026 and robotaxi operations across roughly a dozen U.S. states by the end of the year. At the same time, Tesla has begun installing first-generation Optimus humanoid robot lines in Fremont, converting the old Model S and Model X line, with a target run rate capacity of up to 1 million robots per year by late 2026 and an eventual 10 million per year in Texas.

Image source: Tesla.

Robotaxi and software optionality I see robotaxis as one of the main reasons to keep holding through volatility. Elon Musk and the company are clear that meaningful robotaxi and autonomy revenue is unlikely to be large before 2027, but they are already producing the Cybercab robotaxi and preparing for mass-scale deployments. Tesla also expects that about 4 million existing vehicles will need hardware retrofits to enable unsupervised autonomy, which means a sizable future upgrade cycle on top of regular car sales. If FSD reaches unsupervised capability in multiple markets, Tesla can shift from a one-time hardware sale model to a recurring software and mobility service model with much higher margin potential.

Optimus and the long-term AI pivot The other thing I'm watching is Optimus. Tesla is targeting tens of thousands of humanoid robots in 2026, with ambitions to scale  toward 500,000 units annually by 2027 with an eventual capacity of 1 million units per year at Fremont and up to 10 million per year at Gigafactory Texas. Management has talked about production costs around $20,000 to $25,000 per robot, which, if paired with useful commercial applications, could create an entirely new revenue stream separate from cars. To me, that is genuine optionality that is hard to value precisely but impossible to ignore when deciding whether to hold or sell.

Why Tesla holders should hold into 2027 I am not blind to the risks. Operating margins are low, capital expenditure is guided above $25 billion for 2026, and management itself warns about negative free cash flow while it funds Cybercab, Optimus, and chip projects. Regulatory hurdles for autonomy, supply chain challenges for robots, and potential demand swings for electric vehicles could all be factors.

Even so, when I line up what Tesla is building in 2026 against where the stock could reasonably be in 2027 and beyond, I see a company investing heavily to pivot from being just a carmaker into being an artificial intelligence, robotics, and mobility platform. For investors, that means you should live with a stretched valuation and short-term margin pressure rather than sell now and potentially miss the payoff from robotaxis, FSD, and Optimus if even part of the roadmap becomes real.

Elite Life Management LLC acquired a new position in Tesla, Inc. (NASDAQ:TSLA – Free Report) during the second quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The fund acquired 1,698 shares of the electric vehicle producer’s stock, valued at approximately $546,000. Tesla makes up about 0.6% of Elite Life Management LLC’s investment portfolio, making the stock its 23rd biggest position.

A number of other hedge funds have also added to or reduced their stakes in TSLA. Marks Group Wealth Management Inc boosted its stake in shares of Tesla by 1.7% during the 4th quarter. Marks Group Wealth Management Inc now owns 1,512 shares of the electric vehicle producer’s stock worth $680,000 after buying an additional 25 shares during the last quarter. Clear Trail Advisors LLC raised its holdings in Tesla by 1.6% during the first quarter. Clear Trail Advisors LLC now owns 1,628 shares of the electric vehicle producer’s stock worth $605,000 after acquiring an additional 25 shares in the last quarter. Peirce Capital Management LLC boosted its position in Tesla by 1.5% during the second quarter. Peirce Capital Management LLC now owns 1,657 shares of the electric vehicle producer’s stock valued at $697,000 after purchasing an additional 25 shares during the last quarter. Brio Consultants LLC boosted its position in Tesla by 4.7% during the fourth quarter. Brio Consultants LLC now owns 575 shares of the electric vehicle producer’s stock valued at $259,000 after purchasing an additional 26 shares during the last quarter. Finally, Community Bank & Trust Waco Texas grew its stake in Tesla by 1.7% in the fourth quarter. Community Bank & Trust Waco Texas now owns 1,581 shares of the electric vehicle producer’s stock valued at $711,000 after purchasing an additional 26 shares in the last quarter. Institutional investors own 66.20% of the company’s stock.

Tesla Stock Down 1.7% Tesla stock opened at $348.75 on Friday. The stock has a market cap of $1.38 trillion, a P/E ratio of 322.92, a P/E/G ratio of 17.61 and a beta of 1.83. The company has a quick ratio of 1.55, a current ratio of 1.94 and a debt-to-equity ratio of 0.09. Tesla, Inc. has a twelve month low of $297.38 and a twelve month high of $498.83. The company’s 50-day moving average price is $360.33 and its two-hundred day moving average price is $385.15.

Tesla (NASDAQ:TSLA – Get Free Report) last issued its quarterly earnings data on Wednesday, July 22nd. The electric vehicle producer reported $0.33 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.50 by ($0.17). Tesla had a return on equity of 3.82% and a net margin of 3.67%.The firm had revenue of $28.24 billion for the quarter, compared to the consensus estimate of $26.42 billion. During the same quarter in the prior year, the firm earned $0.33 EPS. The company’s revenue was up 25.5% on a year-over-year basis. As a group, analysts expect that Tesla, Inc. will post 0.88 EPS for the current year. Key Tesla News Here are the key news stories impacting Tesla this week:

Positive Sentiment: Tesla is expanding its robotaxi operation beyond Austin and Miami, with longer service hours and a larger unsupervised fleet. State regulators have also approved permits for Tesla to operate robotaxis, supporting the company’s strategy to monetize autonomous driving. Tesla robotaxi expansion Positive Sentiment: Tesla is preparing an August Cybercab rollout beginning with employee rides, while Cybercab production has reportedly started. Investors view the vehicle and robotaxi network as potential long-term revenue opportunities not yet fully reflected in the stock. Cybercab rollout Positive Sentiment: Optimus humanoid robot production has reportedly begun at Tesla’s Fremont facility, and the company is installing additional robotics manufacturing lines. The development strengthens the long-term artificial-intelligence and automation narrative, although meaningful financial benefits may take time. Optimus production Positive Sentiment: Commercial truckmaker Einride expects to receive approximately 75 Tesla Semi trucks in 2026, with the remainder of its 500-truck order scheduled for 2027. The timeline provides evidence of commercial demand, though deliveries will be spread over several years. Einride Tesla Semi order Neutral Sentiment: Tesla announced a September 24 Semi event that could provide updates on autonomous trucking and production plans, making it a potential catalyst but offering no immediate earnings impact. Tesla Semi event Negative Sentiment: Tesla is voluntarily recalling about 3 million vehicles in China over door handles that may fail after severe crashes and inadequate driver-attention monitoring. The recall adds regulatory, cost and reputational risks to the company’s autonomy push. Tesla China recall Negative Sentiment: Criticism intensified after a vehicle using Tesla’s latest FSD software reportedly nearly drove into a train, renewing concerns about system reliability and the gap between supervised assistance and fully autonomous driving. Tesla FSD incident Negative Sentiment: Analysts and investors continue to question Tesla’s valuation because weak margins and traditional EV risks are not easily reconciled with a price-to-earnings ratio above 300. Toyota’s rising electrified-vehicle volume and broader EV competition further challenge Tesla’s automotive leadership. Insider Transactions at Tesla In related news, CFO Vaibhav Taneja sold 2,606 shares of the business’s stock in a transaction on Monday, June 8th. The stock was sold at an average price of $402.20, for a total value of $1,048,133.20. Following the completion of the sale, the chief financial officer directly owned 22,039 shares in the company, valued at $8,864,085.80. The trade was a 10.57% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. 19.90% of the stock is owned by company insiders.

Wall Street Analyst Weigh In TSLA has been the topic of a number of analyst reports. Weiss Ratings reiterated a “hold (c-)” rating on shares of Tesla in a research note on Tuesday, July 21st. Stifel Nicolaus set a $491.00 target price on shares of Tesla and gave the stock a “buy” rating in a report on Monday, August 3rd. Truist Financial set a $370.00 price objective on shares of Tesla and gave the company a “hold” rating in a research report on Thursday, July 23rd. Piper Sandler lowered their price objective on shares of Tesla from $500.00 to $450.00 and set an “overweight” rating on the stock in a research note on Friday, July 24th. Finally, BMO Capital Markets began coverage on shares of Tesla in a research note on Monday, August 17th. They issued an “outperform” rating for the company. One equities research analyst has rated the stock with a Strong Buy rating, twenty-two have issued a Buy rating, nineteen have assigned a Hold rating and four have assigned a Sell rating to the company’s stock. According to data from MarketBeat.com, the company currently has an average rating of “Hold” and an average price target of $401.74.

Get Our Latest Report on Tesla

Tesla Company Profile (Free Report)

Tesla, Inc (NASDAQ: TSLA) is an American company that designs, manufactures and sells electric vehicles, energy generation and energy storage products. Founded in 2003 by Martin Eberhard and Marc Tarpenning, Tesla grew into a vertically integrated mobility and clean‑energy company with Elon Musk serving as its chief executive officer. The company’s stated mission is to accelerate the world’s transition to sustainable energy, reflected in its combined focus on electric drivetrains, battery technology, renewable energy products and software.

Tesla’s automotive business includes a lineup of battery‑electric vehicles and related services.

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The record safety campaign targets nearly six times Tesla's latest quarterly deliveries. Summary

Tesla accounts for approximately 69% of all vehicles included in China’s recall.

Tesla (TSLA), the electric-vehicle, energy-storage and robotics giant, fell approximately 1.7% to $356.70 Monday morning as China's sweeping automotive recall rattled investors. Tesla must fix emergency door-release problems across roughly 2.98 million vehicles—more than any other automaker caught in the regulatory crackdown.

The full recall reaches approximately 4.3 million vehicles from nine manufacturers. The concern is simple but serious: electronic doors may become difficult to open after a crash or power failure. Tesla can tackle most of the problem through remote software updates and clearer emergency-release labels, keeping the immediate repair bill contained. The next hurdle is harder. China will ban fully concealed exterior door handles beginning in 2027, raising the prospect of physical redesigns across future models.

Tesla delivered more than 480,000 vehicles during the second quarter, meaning the recall covers more than six quarters of current global deliveries. The shares also sit 7.01% above their $333.34 GF Value™, leaving little room for another regulatory surprise. A software patch may solve today's problem, but at more than 300 times earnings, Tesla's premium valuation makes even a fixable safety issue hit harder.

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

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Given nothing more than the headline number, it would be easy to believe electric vehicle maker Tesla (TSLA +5.14%) is firing on all (proverbial) cylinders...at least within the United States. Although down slightly from the first quarter's 54.2% share of the U.S. electric vehicle market, Cox Automotive reported that the iconic EV brand accounted for 50.5% of the country's second-quarter EV sales -- as measured in units -- holding onto an industrywide majority reclaimed in the final quarter of last year for the first time since 2023.

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Now read the fine print. Tesla is only enjoying a market share advantage because its domestic rivals are suffering bigger EV sales setbacks than Tesla did. Total electric vehicle sales in the U.S. fell 20% during the second quarter, whereas Tesla's total unit sales fell 13% from 143,535 automobiles in the second quarter of last year to 124,800 units in Q2 of this year.

Losing share in other markets The United States isn't Tesla's only market. Europe and China are key electric vehicle markets as well, and the company's worldwide second-quarter total deliveries improved 25% year over year, to 480,126 automobiles.

Image source: Getty Images.

Even so, Tesla is losing market share in both of those markets, largely to China's BYD, but also to Chinese EV manufacturers Geely and Changan in China, and Volkswagen in Europe.

Of course, electric vehicles could soon be a secondary business for Tesla anyway. The company continues developing AI-powered humanoid robots that CEO Elon Musk has suggested could begin commercial production before the end of next year.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.

It's been an interesting and mixed 2026 thus far for Tesla (TSLA +5.14%). While the stock has dropped almost 25% since January, the company's dominance in the U.S. electric vehicle (EV) market climbed to 59%, according to data from Cox Automotive. This is a level Elon Musk's company has not seen since 2023.

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The rebound in market share tells an interesting story for Tesla, which has battled an increasingly competitive yet challenging landscape, the expiration of the federal EV tax credit, and Musk's public image, which has hurt the brand. The overall American appetite for EVs has stalled, and legacy automakers have shifted gears back to gas-powered vehicles. The market-share dominance is both a sign of that retreat and of Tesla's competitive edge against pure-play rivals.

While the market share story is positive, there are still plenty of obstacles ahead for Tesla. The company's revenue increased 26% on a record number of deliveries, but profitability decreased. In fact, free cash flow turned negative as Tesla increased its funding of other ambitions, including artificial intelligence, Optimus, and robotaxis.

Image source: The Motley Fool.

This is a familiar conundrum for Tesla investors. The company remains a top player in the global electric vehicle market. Yet the investments in speculative ancillary businesses hurt margins and make investors nervous.

Tesla's core business remains strong even as BYD, Rivian, and other rivals intensify competition globally. What Tesla needs in the long run is for one of its other big bets, be it autonomous driving or robotics, to pay off, thereby justifying the increased pressure on the balance sheet and income statements. Until then, Tesla remains a wild card. It trades at a hefty premium as it shifts its priorities. Longtime investors have done well, but those looking to get in now should expect continued volatility as Tesla's AI projects iterate.

There's still potential upside, but also plenty of risk.

Catie Hogan has positions in Rivian Automotive. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.

Tesla (NASDAQ: TSLA) stock finished Friday, Aug. 21, 2026, up 5.1%, on news that it received approval to bring its robotaxis to Las Vegas. The company also confirmed a European debut for its electric semi truck.

Both the S&P 500 and the Nasdaq Composite finished Friday up 0.4%.

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Clark County cleared Tesla for up to 5,000 robotaxis in Las Vegas On Thursday, Clark County, Nevada, cleared Tesla, Alphabet's Waymo, and Uber to begin running robotaxi services in Las Vegas -- driverless cars that pick up paying passengers with no one behind the wheel. Together, the three can put as many as 8,000 robotaxis on local roads over the next year.

But Tesla got the largest share of that by a wide margin -- its approval covers up to 5,000 vehicles.

Image source: Getty Images.

The stock also got a boost from the news that Tesla plans to show its new all-electric semi-truck at an international transportation expo in Germany as it gears up for a European launch.

Tesla's valuation leans on businesses that don't exist yet These are exciting developments, no doubt, but both projects remain in their development stages, far from true commercial deployment. Tesla's stock is too richly valued, and for my money, too much of that value is derived from lines of business that may never materialize.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

It has been about a month since the last earnings report for Tesla (TSLA - Free Report) . Shares have added about 8% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Tesla due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Tesla, Inc. before we dive into how investors and analysts have reacted as of late.

Tesla Q1 Earnings MissTesla reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%.

Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Record second-quarter vehicle deliveries and growth across the energy and services businesses supported the top line. Deliveries increased 25% to 480,126 vehicles.

Revenue Growth Broadens Across BusinessesAutomotive revenues rose 23% year over year to $20.52 billion. Automotive sales increased to $20.01 billion from $15.79 billion, while leasing revenues declined to $364 million from $435 million. Regulatory credit revenues fell sharply to $146 million from $439 million.

Energy Generation and Storage revenues grew 13% to $3.14 billion. Services and Other revenues jumped 50% to $4.58 billion, reflecting higher activity across used vehicles, Supercharging, service centers and insurance. Higher Full Self-Driving subscriptions also aided automotive ancillary sales.

Deliveries Set RecordTesla produced 451,758 vehicles, up 10% from the prior-year quarter. Model 3/Y production increased 12% to 442,936 units, while production of other models declined 34% to 8,822 units.

Model 3/Y deliveries rose 25% to 467,762 vehicles, while other-model deliveries increased 19% to 12,364 units. Global vehicle inventory improved to 15 days of supply from 24 days a year earlier. The company exited the quarter with its largest order backlog since 2023.

Software and Energy Metrics Gain MomentumActive paid FSD subscriptions increased 56% year over year to 1.48 million. Tesla achieved record FSD subscription additions and more than 55% of its North American deliveries included an FSD subscription at the time of purchase.

Energy storage deployments climbed 41% to 13.5 GWh, marking Tesla’s second-highest quarterly deployment volume. The company also expanded its charging network to 8,704 Supercharger stations and 82,357 connectors, representing increases of 18% and 17%, respectively.

Margins Contract as Expenses ClimbGross profit rose 23% to $4.75 billion, but the GAAP gross margin contracted 41 basis points to 16.8%. Operating expenses surged 47% to $4.35 billion, driven by research and development spending related to AI, Cybercab, Optimus and Tesla Semi, as well as higher stock-based compensation and selling and administrative costs.

Operating income declined 57% to $398 million, reducing the operating margin to 1.4% from 4.1%. Automotive gross margin excluding regulatory credits was 16.3% compared with 15% a year earlier and 19.2% in the preceding quarter.

Energy gross margin fell to 20.4%, partly due to a roughly $240 million warranty charge tied to vendor battery-cell issues and the absence of prior-quarter tariff benefits. Services and Other gross margin improved sequentially to a record 14.1%, supported by higher volumes and better fleet cost management.

Cash Flow Reflects Heavy InvestmentNet cash provided by operating activities increased 85% to $4.70 billion. However, capital expenditures more than doubled to $5.79 billion from $2.39 billion, resulting in negative free cash flow of $1.09 billion.

As of June 30, 2026, cash, cash equivalents and short-term investments totaled $43.52 billion, up 18% year over year but down $1.22 billion sequentially. Long-term debt and finance leases, excluding the current portion, were $7.92 billion.

Outlook Prioritizes AI and New ProductsTesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years. Planned investments include Robotaxi fleet expansion, Optimus production capacity, semiconductor manufacturing, solar production and AI computing infrastructure.

Cybercab production has begun at Gigafactory Texas, while Tesla Semi and Megapack 3 remain scheduled to enter production in 2026. The company is installing first-generation Optimus production lines and expanding Robotaxi operations.

How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -24.42% due to these changes.

VGM ScoresAt this time, Tesla has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tesla has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry PlayerTesla belongs to the Zacks Automotive - Domestic industry. Another stock from the same industry, General Motors (GM - Free Report) , has gained 6.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

General Motors reported revenues of $48.03 billion in the last reported quarter, representing a year-over-year change of +1.9%. EPS of $3.57 for the same period compares with $2.53 a year ago.

General Motors is expected to post earnings of $3.37 per share for the current quarter, representing a year-over-year change of +20.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +4.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for General Motors. Also, the stock has a VGM Score of A.

Further delays await the release of Tesla's Optimus humanoid robot. Production of Optimus robots will start "in the coming months" with commercial sales scheduled for the second half of 2027, according to a new note from JPMorgan Chase.

Earlier forecasts from Tesla planned for production to start this summer, with initial sales kicking off as early as the end of 2026. The new timeline came after JPMorgan analyst Rajat Gupta visited Tesla's Fremont, Calif., factory.

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Tesla (TSLA) stock was down 1.7% on Thursday, according to MarketSurge.

The official unveiling of the Tesla Optimus 3 robot will take place close to the start of production to ensure competitors wouldn't be able to copy its designs, according to Gupta. The cost, capabilities and scale of the following model, the Optimus 4, will be determined based on "Gen 3 field experience," he added.

Optimus Production Timeline
The Fremont factory began converting production lines to make Optimus robots earlier this year after Tesla discontinued its Model S and Model X.

Tesla has repeatedly delayed the start of production. In January 2025, Musk forecast "roughly 10,000 Optimus robots" would be built by the end of that year.

An Optimus 3 unveiling was later expected in Q1 2026, though it wasn't expected to be a fully finished product.

In March, Musk said production would start in the summer. By early July, production was scheduled for between late July and August. During Tesla's second-quarter earnings call in late July, Musk refrained from offering a concrete start date, saying production would begin "soon."

"I really want to emphasize here that the production scaling challenge is very substantial," Musk said during an investor call. "This is going to be the hardest product to scale manufacturing that we've ever made at Tesla because everything on the robot is new. And the difficulty of scaling the production ramp is proportionate to the newness of the parts in the robot."

When Musk and team failed to provide any concrete update on Optimus and robotaxis during Tesla's most recent earnings report, the stock tanked. Investors have built a significant portion of their valuations around the eventual success of Tesla's humanoid robot business. In March, Bank of America valued Tesla's future Optimus business at around $30 billion. Meanwhile, Morgan Stanley believes Optimus will be worth up to $180 billion.

Tesla Stock
Tesla stock took a beating in late July when it plummeted 14.5% in a single day following a poorly received earnings call. Investors had been clamoring for progress on Optimus, robotaxis and self-driving software. Instead, Musk demurred, even as Tesla burned cash amid heavy capital spending that is expected to increase. The lack of any concrete timelines sent the stock tumbling close to 18% that week.

Shares haven't recovered since then. However, TSLA is on course for three straight weeks of gains, though it's only up a fraction as of Thursday afternoon.

Tesla stock is down about 23% this year.

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Tesla
TSLA +3.42% 88

, the electric-vehicle, energy-storage and autonomous-driving giant, surged roughly 2.9% to $346.5 Wednesday morning as Treasury yields backed off. That was enough to flip the script after Tuesday's rate-driven selloff. Investors piled straight back into mega-cap growth, and Tesla was one of the biggest winners.

But here is the catch: Tesla's stock is running much faster than its current profits. Second-quarter revenue jumped 26% to $28.24 billion as deliveries cleared 480,000 vehicles. Then the numbers get ugly. Operating income crashed 57% to just $398 million. Operating margin shrank to a razor-thin 1.4%. Free cash flow dropped to negative $1.1 billion as Tesla stepped harder on spending for AI, factories and future products. Tesla's investor-relations site confirms its Q2 2026 results were released July 22.

And that is exactly why falling yields matter so much here. Investors are not paying a monster earnings multiple for a 1.4% operating margin. They are betting that robotaxis, autonomous software, Optimus and physical AI can eventually turn Tesla into something far bigger than an automaker. The valuation snapshot puts a number on that optimism: Tesla at $346.52 sits 4.02% above its GF Value™ of $333.12. That premium is not enormous, but the message is crystal clear. Tesla is already priced for plenty of tomorrow. Lower yields can keep feeding the story today. Eventually, the profits have to catch up.

Check the Warning Signs for

TSLA

now!

Tesla (TSLA -0.72%) stock isn't having a great 2026 so far. It's down almost 24% this year as of the time of writing, compared to the S&P 500, which is up almost 13.8%. The underperformance is driven by a realignment of expectations throughout the year: Robotaxi revenue expectations were pushed out, capital expenditure expectations were pushed up, and near-term margin expectations were pushed down. I would invite readers to put forward any stocks that have risen given these sorts of circumstances. The bears got it right, but here's where some of them may be wrong.

Tesla's changing narrative Expectations for earnings from robotaxi have been pushed out due to the "delayed" rollout, at the same time as management has unveiled plans to ramp capital spending to above $25 billion in 2026 and will "grow for the next two or three years" to fund Optimus production, robotaxi fleet, investments in Terafab, solar manufacturing, AI compute, and "all the other expansions we'll do for other manufacturing for automotive," according to CFO Vaibhav Taneja on the last earnings call.

Today's Change

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As for the margin compression in the second quarter, it largely stems from an unfavorable sales mix and rising costs, as discussed in more detail previously. Putting all of this together, if you were modeling X amount of earnings and cash flow for, say, 2027 and 2028, and the start of the year, then you would have to lower that figure to X minus Y in light of the changes this year.

For example, here's how the Wall Street analyst consensus for Tesla has changed negatively over the last three months, according to Visible Alpha.

Wall Street Analyst Consensus

2026

  2027

  2028

  Metric

3 Months Ago

Current

3 Months Ago

Current

3 Months Ago

Current

Net income

$4.4 billion

$3.5 billion

$6.1 billion

$4.5 billion

$8.9 billion

$7.1 billion

Capital expenditures

$24.3 billion

$25.2 billion

$20.9 billion

$25.7 billion

$21 billion

$26.3 billion

Free cash flow

($8.4) billion

($8.5) billion

($4.5) billion

($11.1) billion

($0.4) billion

($7.8) billion

Data source: Visible Alpha

In a nutshell, the bears who doubted that Tesla's robotaxi rollout would meet CEO Elon Musk's previous pronouncements have been proven right. Moreover, it's worth noting that Musk's previous estimates focused on fleet size and expansion to new cities, whereas now management wants investors to think in terms of miles driven under robotaxis and the development of the next major version of full self-driving (FSD) software, v15.

Image source: Tesla.

What the bears may be missing The developments in 2026 are disappointing, but the dip in the share price may prove a good long-term entry point, now that expectations for the robotaxi rollout have been reset. In addition, Tesla is making progress on robotaxi development. Realistically, if management has said it wouldn't go "large-scale unsupervised FSD" until v15 was in place, then that's what investors should monitor. The good news is the robotaxi fleet is already running with early, but far from complete, versions of v15.

If the architectural and safety improvements in v15 enable Tesla to scale its robotaxi fleet in 2027, the narrative around the stock will change dramatically for the better, potentially prompting upgrades to earnings expectations. In other words, don't bet against the earnings potential of Tesla's robotaxi business.

powered by

TSLA buy on robotaxi/AI re-rating

Buy Tesla (TSLA). The stock is already reacting to AI/robotaxi headlines, and the market is still “de-emphasizing” near-term fundamentals—meaning incremental proof (robotaxi expansion, Cybercab event progress, Optimus demos) can drive a fast multiple re-rate. Analyst sentiment is also skewing more positive than the long-run average (45% Buy vs 55–60% typical), leaving room for upgrades if events confirm momentum. Key risk: FSD/robotaxi performance stays unreliable (frequent disengagement/collisions), forcing investors to treat robots as marketing instead of a scalable business.

Key Risk: FSD/robotaxi fails to scale—disengagements and safety issues keep proving it’s not ready for mass use.

TSLA sell into valuation risk

Sell Tesla (TSLA). The bearish case is simple: valuation assumes autonomy and humanoid robots work on a timeline that current evidence doesn’t support. With operating margin at 1.4%, negative free cash flow, and energy margin down, the stock has little cushion if robotaxi/Cybercab timelines slip. Johnson’s tracked disengagement rate and collision disclosures directly challenge the “ready now” narrative, and the average target ($374) is far below the recent peak. Key risk: Tesla delivers credible, measurable autonomy/robotaxi expansion fast enough to justify the current expectations (not just events, but real-world scale).

Key Risk: Tesla proves autonomy is ready at scale—real robotaxi adoption and performance beat the valuation assumptions.

Tesla TSLA shares reversed earlier losses on Tuesday and were trading in the green as investors focused on the electric-vehicle maker's artificial intelligence ambitions and potential robotaxi and humanoid robot businesses.

Tesla shares entered Tuesday down about 25% year to date and had gained only around 1% over the previous 12 months, reflecting a prolonged period of limited gains as investors await evidence of progress in the company's AI-related businesses.

Tesla launched an AI-trained robotaxi service in June 2025, although its rollout across several cities has been gradual.

The company is also preparing to introduce the Cybercab, a steering-wheel-less robotaxi, according to The Information.

Tesla has separately been developing Optimus, an AI-trained humanoid robot, although investors have had limited recent visibility into its capabilities.

Baird analyst Ben Kallo said investor attention remains focused primarily on Tesla's robots and robotaxis rather than its traditional automotive and energy operations.

He described the current environment as one in which fundamentals have been "extremely de-emphasized."

Kallo rates Tesla Buy and has a $475 price target.

According to FactSet, 45% of analysts covering Tesla rate the shares Buy, below the typical 55% to 60% Buy-rating ratio for S&P 500 companies.

The average analyst price target is around $374, down from a March peak of approximately $415.

GLJ Research reiterated its Sell rating and maintained a $24.86 price target, implying a 92% downside from current price levels.

GLJ Research analyst Gordon Johnson highlighted Tesla's 1.4% operating margin in the second quarter, negative $1.1 billion in free cash flow and a decline in energy gross margin to 20.4%.

Johnson also raised concerns about Tesla’s robotaxi ambitions, arguing that the company’s Full Self-Driving (FSD) performance does not yet support the expectations built into the stock’s valuation.

He cited tracked data showing FSD v14 on Tesla’s HW4 system disengaging about every 40 miles.

The data covers 865 vehicles, with 18 active in the past week.

Johnson also pointed to 22 collisions reported in National Highway Traffic Safety Administration filings over the past 12 months, saying the figures raise questions about whether Tesla’s autonomous driving technology is ready to justify its current valuation.

Those concerns extend to the Cybercab, Tesla’s planned steering-wheel-free robotaxi.

While Johnson expects the planned Austin event to attract attention, he does not view the event itself as evidence that the vehicle is ready for widespread use.

Johnson also questioned Tesla’s valuation estimates for its future businesses.

He cited management estimates of roughly $20 trillion for Optimus, the company’s humanoid robot business, and about $5 trillion for autonomy and other businesses.

SpaceX merger remains a potential catalystInvestors are also watching speculation about a potential combination between Tesla and SpaceX, both led by Elon Musk.

Gary Black, managing partner at The Future Fund, believes there is a high probability of a Tesla-SpaceX merger this year but remains cautious about Tesla's valuation.

He expects SpaceX could potentially make an all-stock offer for Tesla at a roughly 20% premium.

Black said such a transaction could create strategic synergies and simplify Musk's responsibilities across the two companies. However, he also warned that existing Tesla shareholders could face substantial dilution in an all-stock transaction.

Black estimates Tesla is trading at roughly 195 times 2026 earnings and argues that its valuation leaves limited room for attractive returns even with strong long-term earnings growth.

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In March 2015, Elon Musk told Neil deGrasse Tyson that the burning of fossil fuels “the dumbest experiment in history, by far,” arguing that since reserves are finite and a clean-energy transition is inevitable, altering the atmosphere made no sense. Eleven years later, disclosures in the IPO filing for SpaceX (NASDAQ:SPCX | SPCX Price Prediction) revealed plans to spend more than $2.8 billion on natural gas turbines over three years to power AI data center operations, as reported by WIRED on May 20, 2026 and Benzinga on May 21, 2026. The turbines feed the Colossus compute complex near Memphis, Tennessee.

What the $2.8 Billion Buys Of the total, roughly $2 billion is earmarked for mobile gas turbines, with a separate $805 million in turbine orders already placed and deliveries running through 2029. The power is for xAI, which is now part of SpaceX following a merger completed in early 2026 at a reported $1.25 trillion valuation, per Reuters, Built In and GovCon Wire. Teslarati reported in February 2026 that the merger was structured to keep legal liability and debt at arm’s length.

The scale of compute demand is visible in the tenant list. Data Center Dynamics reported on May 21, 2026, based on the SpaceX IPO filing, that Anthropic is set to pay Musk’s firm $1.25 billion a month to rent xAI data center space. On the call for SpaceX’s first quarter as a public company, Musk said AI segment revenue reached $2.6 billion, up 247% year over year, with compute capacity now at 1.4 gigawatts nameplate and a target of 20 gigawatts of power, cooling, and electrical equipment online by the end of 2027.

Why Gas, and Why Now AI data centers require large, fast-ramping loads that the U.S. grid often cannot supply on the required timeline. Some regions have imposed moratoriums on new data center grid connections extending into 2030. Operators are turning to on-site natural gas, sometimes called “behind-the-meter” or “dark energy” power. Electrek reported on August 10, 2026 that Musk’s Terafab chip plant will run on gas rather than Tesla solar.

The Memphis Backstory xAI has operated dozens of turbines near Memphis. Reported counts have ranged from roughly 46 to 69 turbines at various points in different reports, with only about 15 officially permitted by state regulators. xAI’s position is that trailer-mounted “mobile” units do not require the same state air quality permits as fixed installations. The EPA has determined this interpretation puts the company in violation of federal air pollution rules.

The NAACP and the Southern Environmental Law Center have sued xAI seeking an injunction, citing potential nitrogen oxide emissions of more than 2,000 tons annually in a region with among the poorest air quality in the country. The U.S. Department of Justice has weighed in on the company’s side, characterizing the turbines as a matter of national, economic and energy security, per Electrek reporting on June 17, 2026. The litigation remains active.

Where It Stands TechCrunch reported on July 31, 2026 that SpaceX will not remove all of xAI’s unpermitted turbines for another year. The AI Insider reported on August 3, 2026 that the unpermitted units will be phased out by 2027 while a permanent gas plant is built, reported at roughly 41 turbines in the 16 to 50 megawatt range. Battery storage is going in alongside the gas: Electrek reported on June 4, 2026 that xAI purchased another $269 million of Tesla Megapacks from Tesla (NASDAQ:TSLA).

Tesla shares closed at $342.27 on August 14, 2026, down 23.89% year to date. SPCX closed at $140. The unresolved question is whether Memphis becomes a template for how AI infrastructure gets built in the United States, or a warning.

Contact [email protected] for any questions or corrections.

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Tesla shares have steadied after a rough stretch, closing at $342.27 on August 14, 2026, up 4.2% over the prior week even as the stock remains down 23.9% year to date. Tesla (NASDAQ:TSLA | TSLA Price Prediction) has a $1.4 trillion market cap and a trailing P/E of 311, with analysts holding an average target of $395.34. Here are six catalysts investors are watching, followed by the profitability problem that could stall them.

1. China Momentum Shanghai wholesale sales hit 93,579 vehicles in July 2026, up 37.85% year over year, a ninth consecutive month of growth and the best July on record. Year to date, China wholesale sales reached 561,528 units, roughly 29.88% higher than the same period last year. In Q2, Shanghai exports of 128,394 vehicles exceeded domestic deliveries of 126,157 for the first time.

2. Record Global Deliveries Q2 2026 deliveries reached 480,126, a second-quarter record, up about 25% year over year and past the 402,776 consensus, led by a European rebound (Reuters, July 2, 2026). Morningstar’s Seth Goldstein, who had modeled a third straight annual decline, said afterward it would be “very hard to see a decline for the full year.”

3. Sweden Overhang Cleared Swedish union IF Metall announced the end of its nearly three-year industrial action against Tesla on August 13, 2026, saying the conflict no longer had any effect after Tesla bought out the union’s striking members. Shares rose on the news.

4. Energy Expansion A proposed multibillion-dollar solar facility in Texas, known internally as Project Crystal Sun, would pair solar manufacturing with the Megapack and Powerwall business, aimed at meeting data center and industrial power demand. The EIA projects U.S. electricity consumption growing 1.3% in 2026 and 2.9% in 2027, with commercial demand leading.

5. Robotaxi Footprint Autonomous ride-hailing has expanded into Orlando and Tampa, alongside Austin, Dallas, Houston, and Miami, with Cybercab production expected to ramp later this year. Tesla said on the July call that “we have driven more than 380,000 miles of unsupervised Robotaxi” and Elon Musk added that growth was “more than 10% a week in terms of miles driven.” Commercial adoption remains early; the value is future potential.

6. Wall Street Underwrites the AI Story UBS raised its price target to $442 from $364, citing potential value from Optimus, Full Self-Driving, and the Dojo computing platform. Active FSD subscriptions reached 1.48 million in the second quarter, up 56% year over year, with attach rates above 55% on new North American deliveries.

The Profitability Problem Q2 2026 results were mixed. Adjusted EPS came in at $0.33 versus the $0.5367 consensus estimate, a 38.51% miss, while revenue of $28.24 billion beat by 7.10% and grew 25.52% year over year. Free cash flow turned negative at –$1.09 billion as capital spending surged 141.81% to $5.79 billion, and operating margin compressed to 1.4%. Musk guided that “CapEx for this year will be more than $25 billion” and rising further. Regulatory credit revenue keeps sliding, and Freedom Broker analyst Dmitriy Pozdnyakov estimated U.S. sales likely fell at least 10% in the quarter after the EV tax credit expired. The bull case is credible. The near-term earnings math is not, and that gap is what any rally must close.

Contact [email protected] for any questions or corrections.

Back in 2024, Tesla (TSLA +0.68%) CEO Elon Musk wrote a series of posts on X, saying that he needed 25% voting control of Tesla to feel comfortable leading it into its new era as an artificial intelligence (AI) and robotics company.

He hasn't reached that threshold yet, but he's getting close. Musk recently exercised options to boost his voting power to nearly 20%, up from 13%. Here's what it means for Tesla shareholders as Musk approaches a 25% controlling interest in the company.

Tesla CEO Elon Musk. Image source: The White House.

What Musk said and why it still matters
Musk wrote on X a couple of years ago that he is "uncomfortable growing Tesla to be a leader in AI & robotics" without having 25% voting control, saying, "If I have 25%, it means I am influential but can be overridden if twice as many shareholders vote against me as for me. At 15% or lower, the for/against ratio to override me makes a takeover by dubious interests too easy."

Musk has touted Tesla's focus on self-driving and its Robotaxi and Optimus humanoid robot as the company's future, and he wants a controlling interest so he can set Tesla's direction with minimal interference.

At face value, there's nothing unusual for a CEO wanting control over a company's direction. The potential problem for shareholders is that Tesla is in the midst of a massive transition from an electric vehicle company to a robotics and AI company. And it's risky.

So far, Tesla has built only hundreds of its Optimus robots (which are still not available for purchase), and its self-driving service is in the test phase in a limited number of cities. Meanwhile, some of the goals laid out in Musk's nearly $1 trillion pay package include selling 1 million robots and having 1 million Robotaxis on the road.

And Tesla hasn't performed all that well over the past couple of years. The stock is up just 51% since Musk's 2024 comments -- less than the S&P 500's 62% returns over the same period.

Musk recently increased his ownership stake in Tesla to an estimated 20%, so he's getting much closer to his originally stated goal. Those new shares won't fully vest until January 2028, but their legal structure gave Musk immediate voting power.

Today's Change

(

0.68

%) $

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A Tesla/SpaceX merger could change everything
A recent WSJ report explained that Tesla would consider half of the company's ambitious targets achieved if it were acquired or otherwise taken over.

It added that if Space Exploration Technologies (SPCX -0.91%) bought Tesla, valuing it at $2 trillion, that could result in Musk owning 32% of the combined company, with 73% voting power from Class B voting shares.

Many analysts believe that Musk will move to merge the two companies, with Gene Munster, managing partner at Deepwater Asset Management, saying recently, "I would put the odds that these two will combine at 90% today." Tesla was mentioned 87 times in SpaceX's S-1 filing ahead of its IPO.

Musk himself has mentioned the possibility many times, most recently saying on the Tesla earnings call that he couldn't talk about it, and "It's got to be done with the appropriate process." Morningstar analysts believe Tesla shareholders would only approve a deal if it gave Tesla 50% of the combined company.

All of this means that Tesla shareholders could soon face a big decision: whether they want to own a company where Musk could have even more control than the 25% he nearly has over Tesla.

Tesla (TSLA +0.68%) shareholders approved what could become the largest executive compensation package in corporate history. If Elon Musk achieves every performance target over the next decade, the award could eventually be worth roughly $1 trillion. That's massive.

Many criteria must be met before the award is given, and one number stands above all the others: $8.5 trillion. That's the market capitalization Tesla must reach for Musk to earn the maximum stock award under the new compensation plan.

To put that in perspective, Tesla is currently worth roughly $1.34 trillion, meaning the company would need to grow by roughly 635% to hit the final valuation milestone. Indeed, that may sound unrealistic, but it's important to understand how the package works.

Image source: Getty Images.

A structure that rewards shareholders Unlike a traditional salary or cash bonus, Musk only earns these bonus shares if Tesla meets a series of performance hurdles. Those include market capitalization targets as well as additional operational milestones designed to ensure the company's financial performance keeps pace with its valuation.

This structure will reward shareholders, assuming Tesla becomes dramatically more valuable. So this is less about whether Musk deserves the compensation and more about whether these incentives encourage decisions that increase long-term value. Supporters argue they do.

Does Musk have too much influence? If Tesla reaches an $8.5 trillion market value, shareholders will own a slightly smaller piece of the company, but it would be a much more valuable company. That's the trade-off built into the compensation plan.

But critics see it differently. They argue that the targets place too much emphasis on market capitalization, which can be influenced by investor sentiment as much as business fundamentals. Others have questioned whether such a large equity award gives Musk excessive influence over a public company that already depends heavily on his leadership.

Not a trivial amount of capital expenditures Tesla remains in the middle of one of the largest investment cycles in its history. The company is spending heavily on artificial intelligence (AI) infrastructure, autonomous driving, robotics, and manufacturing capacity. Management believes those investments, not just traditional electric vehicle sales, will ultimately determine whether Tesla can justify a much higher valuation over time.

Recent quarterly capital expenditures, by the way, reached $5.8 billion, reflecting the company's aggressive push into AI and robotics. That exceeds what Domino's generated in revenue in all of 2025. Make no mistake: $5.8 billion in one quarter is not trivial.

Today's Change

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342.27

No guarantees Ultimately, Musk's compensation package doesn't really guarantee anything, but it does set an extraordinarily high bar that few companies have ever approached. Whether Tesla eventually reaches an $8.5 trillion market value will depend less on the compensation plan itself and more on whether the company can successfully commercialize autonomous driving, scale its robotics business, and build entirely new revenue streams beyond selling electric vehicles. If it does, shareholders are likely to benefit alongside Musk.

TSLA stock is moving. See the chart and price action here.
Rocket-Car Demo Nears After DelaysThe thruster package uses pressurized inert gas, the same category of hardware SpaceX relies on for attitude control during Falcon 9 booster landings, rather than combustion.

Roughly ten thrusters are expected to sit where the rear seats would normally go, and Musk has claimed the system could push the Roadster from 0 to 60 mph in about 1.1 seconds while briefly lifting the car off the pavement.

Spectators would need to stand several hundred yards back because of potential hearing damage from the high-pressure gas release, per The Information’s sourcing. The demo vehicle will reportedly be remotely operated, without a driver, and will not be street legal.

Tesla intends to sell a limited-edition SpaceX version equipped with the thruster package alongside a separate “scaled-down” variant of the car, with pricing potentially running into the hundreds of thousands or even millions of dollars.

The program has a rocky history. Electrek noted the Roadster demo has missed at least eight internal deadlines, sliding from an original target date to April, then May, then June and now August.

Musk reportedly received a private preview of the A71 system from Tesla and SpaceX engineers in late April, well before the public timeline kept slipping.

Skeptics Doubt ‘Flying’ Claims Skepticism persists about how literally “flying” should be taken. Electrek previously flagged a Roadster-related patent filing that made no mention of thrusters, rocket, lift, or flight, suggesting the production hardware may diverge from years of hype.

Automotive analysts have also questioned whether a hovering feature would clear basic safety and liability hurdles for a road-legal vehicle.

Regardless of how much the car actually leaves the ground, the event doubles as a marketing showcase for Tesla-SpaceX engineering collaboration at a moment when investors are watching the product pipeline closely. No official date or broadcast plan has been confirmed by Tesla or SpaceX.

TSLA, SPCX Stock Price Activity: Tesla shares were up 0.71% at $342.36 and SpaceX shares were down 3.64% at $136.13 at the time of publication Friday, according to Benzinga Pro.

Photo: Shutterstock

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Tesla is planning one of its largest supercharger stations yet — right in the middle of San Francisco

By

Katherine Li

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Tesla is planning a 124-stall Supercharger hub in San Francisco at 75 Waterloo Street.

Marcin Golba/NurPhoto via Getty Images

Tesla is making a major bet on demand from urban EV owners by planning an unusually large charging hub in San Francisco.

Plans filed with the city show that Tesla is planning for 124 V4 Supercharger stalls at 75 Waterloo Street, a triangular vehicle storage lot near the intersection of Alemany Boulevard and Bayshore Boulevard, alongside Highway 101.

The proposed station would be among Tesla's largest globally, and a rare project of that scale inside a major city. By comparison, Tesla's planned V4 Supercharger at 25 Mason Street, near Market Street in the city, would have 35 stalls. That permit application was submitted on May 18.

Tesla's 124-stall Supercharger hub plan, as seen in the company's permit application to the city of San Francisco. 

Official Tesla Filings

Tesla's biggest charging hubs are typically built along heavily traveled interstate corridors, where land is cheaper and demand surges during road-trip season. The hub sits at the crucial location where the 101 meets Interstate 280, which leads to the Peninsula, Silicon Valley, and San Francisco International Airport. It's also not far from Bernal Heights and the Bayview, which have significant residential populations.

Some of Tesla's largest charging locations include a 200-stall station in Yeehaw Junction, Florida, and a 164-stall station in Kern County, California. While the latter became fully operational in November 2025, the largest hub in Florida has yet to open.

Based on maps submitted to the city, the 124 stalls would use a conventional parking configuration rather than the pull-through stalls Tesla has introduced at some newer locations.

The plans include a roughly 416-square-foot "micro-amenity" building. 

Official Tesla Filings

The plans indicate the station would operate around the clock and include a roughly 416-square-foot "micro-amenity" building. Sketches show that the building contains two gender-neutral, accessible restrooms with diaper-changing stations, water fountains, and vending machines, as well as space for storage, cleaning equipment, and the site's security and IT systems. The vending area would offer coffee, hot drinks, and snacks.

The plans do not appear to include solar canopies or Tesla Megapack batteries, features used at some of the company's other large charging hubs. Solar canopies are typically used to lower peak-demand costs and keep chargers operating during some outages.

The latest version of the application was submitted on July 29, but the project still needs to go through the city's permitting process. No construction or opening date has been announced.

Tesla did not respond to a request for comment.

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The market is watching an industrial sector powerhouse attempt to rewrite its fundamental DNA in real time. Tesla, Inc. NASDAQ: TSLA is aggressively pivoting from a traditional electric vehicle manufacturer into an autonomous mobility and AI network. This ambitious transition comes with an immediate financial reckoning. As full-year capital expenditures are tracking to exceed $25 billion, quarterly free cash flow recently turned negative to $1.09 billion.

Tesla Today

$325.46 -7.35 (-2.21%)

As of 11:52 AM Eastern

52-Week Range$297.38▼

$498.83P/E Ratio301.35

Price Target$401.74

Strip away the futuristic narrative, and Tesla's core automotive business is facing severe pressure. Price reductions across key global markets continue to squeeze profitability.

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Operating margins compressed to a razor-thin 1.4% during the second quarter of 2026, while adjusted EBITDA came in around $3.27 billion. Adjusted earnings arrived at 33 cents per share, missing Wall Street expectations, even as top-line quarterly revenue showed resilience at approximately $28.24 billion.

What does a 1.4% operating margin mean for a heavy manufacturing operation? It leaves almost zero room for error. Unit volume growth is no longer preserving net margins or return on equity. The entire valuation thesis now rests almost entirely on software monetization and progress in physical AI. Tesla is actively decommissioning traditional assembly lines at its Fremont facility to build dedicated Optimus robotics lines, funneling billions into Gigafactory Texas for Cybercab tooling.

Wall Street Demands Proof of the Robotaxi FlywheelHigh-conviction institutional investors demand concrete operational proof points rather than forward-looking guidance. Morgan Stanley NYSE: MS recently issued notes highlighting that long-term institutional confidence hinges on tangible progress in the Robotaxi division. The market needs to see actual vehicle deployment density in active metropolitan areas and exponential growth in unsupervised driverless miles.

The ultimate goal is to demonstrate the unit economics of the Robotaxi network, targeting an operating cost of around 81 cents per mile.

If Tesla hits or beats this metric, the high valuation multiples are easily justified by the sheer scale of the global transportation market. If the deployment data fails to demonstrate scalable cash flow, the narrative premium built into the stock begins to evaporate.

There is a highly lucrative bright spot in the current software transition. Full Self-Driving attach rates on new North American deliveries reached about 55%, significantly outpacing early Wall Street projections. Converting these software subscriptions into high-margin driverless mobility remains the central hurdle, but this level of consumer adoption proves that direct-to-consumer software monetization is accelerating.

Software revenue carries incredibly high margins, which is exactly the lifeline the balance sheet needs to offset the brutal physical electric vehicle price war. The current environment presents a race against the clock. Tesla needs to scale its higher-margin software revenue fast enough to bridge the gap left by falling automotive profits.

Energy Storage Offers a Much-Needed Revenue BufferWhile automotive margins are in decline, the commercial energy storage division continues to scale as a vital secondary growth driver. The Megapack business provides a non-automotive revenue stream that helps absorb the elevated capital expenditures for AI.

Commercial execution was recently highlighted by SpaceX's NASDAQ: SPCX purchase of approximately $300 million in Megapacks to supply power for dedicated data center infrastructure. This internal cooperation showcases a broader blueprint for AI data center energy demand, proving that Tesla has viable, high-margin revenue streams beyond selling consumer vehicles. Energy generation and storage now represent a critical stabilizer for the bottom line, keeping the autonomous dream funded while the core auto segment fights a grueling war of attrition.

A 300x Multiple Teeters on Deployment MetricsTrading at over 300 times trailing earnings, Tesla assumes substantial future cash flows from high-margin software revenues. For context, legacy automakers generally trade at single-digit multiples. This valuation gap creates a highly volatile, data-dependent environment. If the upcoming Robotaxi operational data fails to confirm scalable unit economics, the stock could face a severe downward re-rating towards a multiple more typical of the automotive sector.

Tesla, Inc. (TSLA) Price Chart for Wednesday, August, 12, 2026

The options market reflects this exact vulnerability. Options positioning for Tesla leans heavily toward downside protection, with a put-to-call ratio sitting near 1.18. Traders currently hold significantly more put contracts, instruments used to bet on or protect against a price drop, than call contracts. The options' max pain level is anchored around $320. Max pain is the price at which the most options contracts expire worthless, and it often acts as a magnetic anchor for the stock price as expiration approaches. Thirty-day implied volatility remains elevated at nearly 44%, suggesting market makers are pricing in severe price swings ahead.

Short interest currently sits at roughly 70 million shares, representing nearly 3% of the available float. While some short covering occurred recently, this level of bearish betting indicates that a well-capitalized portion of the market expects the autonomous pivot to stumble over regulatory or manufacturing hurdles. The National Highway Traffic Safety Administration recently initiated recalls and preliminary investigations concerning potential suspension safety issues, adding regulatory friction to the operational headwinds.

The Autonomy Gamble Reaches Its Tipping PointThe transition from bending metal to deploying scalable artificial intelligence requires unparalleled capital. Expanding commercial Robotaxi operations across a dozen target states by year-end burns cash rapidly. The market is currently forgiving the negative free cash flow because it believes in the autonomous payoff.

Upcoming deployment data will likely act as a binary valuation trigger. Strong data confirming the 81-cent-per-mile unit economics could short sellers to cover and validate the high price-to-earnings multiple. Weak data could strip away the technology premium, leaving Tesla priced as a struggling automaker fighting for market share in a fierce price war.

Investors holding long positions might consider maintaining their exposure while closely monitoring the rollout density and unit economics of the Cybercab fleet. Those looking to deploy new capital may prefer to wait for clear cash flow metrics from the autonomous network before taking a heavy position.

Given the high implied volatility, options traders could find strategic opportunities by hedging against sudden downside re-ratings while keeping upside exposure open for potential deployment breakthroughs. The next few quarters will determine whether Tesla secures its future as a dominant software network or faces a harsh reversion to automotive realities.

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Key Takeaways Tesla registered about 12,000 vehicles in Japan in the first half, with June sales up 183.7% year over year.Tesla plans to expand Japan delivery sites from seven to 11 this year to ease capacity bottlenecks.A second import port lifts TSLA's annual Japan capacity to about 48,000 vehicles and improves western access. U.S. electric vehicle (EV) and tech giant Tesla (TSLA - Free Report) is gaining momentum in a market that has historically been difficult for foreign automakers to crack. After selling more than 10,000 vehicles in Japan in 2025 (doubling from 2024), Tesla registered roughly 12,000 vehicles in the first six months of this year.

June was particularly impressive, with registrations jumping 183.7% year over year to 3,997 vehicles from 1,411 a year earlier, per the data from the Japan Automobile Importers Association, as cited in EVwire. Tesla overtook BMW (BMWKY - Free Report) to become Japan's second-best-selling imported brand for the month, trailing only Mercedes-Benz (MBGYY - Free Report) .

In fact, demand appears to be running ahead of Tesla’s delivery infrastructure. Some June handovers were pushed into July because Tesla did not have enough delivery capacity.

TSLA’s Delivery Expansion Plans in JapanTesla plans to increase its delivery sites in Japan by 60% this year, taking the total from seven to 11. New locations are being added in Yokohama and Kobe this month, followed by additional sites in the Greater Tokyo Area and Nagoya by the year-end. Notably, these are delivery hubs, not showrooms. Tesla keeps sales online and treats physical locations as places for browsing and questions. Deliveries are handled through dedicated centers or directly to customers.

That means the expansion is less about creating visibility and more about removing a bottleneck. Tesla already appears to have found buyers. It needs enough physical capacity to process those buyers efficiently.

On the import side, Tesla added Mikawa Port in Aichi prefecture as a second entry point, supplementing its long-standing reliance on Yokohama's Daikoku Wharf. That roughly doubles the brand's annual import capacity to about 48,000 vehicles and gives it a more direct route into western Japan.

If demand continues at the current pace, this additional capacity could become increasingly important.

Why the Timing Works in Tesla's FavorChanges to Japan's EV subsidy system have created a more favorable environment for Tesla while making the competitive landscape tougher for some Chinese EV makers.

Japan increased the maximum national EV subsidy to ¥1.3 million, and the revised framework places greater emphasis on factors such as supply-chain security, battery sourcing, V2X capability and service coverage. Tesla benefits because its vehicles use Panasonic battery cells, helping it meet the criteria around non-Chinese battery supply. Its bidirectional charging support checks the V2X box. Tesla can therefore qualify for subsidies close to the maximum level, while BYD faces a substantially lower incentive.

That matters in a market where Toyota and other Japanese automakers have traditionally enjoyed a strong home-market advantage. Tesla's growth is being driven largely by the Model Y and Model 3, and the brand is pulling affluent, tech-inclined buyers away from both Japanese hybrids and German luxury marques like Mercedes-Benz and BMW.

In June, Tesla's 3,997 registrations put it ahead of BMW's 3,379 and behind only Mercedes-Benz's 4,512 among imported brands.

Last WordThe company has found a pocket of demand, helped by the Model 3 and Model Y, and is now expanding the infrastructure needed to serve it. Japan’s favorable subsidy design and Tesla’s expanding logistics and buyer base are expected to boost the company’s prospects in Japan. Tesla doesn't need Toyota-scale volumes to make the Japan bet worthwhile, because each sale carries a premium-brand margin.

The Zacks Rundown on TSLA StockShares of Tesla have declined 26% over the past year, underperforming the industry.

Image Source: Zacks Investment Research

From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 11.6, above the industry and its own five-year average. It carries a Value Score of F.

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See how the Zacks Consensus Estimate for Tesla’s 2026 and 2027 EPS has been revised over the past 60 days.

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TSLA stock currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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A Wall Street Journal report dissected on the TBPN podcast episode Nvidia’s $500B Compute Deal, Paramount Threatens CA Exit, Musk’s ‘Shortcut’ to $1T Payday | Diet TBPN is drawing fresh scrutiny to an obscure provision inside Elon Musk’s 2025 Tesla compensation plan. The clause could allow the world’s richest executive to skip the operational milestones that otherwise stand between him and one of the largest pay packages in corporate history.

Tesla (NASDAQ:TSLA | TSLA Price Prediction) shares traded at $332.81 as of the most recent close, giving the company a market capitalization of roughly $1.31 trillion. The stock is down 26% year to date and 18.38% over the past month.

The Package and the Shortcut Under the 2025 CEO Performance Award, Musk can earn up to 423 million Tesla shares across 12 tranches. Each tranche requires Tesla to hit both a market capitalization target and an operational milestone. The operational goals across the full package include delivering 20 million vehicles, reaching 10 million active FSD subscriptions, producing 1 million Optimus robots, and putting 1 million robotaxis into commercial operation. The Journal estimates the maximum award is currently worth approximately $824 billion.

The catch surfaced by the WSJ, as unpacked on TBPN: if Tesla undergoes a change of control, those operational requirements disappear entirely. As the discussion framed it, “Instead of spending the next decade hitting a dozen separate operating goals, a sufficiently expensive acquisition of Tesla could effectively declare those goals accomplished.” For all 12 tranches to unlock through a deal, Tesla’s value at the time of the transaction would need to reach $8.5 trillion, more than 6 times its recent market cap.

Tesla shareholders approved the compensation plan in November, and would still need to approve any acquisition. Evidence that the award is already flowing through Tesla’s income statement is visible in the Q2 2026 8-K filing, which attributes a 47% year-over-year surge in operating expenses to $4.35 billion to AI infrastructure buildout, R&D, and stock-based compensation tied to the CEO award.

SpaceX as the Only Plausible Buyer The speculated acquirer is SpaceX, a privately held company also valued in the trillions and the only entity plausibly capable of such a deal. Speculation intensified after WSJ reported that Tesla executives were considering separating the company’s China business through a spin-off, sale, or closure to pave the way for a potential SpaceX merger, a claim Musk publicly denied. Prediction markets remain skeptical, assigning only a 17.5% probability to a Tesla-SpaceX merger being announced by year-end 2026.

Analysts are split. RBC Capital Markets sees a hypothetical combined entity valued at $3.31 trillion with Tesla shareholders owning 54%, and other analysts suggest an all-stock deal could carry a 20-30% premium for Tesla holders. Future Fund’s Gary Black has pushed back, arguing that SpaceX could not afford Tesla due to significant dilution to SpaceX shareholders.

The U-Shape Incentive One TBPN host described Musk’s payoff curve as a “U-shape.” Musk owns 19.9% of Tesla as of June 17, 2026, based on 413,152,109 shares. Because his stake in SpaceX is larger, he arguably benefits from acquiring Tesla at a very low price, and he also benefits at a very high price through expanded Tesla equity. The middle, per the discussion, is messy.

What to Watch Tesla’s Q2 2026 operating margin compressed to 1.4%, with free cash flow turning negative at -$1.09 billion even as deliveries hit a record 480,126 vehicles and FSD subscriptions climbed to 1.48 million (+56% YoY). Analyst consensus target sits at $396.62, well below anything approaching the $8.5 trillion threshold. For investors, the compensation clause is worth tracking because it aligns Musk’s incentives around a corporate event that would rewrite Tesla’s governance, not just its market cap.

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Tesla has a long history of partnering with Musk's other companies. Tesla Tesla is giving its Cybercab a little help from another Elon Musk company.

On Monday, the EV maker shared photos on X of what it called the "First Cybercab with Starlink integration." The images show a square-like cutout in the roofline, where the satellite internet equipment is built directly into the vehicle.

In a subsequent X post, Musk said riders inside the autonomous two-seat car can "watch live sports in 4k or movies or games or productivity."

The integration is another example of how Musk's companies are increasingly intertwined. Tesla is using SpaceX's AI personality, Grok, as a voice assistant in its vehicles; SpaceX is buying hundreds of millions of dollars' worth of Tesla Megapacks and cars; and the companies have partnered on a joint chip factory project called Terafab.

Those collaborations have inspired rumors of a potential mega-merger between the two companies.

Monday's Cybercab post also shows how Tesla plans to keep its future fleet of driverless cars connected.

During the automaker's second-quarter earnings call, Musk said that Starlink would help address gaps in cellular coverage as the company expands its self-driving robotaxi service.

"We can't have robotaxis getting stuck in these Bermuda Triangles of lack of cellular connectivity," Musk said. "Starlink, with its ability to do connectivity anywhere, is actually quite important, so we don't have robotaxis missing in action."

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Ben Shimkus You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.

Ben Shimkus is a reporter for the Business News desk. He writes about cars, transportation, retail, and jobs. Ben's reporting has appeared in Rolling Stone, The Verge, Automotive News, USA Today, AutoBody News, LGBTQ Nation, TopSpeed, and Out Magazine. He's also held staff writing positions at The U.S. Sun and the Daily Mail. He graduated from NYU with a Master's in journalism in 2024. Email Ben at [email protected] or message him privately on Signal at bshimkus.41. 

Tesla Elon Musk

Elon Musk wants Tesla Inc. (NASDAQ) to become an autonomous-driving powerhouse, , but the company’s Robotaxi service covered roughly 700,000 paid miles in the second quarter. That’s down about 36% from approximately 1.1 million miles in the first quarter, according to Tesla’s reported figures.

Still, the service expanded across more U.S. cities, accumulating driving data specific to its purpose-built Cybercab so it can roll out more vehicles on the road.

That makes the latest growth in Tesla’s broader software ecosystem particularly interesting.

Tesla’s Robotaxi Future Is Taking TimeRobotaxi is supposed to be one of Tesla’s biggest long-term growth engines. But the second quarter mileage decline shows why investors may have to wait before autonomous rides become a major source of revenue.

The company says its Robotaxi service has expanded to additional metropolitan areas, while its purpose-built Cybercab is moving toward production. But scaling an autonomous fleet involves collecting enough real-world driving data, proving safety, and navigating regulatory requirements.

In the meantime, Tesla already has something Robotaxi doesn’t: millions of existing customers.

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The Tesla App Is Becoming More ImportantTesla’s mobile app reached 10.8 million monthly active users in July, according to Similarweb data, up 36.8% from a year earlier and 16.5% from June.

The app is also becoming more tightly connected to Tesla’s software ecosystem. Recent updates added self-driving statistics, more vehicle controls and the ability to use Tesla’s app for additional functions. Tesla has also expanded xAI’s Grok assistant inside its vehicles, allowing drivers to control functions such as climate and music through voice commands.

That creates an important distinction: Tesla doesn’t necessarily need to sell another vehicle to increase the value of the vehicles it has already sold.

Tesla’s FSD Business Provides Clearer ExampleTesla ended the second quarter with 1.48 million active full self-driving (FSD) customers, up 56% from a year earlier. More than 55% of new Tesla deliveries in North America included FSD, showing that the company is increasingly attaching software revenue to its vehicles.

Services and other revenue also reached $4.58 billion in the second quarter, up about 50% year over year, with record gross profit and gross margin.

The bigger opportunity, then, isn’t simply Tesla’s ability to sell more cars.

It’s the ability to keep generating revenue from the cars already on the road through software, subscriptions and other services.

Robotaxi could eventually become the much larger prize Musk has promised. But while that business works through its growing pains, Tesla is finding another way to grow: make the existing Tesla fleet worth more.

For investors, that may be just as important to watch as the next Robotaxi mile.

Read Next

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The silhouette of Elon Musk and SpaceX logo are seen in this illustration created on June 11, 2026. REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights, opens new tab

CompaniesAug 6 (Reuters) - Elon Musk's SpaceX <SPCX.O> and Tesla <TSLA.O> will initially invest $16.8 billion to build Terafab, an advanced AI semiconductor complex in Grimes County, Texas, as the companies race to ​secure the chip capacity that the billionaire has called essential to their ‌future.

The facility is intended at narrowing the gap between global chip supply and the more than 1 terawatt of computing power that SpaceX and Tesla expect to need in the coming years.

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Future expansion ​phases could push total investment much higher, SpaceX said in a statement on ​its website on Thursday, adding that the facility would employ at ⁠least 3,000 people.

"The Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying ​jobs in the Lone Star State, and enabling us to produce AI chips at scale ​for use on Earth and in space," Musk said.

Musk has been tightening integration of AI efforts across his companies, with SpaceX acquiring his startup xAI earlier this year in a deal focused on ​building space-based data centers, before going public in June in the largest-ever IPO.

The vertically ​integrated, 100-million-square-foot Terafab plant will make, package and test advanced logic and memory chips under one roof, ‌producing ⁠processors needed to power Tesla's Optimus robots and Cybercabs, as well as high-power chips to run SpaceX's space-based data centers.

A May filing showed SpaceX has proposed an initial investment of $55 billion to build the Terafab, with the total amount rising to $119 billion if extra ​phases are completed.

To aid ​the efforts, SpaceX ⁠earlier this year partnered with Intel, which has been trying to expand its chip contract manufacturing business as part of a turnaround effort.

Tesla broke ​ground in April on a research facility at the North ​Campus of ⁠its Giga Texas plant, a precursor to Terafab.

The Grimes County site sits near the Gibbons Creek Reservoir, whose water the companies plan to use for industrial operations rather than local groundwater.

It ⁠adds ​to SpaceX and Tesla's growing Texas footprint, alongside sites ​at Starbase, Bastrop and McGregor.

"Texas is where big ideas grow even bigger," the state's governor, Greg Abbott, said ​in a statement.

Reporting by Aditya Soni and Anhata Rooprai in Bengaluru; Editing by Anil D'Silva

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