Tesla shares TSLA edged higher on Tuesday as investors weighed progress toward reopening the Strait of Hormuz, a new vehicle recall, and Wall Street's continued focus on the company's Robotaxi and artificial intelligence initiatives.
Tesla stock rose 1.2% to $334.35 in early trading.
The broader market was little changed. The S&P 500 gained 0.1%, while the Nasdaq Composite traded around the flatline and the Dow Jones Industrial Average added 50 points, or 0.1%.
Investors were weighing signs of progress toward reopening the Strait of Hormuz against lingering doubts that the US and Iran can reach a broader resolution to the conflict.
Tesla shares rose last week but remain down 23% for the year amid concerns about declining profitability and the company's heavy spending on artificial intelligence.
The US National Highway Traffic Safety Administration said Tuesday that Tesla is recalling 20,349 vehicles in the US over low-beam headlights that may be excessively bright.
The regulator said the issue could reduce visibility for oncoming drivers and increase crash risk.
The recall affects certain Model 3 and Model Y vehicles. NHTSA said a remedy has not yet been finalized.
The recall adds to regulatory scrutiny surrounding Tesla's vehicle safety.
In July, NHTSA opened a preliminary investigation into about 1.2 million Tesla vehicles following reports of suspension failures that could potentially cause a loss of steering control.
The latest recall did not appear to weigh significantly on Tesla shares in early trading.
Robotaxi remains key to investor confidenceMorgan Stanley said Tuesday that Tesla needs to provide clearer evidence that its Robotaxi business is scaling to strengthen investor conviction in the company's longer-term strategy.
Analyst Andrew Percoco said investors remain constructive on Tesla's "Physical AI" opportunity, supported by stronger adoption of its Full Self-Driving software.
"Recent feedback suggests investors remain constructive on TSLA’s Physical AI opportunity, supported by stronger FSD adoption."
However, he said stronger conviction "will require clearer evidence that Robotaxi is scaling and more tangible Optimus proof to support the ROI on elevated capex."
Morgan Stanley said the latest quarterly results did not materially change its long-term view that Tesla is positioned to lead in Physical AI.
At the same time, weaker gross margins, higher research and development spending, and continued free cash flow use have "sharpened our (and investors’) focus on measurable progress across Robotaxi and Optimus."
Morgan Stanley highlighted stronger-than-expected adoption of Tesla's Full Self-Driving software as one of the more constructive developments from the company's recent results.
The firm maintained its equalweight rating on the stock.
The firm said FSD had a 55% attach rate on North American deliveries, substantially above its previous expectation of 25% to 30%.
The comments underscore the challenge facing Tesla as it seeks to justify elevated investment in autonomy and robotics.
While FSD adoption is providing evidence of demand for its AI software, investors are looking for more measurable progress from Robotaxi and Optimus before assigning greater value to those businesses.
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Tesla has pushed back the Roadster's rollout as the company pivots to AI and robotics. Tesla The Tesla Roadster is almost here! Hopefully! Maybe?
Franz von Holzhausen, Tesla's chief car designer, appeared on the latest episode of "Jay Leno's Garage" and gave an update on the long-awaited two-seater.
When Leno asked the designer about the car's arrival, von Holzhausen repeated, "Very soon," while rubbing his hands together eagerly.
The Roadster's revival has been a long time in the making.
Tesla's first car, sold between 2008 and 2012, was a two-door electric sports car built off the Lotus Elise's chassis. The EV maker sold roughly 2,800 units globally, helping it build its brand as a fun-to-drive electric car company.
CEO Elon Musk unveiled a prototype of the second-generation vehicle in November 2017, promising a high-performance vehicle with record-setting acceleration and range. Tesla began accepting reservations and deposits of $50,000 to $250,000.
At the time, he promised a 2020 launch — but that was delayed by the COVID-19 pandemic. The car has missed several launch dates since, while Tesla has increasingly prioritized higher-volume vehicles and, more recently, AI, autonomy, and robotics.
"Roadster is not just icing on the cake, it's the cherry on the icing on the cake," Musk said in an October 2024 earnings call. "We are working on it, but it has to come behind the more serious things that have a more serious impact on the world. So, just thank you to all our long-suffering Tesla Roadster deposit holders."
There has been some behind-the-scenes movement on the car's launch in the past year. Business Insider previously reported that the company started ramping up design development on the program last summer. It's also applied for at least three trademark applications for insignia designs this year.
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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 (NASDAQ: TSLA) stock has been enjoying a slow recovery through early August, though it remains 16.18% down on the monthly chart, and Finbold’s predictive machine learning algorithm estimates the recovery will persist through the end of the month.
Tesla stock price one-month chart. Source: Google Specifically, after analyzing TSLA shares using a series of technical analysis (TA) tools, including oscillators, moving averages (MA), and the relative strength index (RSI), the Finbold AI Agent determined that the equity is likely to, on average, rally 3.77% to $343.34 by August 31.
Still, there was some divergence among the models involved in the stock price prediction system. Out of the six artificial intelligence (AI) platforms involved, DeepSeek was the least optimistic.
Indeed, China’s most recognizable AI name estimated that Tesla stock is likely to rally only 0.09% in the coming weeks to $331.18. On the flip side, SpaceX’s (NASDAQ: SPCX) Grok 4.5 was the most bullish, and it forecasted a TSLA share price rally to $348.75 for a 5.4% increase by August 31.
Finbold AI Tesla stock price high and low predictions for August 31, 2026. Source: Finbold ChatGPT-5.6 Terra was the second-most optimistic, having predicted a 5.06% rise to $347.60, and Gemini 3.5 Flash was the only of the remaining models to estimate a rally smaller than 4% by August 31. Specifically, Google’s (NASDAQ: GOOGL) AI set its sights at a 2.91% TSLA equity rise to $340.50.
Tesla stock price performance Elsewhere, Tesla stock recently entered its second bullish reversal of 2026. After dropping 31.90% to price between January 2 – the first regular session of the year – and July 29, the equity began climbing and diminished its year-to-date (YTD) losses to 24.47%.
Tesla stock price YTD chart. Source: Google Furthermore, Elon Musk’s older public company enjoyed a particularly decisive phase of the rally on Friday, August 7, when it – together with SpaceX – announced an investment worth nearly $17 billion in the Texas-based Terafab advanced AI semiconductor plant.
The news was even more of a bullish catalyst for SPCX shares as it enabled the rocket, internet, AI, and social media company to soar 15% in a day and rise back above the initial public offering (IPO) price of $135 after a downtrend that lasted nearly two months.
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Tesla Inc. (NASDAQ:TSLA) wants investors to see its future in robots, robotaxis and artificial intelligence. But powering that future may require more fossil fuel than the company’s electric-car identity suggests.
Tesla and Space Exploration Technologies Corp. (NASDAQ:SPCX) are initially investing $16.8 billion in Terafab, a massive semiconductor complex in Texas designed to produce AI chips for Tesla’s Optimus humanoid robots and Cybercabs, as well as SpaceX’s space-based data centers. The 100-million-square-foot facility is expected to support more than 1 terawatt of computing capacity.
And it won’t rely on Tesla’s solar business for all that power.
SpaceX plans to build natural-gas power plants for the site and use large battery arrays, according to comments made by Terafab’s lead developer at a Grimes County public meeting. The facility is also expected to operate independently of the Texas power grid.
That detail matters for Tesla investors because Terafab isn’t simply another factory. It is a bet on the infrastructure needed to turn Tesla into an AI and robotics company.
Tesla’s AI Ambitions Need More Than ChipsCEO Elon Musk has said Terafab is necessary to avoid an AI-chip shortage that could constrain Optimus production. During Tesla’s second-quarter earnings call, he said the company would need its own supply of memory, logic and packaging capacity to scale the humanoid robot.
The facility therefore sits at the center of Tesla’s broader transformation.
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The company is spending heavily on AI infrastructure, robot manufacturing and autonomy even as its traditional auto business remains the economic foundation. Tesla reported negative free cash flow of $1.1 billion in the second quarter, while Reuters reported that full-year capital spending is expected to exceed $25 billion.
Terafab adds another enormous piece of infrastructure to that equation.
The Power Problem Is Getting BiggerThe irony is obvious, but the investor takeaway is bigger than Tesla using natural gas.
AI requires electricity at every layer: manufacturing advanced chips, training and running models, operating robots and supporting autonomous vehicles. As Tesla moves deeper into physical AI, its energy needs are likely to grow alongside its computing ambitions.
That creates a new question for investors: Can Tesla turn its massive AI and robotics spending into returns fast enough to justify the infrastructure being built around it?
Tesla’s energy business could benefit from that trend, too. SpaceX purchased $295 million of Tesla Megapacks in the second quarter, according to its first public-company filing, illustrating how Musk’s companies are already becoming customers for one another’s infrastructure.
But batteries store electricity; they don’t eliminate the need for generation.
For Tesla, the natural-gas-powered Terafab is therefore more than an awkward footnote to an electric-car story. It is a sign of how dramatically the company’s investment thesis has changed.
Tesla isn’t just building electric vehicles anymore. It’s building the chips, robots and computing infrastructure for an AI future — and that future needs an extraordinary amount of power.
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Photo courtesy: Rokas Tenys on Shutterstock.com
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Tesla (TSLA +0.70%) and SpaceX (SPCX +4.23%) said on Aug. 6 that they will spend $16.8 billion on the first phase of Terafab, a semiconductor plant in Grimes County, Texas. Tesla's net income over the past 12 months was about $3.8 billion -- so the two companies' opening commitment alone is more than four times what Tesla currently earns in a year.
Image source: Tesla.
The plan is enormous even by chip-industry standards. Terafab is designed to put logic, memory, packaging, and testing under one roof, across more than 100 million square feet, about an hour northwest of Houston. The companies say the site will draw water from the Gibbons Creek Reservoir rather than local groundwater.
The chips are meant for Tesla's Optimus robots and its Cybercab, plus the high-power processors SpaceX wants for space-based data centers. Elon Musk is CEO of both companies, and Tesla said on X that it and SpaceX will need far more chips than current and future global production can supply.
What neither company has said is how the bill divides. The announcement attributes the $16.8 billion to the two companies jointly. And the first phase is only the start -- the project has been described in SpaceX's Texas tax-incentive filings as a multiphase plan that could reach $119 billion.
But even a half share would be a large number against Tesla's current results. For perspective, Tesla spent about $12.9 billion on capital expenditures over the past 12 months, generated $5.8 billion of free cash flow, and earned $3.8 billion of net income.
An $8.4 billion share of phase one would equal about two-thirds of a full year's capital spending, layered on top of the vehicle programs and artificial intelligence (AI) infrastructure that spending already covers.
Tesla can write the check. The company finished the second quarter with about $43.5 billion of cash and investments on hand, so the balance sheet can absorb a project like this. The strain shows up first in cash flow, and only later in earnings, as depreciation on a plant that size runs through an already thin profit base.
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And the chips Terafab is built to make are mostly for products that don't ship at scale yet: Optimus and Cybercab on Tesla's side, orbital data centers on SpaceX's. The plant is a bet that those businesses grow large enough to absorb its output.
Tesla's market capitalization is about $1.3 trillion, roughly 340 times its trailing earnings. The stock, in other words, already assumes those businesses arrive. In that sense, the commitment is consistent -- a company priced for a robot-and-autonomy future is now spending like one.
Tesla can afford phase one. The earnings that would justify it, however, are still ahead.
A Tesla logo is pictured on a car in the rain in the Manhattan borough of New York City, New York, U.S., May 5, 2021. REUTERS/Carlo Allegri/File Photo Purchase Licensing Rights, opens new tab
CompaniesTesla (TSLA.O), opens new tab is recalling 20,349 vehicles in the U.S. over low-beam headlights that may be excessively bright, potentially reducing visibility for oncoming drivers and raising crash risk, the U.S. National Highway Traffic Safety Administration said on Tuesday.
Here are further details:
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The recall affects certain Model 3 and Model Y vehicles, NHTSA said.
A remedy is yet to be finalized, according to the auto safety regulator.
The recall comes as Tesla faces continuing regulatory scrutiny over vehicle safety.
In July, NHTSA said it had opened a preliminary investigation into about 1.2 million Tesla vehicles over reports of suspension failures that could lead to a loss of steering control.
Reporting by Ananya Palyekar in Bengaluru; Editing by Rashmi Aich
Our Standards: The Thomson Reuters Trust Principles., opens new tab
David Moss, a robotaxi content creator, spotted a lot filled with more than 100 gold Tesla Cybercabs. David Moss The hustle never stops for Tesla and Waymo.
As both companies race to roll out new vehicles for their respective robotaxi services, a bystander caught a glimpse of the behind-the-scenes scaling operations of Tesla and Waymo.
David Moss, a Tesla fan who recently pivoted to content creation focused on autonomous vehicles, posted two videos on X — one of Waymo's Ojai fleet in Arizona and another of Tesla's Cybercab fleet in Dallas — both taken during his ongoing nationwide scavenger hunt for robotaxi operations.
In Mesa, Arizona, Moss was scoping out Waymo's manufacturing and integration facility, where it retrofits the Jaguar I-PACE SUV and the Ojai with its proprietary sensors and driverless software.
The Ojai is Waymo's latest and most spacious robotaxi platform. The vehicle's base comes from Zeekr, a Chinese EV company.
Just spotted upwards of 500 yes 500 Waymo Ojai today in Mesa, AZ
These are produced by Chinese automaker Zeekr of the Geely holding group then retrofitted with Sensors by Magna
I don’t know the exact number of cars just want to stress the magnitude of what I saw & the fact… pic.twitter.com/3B0emIYKfY
— David Moss (@DavidMoss) August 6, 2026 Moss said he counted at least 500 retrofitted Ojais within his line of sight and that there were likely more when he visited the campus on August 6.
That would be at least five times the about 100 Ojai robotaxis that Waymo initially launched in May.
On the other side of the Waymo facility, Moss told Business Insider that there were more Ojais that weren't retrofitted with sensors.
"It was the most impressive display of autonomous vehicles I've seen for sure to date," he said.
A Waymo spokesperson declined to comment.
On August 9, Moss went to Dallas, where he documented a large lot near Dallas Love Field Airport storing more than 100 Tesla Cybercabs at the time of his visit.
The Cybercab is Tesla's two-door, purpose-built robotaxi that is intended to have no steering wheel or pedals.
Moss said the Cybercabs he spotted had steering wheels, which could indicate that the vehicles are part of Tesla's validation and mapping fleet rather than a production fleet that's ready for commercial service.
The Dallas lot also stored the Model Y robotaxis used for Tesla Robotaxi.
Tesla said in its second-quarter reporting from July that the Cybercab was in production and that engineering test drives on public roads had begun.
A Tesla spokesperson did not respond to a request for comment.
Moss said he has also spotted Cybercab fleets in San Antonio, Phoenix, Las Vegas, and the San Francisco Bay Area.
As robotaxi companies increase service areas, acquiring land will also be a necessary part of their operations. Robotaxi services need a physical space to charge and maintain the driverless cars.
In San Francisco, Waymo has its largest depot, which the company said can service hundreds of robotaxis.
Have a tip? Contact this reporter via email at [email protected] or Signal at lloydlee.71. Use a personal email address, a nonwork WiFi network, and a nonwork device; here's our guide to sharing information securely.
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The KraneShares Global Humanoid Robotics and Physical AI Index ETF (NASDAQ:KOID) was the first mainstream way to buy the humanoid theme in a single ticker. KOID has grown into a $6.3 billion fund on that pitch, carries a 0.69% net expense ratio, and is up 22.11% year to date. A second robot ETF now exists that holds a materially different portfolio, and for an investor whose thesis is specifically humanoids, KOID may be the wrong tool.
What KOID Actually Owns, and Why It Matters A broader “physical AI” index is what KOID tracks, and its top holdings lean toward diversified suppliers rather than pure-play robotics names. Hexagon AB sits at 2.59%, Horizon Robotics at 2.45%, Magna International at 2.34%, and TE Connectivity at 2.26%. Those are robotics-adjacent businesses, though Magna is really an auto parts conglomerate and TE Connectivity is a broad-based connector maker. Owning KOID means owning the theme diluted through industrial automation and auto supply. That works as a feature for investors seeking a wider net, but it becomes a drag for those who bought a robot ETF expecting the specific mass-production ramp behind Tesla’s Optimus and Hyundai’s humanoids, which dominated headlines this summer.
The Pure-Play Alternative: HUMN The Roundhill Humanoid Robotics ETF (CBOE:HUMN) launched June 26, 2025 and is built around who actually makes the robot. Its top holdings are Tesla at 8.93% of net assets, UBTech Robotics at 6.42%, and NVIDIA at 4.84%. Then it goes where KOID does not: Harmonic Drive Systems at 3.24%, Nabtesco at 2.20%, and Hiwin Technologies at 1.82%. These companies manufacture the strain-wave gears, precision reducers, and ball screws that make a robot arm bend without slop. There is no humanoid supply chain without them.
HUMN also carries Hyundai Motor at 2.51%, Hyundai Glovis at 2.80%, giving direct exposure to the parent of Boston Dynamics, Rainbow Robotics at 4.14%, Doosan Robotics at 2.11%, and Shenzhen Dobot at 4.15%. Roughly a third of the fund is allocated to Asian pure-plays that either build humanoid platforms or supply their joints.
Why the Composition Difference Is the Whole Argument Tesla filed its Q2 2026 report on July 22, 2026, with $28.24 billion in revenue, up 25.5% year over year, and disclosed that first-generation Optimus production lines are being installed at Fremont on the decommissioned Model S and X lines. NVIDIA reported $81.6 billion in Q1 FY2027 revenue, with data center up 92% year over year, and CEO Jensen Huang described “the buildout of AI factories” as the largest infrastructure expansion in history. HUMN carries nearly 14% direct exposure to those two names combined. KOID’s top-10 lists neither at that weight.
Joint-builders anchor the second half of the case. If Optimus production ramps into 2026 as guided, the components that never appear in a news headline become the choke point. HUMN owns them at meaningful weights. KOID’s disclosed top-10 does not.
The Tradeoffs Are Real Small is what HUMN is right now. Net assets sit at $46.5 million as of the March 31, 2026 NPORT filing, compared with KOID’s multi-billion-dollar base, which means wider bid-ask spreads and more single-holder risk. The expense ratio for HUMN was not disclosed in the fund’s most recently available filing, so a like-for-like fee comparison against KOID’s 0.69% net cannot be made with any confidence.
The broader mandate behind KOID will be delivered in 2026. The fund is up 22.11% year to date, well ahead of HUMN’s 8.87%, and that performance has been supported in part by the broader industrial rally, including ABB, which has climbed 39.34% year to date. Over a one-year window, the gap narrows somewhat but still favors KOID, with HUMN returning 26.36% against KOID’s 43.28%. So far, KOID’s diversification has clearly been the winning approach.
Prediction markets are skeptical about near-term Optimus milestones: Polymarket assigns only a 14.5% probability to a Tesla Optimus release by the end of 2026. Owning HUMN concentrates exposure to that timeline risk.
How to Think About the Switch The choice comes down to which fund matches the reason a position was opened. If a KOID holder bought the fund to own industrial automation and physical AI broadly, KOID is doing that job, and the swap is not warranted. If the position was opened because of the humanoid mass-production narrative, HUMN maps to that thesis with far higher fidelity. KOID’s own returns reflect the broader basket driving performance rather than pure-play humanoid exposure. A partial reallocation, sized to the strength of the humanoid conviction and mindful of capital-gains consequences in a taxable account, respects both.
Where This Leaves the Decision For the broader physical AI supercycle, KOID remains a reasonable core position. HUMN, on the other hand, is the humanoid ETF that the summer 2026 headlines have been describing, though it carries the concentration risk and expense disclosure gap that tend to come with being new and small. The question worth asking is whether the exposure within the ticker actually matches the story that led to the purchase, and, if not, whether trimming into a more targeted vehicle is worth the trade-off in size and fee transparency.
Contact [email protected] for any questions or corrections.
Cathie Wood, the CEO of Ark Investment Management, is a believer in the power of innovation to enable companies to deliver outstanding returns. That's why her investment firm continues to buy shares of companies that lead transformative industries such as artificial intelligence (AI), electric vehicles (EVs), and space travel. And on July 28, Ark Investment Management bought almost $40 million worth of shares of Nvidia (NVDA -2.41%), Tesla (TSLA +0.25%), and Space Exploration Technologies (SPCX -0.13%), as all three stocks were dropping. Was that a good move?
Image source: Getty Images.
One of these is not like the others Let's start with Nvidia. Driven by its dominance in the GPU (Graphics Processing Unit) market, the company's revenue has been growing rapidly for the better part of four years. In the first quarter of its fiscal year 2027, ended April 2026, Nvidia reported revenue of $81.6 billion, up 85% year over year. The company's adjusted earnings per share (EPS) came in at $1.87, up 140% from the year-ago period.
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Management is projecting $91 billion in revenue (at the midpoint) for its upcoming second quarter, representing a year-over-year increase of almost 95%. Meanwhile, the stock is trading at 25.5x forward earnings, versus an average of 22.1x for information technology stocks. But Nvidia is no average company, and given how quickly earnings are growing, its valuation looks reasonable, even assuming revenue and EPS growth slow over the next couple of years. So, the stock still looks like a buy.
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What about Tesla? The company's latest financial results were mixed. Second quarter revenue increased by 26% year over year to $28.2 billion. But Tesla's adjusted EPS dropped 18% year over year to $0.33. It's also worth highlighting that the company's deliveries crushed expectations during the period, largely because of geopolitical tensions that are impacting oil prices, a dynamic that may not be a structural long-term growth driver for Tesla. Meanwhile, the stock trades at 169.5x forward earnings.
The market is expecting Tesla to impose itself in the robotaxi market. If it is successful, it will transform the business and significantly boost revenue, margins, and profits. However, there is still significant uncertainty with Tesla's robotaxi efforts. So, the stock is fairly risky and should be volatile going forward. It may be attractive to patient investors comfortable with heightened volatility.
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Then, there is SpaceX, which dominates space travel and satellite-based internet connectivity. It recently posted encouraging financial results. Second quarter revenue jumped by 92% year over year to $7.8 billion. It recorded a net loss of $541 million, much lower than the $1 billion loss recorded in the prior-year quarter. But even with the company's improvements on the bottom line, the stock remains unprofitable, which is odd for a company worth $1.8 trillion.
The market is pricing SpaceX like a disruptive tech company still in its early growth stages: it trades at a price-to-sales ratio of 61.5. That may be justified, provided SpaceX's grand vision becomes reality. We are talking about making space tourism commonplace through decreased space travel costs, a massive AI business, and a telecom segment that may rival the leaders in this field. These are all potentially lucrative opportunities, but there is far too much uncertainty with the company's prospects right now to justify its valuation. The stock isn't a buy, but it may become attractive if it sinks from its current levels.
Elon Musk has two highly successful publicly traded companies: Tesla (TSLA +2.83%) and Space Exploration Technologies Corp. (SPCX +15.83%), better known as SpaceX. They're both valued at well over $1 trillion in market cap and are among the most popular growth investments for retail investors.
But running a public company is by no means easy, as Musk highlighted in a recent interview with The Economist, noting that a big challenge is "the pressure to have great results every single quarter." And that challenge can weigh on a stock's performance and introduce a great deal of volatility along the way, especially when it comes to companies that Musk runs.
Image source: Getty Images.
Why Tesla and SpaceX are highly volatile investments There is a ton of pressure on public companies, and what sends that to the next level for Tesla and SpaceX is that Musk also sets a high bar. With Tesla, his goal is to make it a leading robotaxi company and to produce humanoid robots for the public. At SpaceX, the visions are even grander, with space travel to Mars and putting data centers in space being even more ambitious targets that the business is aiming for.
While those kinds of goals do inspire people and attract many growth investors, they also put more pressure on the business to stay on track with those targets and deliver strong quarterly results from its day-to-day operations. A big reason that SpaceX, which isn't profitable but is valued at nearly $2 trillion, is so highly valuable is that investors are highly optimistic about what lies ahead. Even though the vision may take several years to achieve, investors are pricing the business as if its success were certain.
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These stocks come with considerable risks For people investing in either Tesla or SpaceX, it's important to understand the risks: while there is considerable growth potential, there's also tremendous risk. If there are signs that the business isn't on track to meet its goal, the investment thesis could unravel, and a lower valuation may prove justified given the greater uncertainty ahead.
Although there has been some apprehension around SpaceX of late and the stock has been falling in recent weeks, its valuation remains extremely high for an unprofitable and cash-burning business. While SpaceX and Tesla may both have intriguing long-term potential, investors should consider whether they can stomach the risk and volatility that come with owning these stocks, as they could have a lot of room to fall if doubts arise about their long-term success.
Tesla (NASDAQ: TSLA | TSLA Price Prediction) and SpaceX (NASDAQ: SPCX) closed Q2 2026 with results that put their shared Austin semiconductor fab, Terafab, at the center of every forward question.
Tesla (NASDAQ:TSLA | TSLA Price Prediction) just delivered its most contradictory quarter in years. Record deliveries of 480,126 vehicles, revenue of $28.236 billion, and an EPS miss so severe it dragged the stock into a full-blown YTD slump.
Yet here I am, staring at shares of Tesla trading at $328.58, and asking whether this stock can claw its way to $500 by the end of 2027. The setup looks broken. The math says otherwise.
The Real Reason Tesla Is Down 26.9% This Year Let me be blunt. Shares are stuck because Q2 broke the profitability story. Non-GAAP EPS came in at $0.33 versus a $0.5367 consensus, a 38.51% miss. Free cash flow flipped to negative $1.092 billion. Operating margin compressed to 1.4% as OpEx surged 47% YoY on AI infrastructure and R&D.
The price action shows the damage. Tesla is down 26.94% YTD and off 16.62% over the past month, even after a 5.58% one-week bounce. With a beta of 1.827, this stock amplifies every macro shudder. That volatility is the price of admission.
Wall Street Sees 21% Upside. I Think They Are Too Cautious Wall Street’s consensus target sits at $397.87, with 6 Strong Buys, 17 Buys, 18 Holds, 4 Sells, and 2 Strong Sells. Our own base case lands at $396.51, a 20.67% upside, with a bull case of $470.99 and a bear case of $354.29. Confidence on the base target is 0.9, high.
I think the sell-side is anchoring on the Q2 earnings report. Only 49% of analysts are bullish, but the pipeline for 2027 (Optimus, Cybercab, Megapack 3, Semi, Robotaxi) is being priced almost entirely off recent margin pressure. That is a mistake if any two of those products scale.
The Path to $500 Per Share Here is the math. Reaching $500 from today’s price of $328.58 would require a gain of 52.2%.
With forward EPS of $2.35, a $500 share price implies a forward P/E of 213x. Our base case of $396.51 already implies 189x, meaning $500 requires roughly 24x of additional multiple expansion.
That sounds crazy until you look at the catalysts. Tesla just broke ground on Terafab, a $16.8 billion semiconductor campus in Texas targeting in-house chips for Optimus and FSD. Megapack 3 production went live at the new Brookshire, Texas Megafactory, with storage deployments up 41% YoY at a 20.4% gross margin.
Robotaxi has expanded to seven U.S. metros, and FSD subscriptions hit 1.48 million, up 56% YoY. If forward EPS re-rates as Optimus and Cybercab contribute, the compression flips into P/E digestibility rather than multiple expansion. That is the setup.
The primary risk: capex stays north of $25 billion without commensurate revenue leverage, and FCF stays negative into 2027.
Where Tesla Trades Today vs Its Earnings Power At today’s price, Tesla trades at a forward P/E of 140x on $2.35 in forward EPS. Rich by any conventional measure, but shares sit 20% below the 52-week high of $498.83 and well off the 52-week low of $297.38.
Over the past decade shares have returned 2,051.52%. If you believe autonomy and energy storage carry the earnings baseline higher, today’s multiple is a bet on future EPS.
Can Tesla Really Hit $500? My Verdict $500 requires a 52.2% gain from here. I think it is a stretch, not a long shot.
Three things need to go right: energy storage margins keep leading the mix, Robotaxi scales beyond seven metros without a serious safety setback, and Optimus starts shipping revenue in 2026 as management guided. What derails it is another negative FCF quarter that spooks the growth-multiple crowd. Returns at this level shouldn’t be expected every year, but we’ve outlined the blueprint for how Tesla could reach $500 in 2027.
Contact [email protected] for any questions or corrections.
The August 4 SpaceX (NASDAQ: SPCX) quarterly earnings report proved a turning point for SPCX stock as the equity entered a rally that took it to $138.50 by press time in the Monday pre-market.
Indeed, after dropping roughly 52% from the $225.64 all-time high achieved just four days after the June 12 initial public offering (IPO) to approximately $108 early last week, Elon Musk’s newer public company rose nearly 25%, reclaiming its IPO price.
Thus, after weeks in the red, investors who managed to fill their order at the original $135 price and acquire $10,000 worth of SpaceX stock would now have $10.259.
Though the move, in the grand scheme of things, appears minor, it signals a stark reversal relative to early August. For example, the position would have been worth about $8,000 just before and just after the quarterly results were unveiled.
SpaceX stock price one-month chart. Source: Google Why SpaceX stock is soaring today Elsewhere, it is somewhat unclear what drove the latest SPCX stock rally that took the equity more than 15% higher in the Friday, August 7 session, though there are several contenders.
To begin with, SpaceX and Tesla (NASDAQ: TSLA) announced they were teaming up to invest nearly $17 billion in the Terafab advanced artificial intelligence (AI) semiconductor plant in Texas.
The move, together with the expected acquisition of the AI coding platform Cursor, could have driven investor optimism.
Similarly, traders might have regained confidence after last week’s unlocking of nearly 1 billion insider SPCX shares failed to trigger a crash.
Notably, however, the Friday rally was accompanied by retail investors turning net SpaceX stock sellers, indicating recent bullishness might be on shaky ground.
Lastly, despite the initial selloff, Elon Musk’s newer public company’s first-ever quarterly earnings showed stronger-than-expected results, with the exorbitant capital expenditures (CapEx) being the singular new major bearish catalyst.
Under the circumstances, it is possible that the Friday regular session and Monday pre-market rallies were a belated reaction to the figures, made possible by a lack of immediate insider selling.
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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
Image via Shutterstock
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On August 6, 2026, Tesla (NASDAQ:TSLA | TSLA Price Prediction) and SpaceX formally confirmed Terafab, a jointly built semiconductor megafactory in Grimes County, Texas, just north of Houston. On X, Elon Musk called it “the largest and most valuable building on Earth by far.” The site plans exceed 100 million square feet of manufacturing space, more than five times China’s New Century Global Center and larger than the Pentagon, Apple Park, and Mall of America combined.
The pitch is vertical integration at a scale nobody has attempted. Terafab will house manufacturing, packaging, and testing of advanced logic and memory chips in a single facility, aimed squarely at the bottleneck Musk keeps hitting: there are not enough chips on Earth to build the Optimus robots, Cybercabs, and space-based data centers he has pitched investors. SpaceX describes the plant as designed to “bridge the divide between current global chip supply and the compute demand of the future”, with a stated production goal of more than 1 terawatt of compute per year optimized for edge inference.
The money framing matters. What is committed now is $16.8 billion for the first phase. The widely quoted $119 billion figure is a multi-phase ceiling SpaceX disclosed in its May 2026 filings, first reported by TechCrunch on May 6, 2026, and represents a top-end estimate, not confirmed spend. The legally binding floor is more modest: agreements signed by SpaceX CFO Bret Johnsen commit at least $5 billion in Grimes County by 2030 and at least 1,800 full-time jobs by 2035. Intel (NASDAQ:INTC) has agreed to contribute but has been vague about the size of its commitment.
Beyond the binding floor, the partners are promising at least 3,000 jobs across Grimes and neighboring Brazos County, with early production as soon as 2027 and mass production targeted for 2028. Texas is sweetening the deal: SpaceX received a $30 million Texas Enterprise Fund grant, and the project qualifies under the state’s Texas Jobs, Energy, Technology, and Innovation program. Musk first floated Terafab in Austin on March 22, 2026; the Grimes County selection ends months of speculation.
Water was the community’s first question, and the answer is unusual. The site sits on Gibbons Creek Reservoir, which previously cooled a coal-fired power plant that closed in 2018. SpaceX has committed to drawing process water from the reservoir rather than local groundwater, a concession clearly aimed at farmers worried about aquifer draw.
Local reaction has been split. A Grimes County meeting on Wednesday, August 5, drew hundreds of residents objecting to the scale of tax breaks and what they described as a lack of transparency. On the other side, Anderson-Shiro Consolidated ISD Superintendent Dr. Sarah Borowicz, in a statement released by the Texas Governor’s office, said: “We believe this agreement will strengthen our district, expand opportunities, and better prepare our students for their future.”
The signal to watch over the next 18 months is straightforward: does the first-phase $16.8 billion translate into groundbreaking on a fab bigger than the Pentagon, Apple Park, and Mall of America combined, or does the $119 billion ceiling quietly recede into the same category as every other Musk moonshot timeline?
Contact [email protected] for any questions or corrections.
In the past decade, few stocks have delivered life-changing returns like Tesla (TSLA +2.83%). If you had bought $10,000 in Tesla stock 10 years ago, that investment would be worth a staggering $217,900 today.
With CEO Elon Musk at the helm, the company has achieved impressive scale that has historically hounded upstart automakers and has evolved into a speculative play on self-driving vehicles, energy, and other emerging technologies. Here's what has driven Tesla's growth and what investors have to look forward to.
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Tesla's scaled electric vehicle business sent the stock soaring in the past decade Tesla bucked the traditional automotive industry business model with direct-to-consumer sales, bypassing dealerships and giving the company full control over its customer buying experience. Its vertical integration helped lower assembly costs and gave it a gross margin that crushed industry peers in the early 2020s.
Over the years, Tesla did an exceptional job scaling its manufacturing capabilities, starting with key expansions in Fremont and Shanghai. This growth, coupled with strong tailwinds from regulatory credit sales, helped Tesla turn cash-flow positive and GAAP (generally accepted accounting principles) profitable, sending the stock soaring and earning it a spot in the S&P 500 index in late 2020.
Image source: The Motley Fool.
Here's what could drive Tesla's growth over the next decade While Tesla has done an excellent job scaling up its EV business, the company looks to achieve more technological breakthroughs under Musk, which is why it trades at such a lofty valuation.
The automaker continues to develop its end-to-end self-driving software and build out its ride-hailing network infrastructure and dedicated autonomous vehicle platform, which could open up high-margin recurring software revenue through subscriptions or other offerings.
TSLA PE Ratio data by YCharts
Additionally, it is leveraging its battery manufacturing footprint to expand its Megapack and Powerwall offerings, which can address the power needs for utility, industrial, and data center operators. These battery storage systems could prove hugely useful in helping utilities stabilize intermittent renewable power grids.
Meanwhile, its Optimus robot is another moonshot project that could eventually account for a majority of Tesla's long-term value, according to Musk. These general-purpose robots are an idea straight out of science fiction, and could revolutionize and serve a wide range of purposes for both business and personal use.
Is Tesla stock a buy? Analysts project Tesla's earnings to grow at a 24% compound annual rate from 2025 through 2028. With 2028 non-GAAP earnings per share projected at $3.17, the stock is priced at 100 times those projected earnings, well above the automotive sector and far outpacing major technology stocks.
That said, Tesla investors buying the company today are betting it can achieve huge technological and business breakthroughs with its self-driving vehicles, batteries, and Optimus robots. If Musk succeeds in one or more of these areas, it could send earnings projections higher and set the stage for large returns further down the road.
The Boring Company, Elon Musk's tunneling venture, is in talks to raise roughly $4 billion in a private stock offering at a valuation of about $20 billion, according to a report from The Wall Street Journal. The last time it was formally priced, back in 2022, the number was $5.7 billion. That's a nearly fourfold increase in four years.
So what are private investors paying for? And what about Musk's other, smaller ventures outside of Space Exploration Technologies (SPCX +15.83%) and Tesla (TSLA +2.83%)?
Image source: Getty Images.
What is the Boring Company and what's it been up to? The Boring Company is so-named because that's what it does: bores through the earth. The massive tunnels are then converted into "hyperloops" in which Tesla's cars can travel rapidly, without traffic, between major hubs. That's the idea, at least.
The company's Las Vegas Loop has moved more than 4 million passengers across 11 stations and will soon expand to include the nearby Harry Reid International Airport. This, according to the company, will take annual ridership from around 1 million to between 5 million and 10 million. Outside of Las Vegas, projects are planned in both Nashville, Tennessee, and Dubai, United Arab Emirates.
The progress has not been without issue, however. The Vegas Loop still handles relatively little traffic, and firsthand reports of using the service leave many wanting more. It's also run afoul of Nevada environmental regulators, who sent the company a cease-and-desist letter in September 2025 alleging roughly 100 violations of an earlier settlement and 689 missed inspections. The company disputes that letter.
Neuralink is making real progress -- but commercialization is still years away Neuralink, which is working to connect the human brain directly to computers, has made some real strides recently. Its brain-computer interface (BCI) -- a chip that reads brain signals so a paralyzed person can control a computer by thinking -- is already working and implanted in patients. Enrollment reached 21 people in January, up from 12 the previous September.
The company says it aims to reach $1 billion in annual revenue by 2031, though the U.S. Food and Drug Administration (FDA) will have to give its regulatory approval for any commercial deployment.
Musk just bought a power company for over $1 billion In May, Musk personally bought APR Energy, a Florida company that rents trailer-mounted turbines and generators. A minority investor's disclosure implies a price above $1 billion.
APR has customers and projects in more than 35 countries and equipment that it can install in a month or two. Data centers waiting years for a grid connection will pay for that. SpaceXAI, for instance, has relied heavily on gas turbines at its Memphis Colossus data center.
What does this mean for you? These are private ventures. You can't buy shares in any of these companies, so why does it matter? Well, if you're a SpaceX or Tesla investor, it's a good idea to understand Elon Musk's whole business ecosystem. There's a good chance that at some point, one or more of these will be acquired by one of his public ventures -- most likely SpaceX.
But if you ask me, none of them are promising enough to really move the needle for SpaceX or Tesla. I still consider both stocks overvalued.
At the end of 2025, Elon Musk owned roughly 20% of Tesla's (TSLA +2.83%) shares, inclusive of the over 300,000,000 options he recently exercised. That's a huge stake, but for comparison, the giant asset manager Vanguard was the second-largest holder with a 6.1% stake in the company. Musk's massive ownership position changes the game for investors.
Insider ownership is good, but too much can be a problem Wall Street likes to see CEO's with skin in the game. It means their interested are aligned with the interested of shareholders. However, in a situation like electric vehicle maker Tesla, where CEO Elon Musk controls a huge 20% of the company's voting power, insider ownership takes a different form. At this level, the CEO's interest may supersede those of the shareholders because the CEO's voting power is so influential.
Image source: The White House.
This isn't the only company over which Elon Musk has such sway. He also has 82% voting control at Space Exploration Corporation (SPCX +15.83%). The space-focused company only recently held its initial public offering, but already has a massive $1.5 trillion market cap (making it larger than Tesla). The company's prospectus was very clear about what Musk's voting control meant: "As a result, Mr. Musk will be able to control the outcome of matters requiring shareholder approval." While he doesn't have the same level of voting control at Tesla, Musk's 20% stake is so large that it would be hard for shareholders to meaningfully oppose him. Even the board of directors, which is supposed to represent shareholders, would likely struggle to oppose a CEO with such a large investment in the company they run.
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You are investing alongside Elon Musk When you step back, you can argue that Elon Musk having so much influence over Tesla and SpaceX is both good and bad. He is clearly a visionary businessman, but he's also known for making provocative statements and non-business choices that sometimes have real-world economic impacts on shareholders. For example, his involvement with U.S. politics in 2025 led some to boycott Tesla. The company's deliveries declined materially that year.
Notably, your view of his control should probably be an integral part of your investment decision if you are considering buying the stock. You are, effectively, investing alongside Musk. What he wants to do is likely to happen, with little the board or investors can do to get in the way. If that isn't OK with you, you shouldn't buy Tesla or SpaceX stock.
by Todd Bishop on Aug 8, 2026 at 7:57 amAugust 8, 2026 at 8:38 am
John Cook studies the 2009 Puget Sound Tech Universe map while recording this week’s GeekWire Podcast, with WTIA’s 2026 Washington Tech Universe map on the table behind him. (GeekWire Photo / Todd Bishop) This week on the GeekWire podcast: SpaceX reports its first quarter as a public company, and Elon Musk says Starlink could deliver a majority of the world’s internet within a decade, leveraging the company’s production facilities in Redmond. Musk also sizes up Microsoft and Amazon, calling terrestrial data centers a trivial problem next to reusable rockets.
Plus: we bring two Washington tech universe posters into the studio, 17 years apart. The 2009 original turns up gems including Boeing’s unlikely connection to Classmates.com, the 1990s forerunner to Facebook. It also brings back memories of Teledesic, the Craig McCaw venture backed by Bill Gates that tried to beam internet from space decades before Starlink.
Finally, the GeekWire Trivia Challenge returns with a timely question about Google’s origins.
Related stories and links SpaceX’s first earnings call as a public company
SpaceX earnings: Elon Musk says Starlink could deliver most of the world’s internet within a decade Elon Musk’s Mars illusion — Dominic Gates on the gap between the Mars vision and the timeline Blue Origin’s New Glenn rocket explodes on pad during test; Jeff Bezos vows to rebuild Blue Origin’s rocket blowup hits NASA and Amazon Leo as well Mapping Washington’s tech universe
New map traces Washington state’s tech ‘universe’ to a few key hubs, and shows what’s at risk The latest Washington Tech Universe map from WTIA, and posters are available here Massive map shows how Seattle’s tech ecosystem evolved over the last 30 years — the 2015 edition The original 2009 Puget Sound Tech Universe map. (Thanks to Ken Myer for digging this up!) GeekWire’s Seattle engineering centers list GeekWire Trivia
The startup idea that convinced a UW computer science legend to leave Google after 27 years What a longtime Google AI leader told UW computer science students at their graduation Subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.
Audio edited and produced by Curt Milton.
Previous StorySeattle AI Film Festival returns with 200 films that try to change your mind about AI cinema
Three years from now, Tesla (TSLA +2.83%) could have successful Robotaxis operating in multiple cities. Optimus robots could be working inside factories. Its artificial intelligence systems could be among the most advanced in the world.
And the stock could still disappoint investors. That may sound impossible. But it's arguably a realistic bear case that many investors overlook.
When people think about Tesla's downside, they usually imagine a collapse in electric-vehicle sales, intense competition from BYD, or a failure by Elon Musk to deliver on his promises. Those are legitimate risks.
But Tesla doesn't have to fail for the stock to underperform. It simply has to execute these opportunities more slowly than investors expect.
Image source: Getty Images.
Tesla's biggest challenge has changed For years, Tesla's success depended largely on selling more electric vehicles.
That's no longer the case. Today, much of Tesla's valuation reflects what investors believe comes next: Robotaxis, Optimus, artificial intelligence, and software-driven services. Those businesses could eventually generate far higher margins than manufacturing cars does.
But here's the thing. Building revolutionary technology doesn't automatically create shareholder value. Commercializing it at the right time and with the right capital investment can.
That's the challenge Tesla now faces. Tesla's latest earnings call may have marked an important shift in management's messaging. Rather than focusing on what Tesla can build, Musk spent more time discussing how difficult it will be to scale those products.
Speaking about Optimus, Musk said, "I really want to emphasize here that the production scaling challenge is very substantial." He even described it as "the hardest product to scale manufacturing that we've ever made at Tesla."
Those comments deserve attention. Musk wasn't questioning whether Tesla could build a capable humanoid robot. He was acknowledging that turning a breakthrough technology into a mass-market business is an entirely different challenge.
The same applies to Robotaxis. Launching autonomous vehicles in selected markets is an impressive milestone. Building a global ride-hailing network that earns attractive returns while satisfying regulators, insurers, and customers is a much taller order.
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Time may become Tesla's biggest competitor The bear case isn't that Robotaxis or Optimus fail. It's that they take longer than investors expect to become meaningful profit engines.
That matters because Tesla has entered one of the most capital-intensive periods in its history. The company continues investing billions of dollars -- $25 billion or more just in 2026 -- into AI infrastructure, custom chips, data centers, Robotaxis, and Optimus. Those investments may create enormous value over the long run.
But until Tesla generates meaningful cash flow, its core automotive business must fund much of that spending. That creates a difficult balancing act.
Competition in the EV industry remains extremely intense, particularly from the Chinese players such as BYD. It doesn't help that Tesla's automotive margins also remain below their historical highs after years of price reductions.
In short, if these new ventures reach profitability later than expected, it could create enormous financial stress for the group.
Expectations could become the real problem Ironically, Tesla's biggest risk may not be execution. It may be expectations.
Imagine that three years from now, Tesla has expanded Robotaxis into additional cities, and Optimus performs useful work inside its factories. Objectively, that would represent remarkable progress. But would it justify today's expectations? That's the question investors should ask.
To put it into perspective, Tesla's stock trades at a price-to-sales ratio of 11.2 as of this writing, and that's after the recent correction. Its most formidable rival, BYD, trades at just 1.8 times its price to sales.
If commercialization progresses steadily, but not spectacularly, the gap between investor expectations and financial results could narrow through valuation rather than faster earnings growth.
For a company that's already trading at a market capitalization of $1 trillion, the risk is not inconsequential.
What does it mean for investors? Let's begin by saying that Tesla's bear case isn't all that bad.
Three years from now, the company may possess world-class AI, increasingly capable Robotaxis, and impressive humanoid robots.
Still, there's no guarantee that these ventures will scale on time and on budget. If there's any hiccup in the execution process, or if these businesses take longer than expected to reach profitability, there's a good chance that the stock valuation could adjust to the new reality.
It may be that three years from now, Tesla remains a trillion-dollar company. But that scenario is probably going to be disappointing for its most ardent supporters.
Tesla (TSLA), the electric-vehicle and AI technology giant, jumped nearly 4% in Friday's regular session after Tesla and SpaceX revealed the site and first wave
The robotaxi industry is currently tiny. But in the coming years, the market should scale significantly in size. Tesla (TSLA +2.83%) has quickly emerged as a serious competitor. And looking at various market forecasts, it's not hard to see why the market is so excited about this opportunity.
Goldman Sachs estimates the global robotaxi market will reach $415 billion by 2035. The U.S. portion represents just $48 billion of that entire pie, but autonomous trucking could add even more upside to that figure. "Autonomous trucking is expected to become cheaper per mile than human-driven trucks in 2028 in the U.S.," the bank predicts, "with the global AV trucking market potentially reaching $560 billion in 2035."
In my experience, plenty of bullish research on lucrative multidecade opportunities tends to overestimate near-term growth. But the opposite is happening with Goldman Sachs and its robotaxi forecasts. Previously, the bank estimated that the robotaxi market would reach $7 billion by 2030. More recently, it has been forced to up that figure to $19 billion -- not an insignificant change.
Many Wall Street analysts are highly optimistic about Tesla's ability to capture a disproportionate amount of value from the robotaxi opportunity. Wedbush analyst Dan Ives, for example, believes Tesla will ultimately control 80% of the market. Yet Tesla has repeatedly faced challenges scaling its robotaxi business. These struggles have weighed heavily on its stock price, which has fallen nearly 30% year to date.
Looking beyond the next couple of months, however, it's not hard to see Tesla dominating this market domestically. In fact, there are two reasons to believe Tesla may end up with a pseudo-monopoly in the U.S. robotaxi market.
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1. Tesla controls its means of production Most robotaxi competitors don't fully control their means of production. This means they need to rely on a long list of third-party suppliers to build the cars needed to deploy a fleet of robotaxis.
This presents a couple of challenges. First, the growth of their fleets will be constrained by suppliers' production capacities. Second, their self-driving technology may have certain implementation challenges compared to a company with full control over the production process. Alphabet's Waymo robotaxi service, for example, has reportedly faced challenges integrating its technology with suppliers simply due to the highly confidential nature of some of its software. Finally, it typically raises costs, indirectly reducing their ability to scale and compete.
Vertical integration minimizes these challenges for Tesla. Some early data suggest this. This year, Tesla has been undercutting the competition by charging significantly less for its robotaxi rides.
"Tesla's autonomous service averages just $8.17 per ride in San Francisco -- nearly half Lyft's $15.47 average and drastically cheaper than Waymo's premium rates," observes one report. Other research has estimated that Tesla enjoys significantly lower operating costs per mile for its robotaxi fleet versus its main competitors.
Aggressive pricing may currently have more to with gathering data versus a clear structural cost advantage. But it's still somewhat reflective of Tesla's ability to keep its own costs low while stomaching short-term losses for better long-term competitiveness. Some estimates, for example, peg the cost of a Waymo autonomous vehicle at several hundred thousand apiece. Tesla, for comparison, hopes to produce Cybercabs at a price below $30,000.
Image source: Tesla.
2. AI will rule robotaxi scaling Some of Tesla's robotaxi competitors have deep budgets and highly developed AI divisions. Alphabet's Waymo division, for example, is well funded and armed with advanced AI technology. Other competitors, however, such as Uber Technologies, have far less direct access to next-gen AI.
Given how critical AI has become for advancing self-driving technologies, Tesla's heavy AI investments and direct co-ownership of xAI, the AI division of Space Exploration Technologies, become a real advantage. Many experts believe AI is critical for achieving full autonomy, and thus operating an autonomous robotaxi fleet.
"AI is essential for autonomous driving," stresses Valeo, a global automotive technology supplier. "Without artificial intelligence, vehicles cannot detect, classify, and predict the intentions of other road users in real time, capabilities that are fundamental to safe self-driving technology."
In many ways, Tesla can be considered one of the largest AI stocks on the planet. And soon, it may merge with SpaceX, another AI giant. From a standpoint of funding and access to technology, these factors weigh heavily in Tesla's favor when it comes to its potential domination of the robotaxi market.
In a recent edition of Breakfast News, we gave a five-year price target for Space Exploration Technologies (SPCX +11.55%), or SpaceX, of $141.84 in response to TMF co-founder and CEO Tom Gardner's $217.52 on behalf of Team Hidden Gems.
Our figure came from the mean of separate analyst price targets. Today, we'll delve deeper into some of those predictions. Fool on!
I think this business is very overvalued, even with the decline we've seen since the IPO. Getting cut in half over the next five years would make it more reasonable, but still perhaps way overpriced. SpaceX is a challenge to evaluate given the disparity of its business lines, including two (space and AI) that are evolving, cutting-edge, overhyped industries that will likely see substantial change over the next five years. Given that, I think placing any kind of price target at all on this company is probably nonsensical.
In terms of the artificial intelligence (AI) business, I'm skeptical that SpaceX will be a big winner unless things change quickly. If your best use of your data center compute power is leasing it to other AI companies, then that suggests either 1) your AI products and services are not very good, or 2) you have no compelling monetization ideas, or 3) you think the bottom is going to fall out of this market soon and you're trying to recoup as many of your costs as you can before it does. But it's not a good signal, in my opinion, that you really believe in your long-term strategy. Unless that strategy is to become a data center REIT, in which case we should probably value it as such.
On the space business, space is exciting, but very hard. Look at the challenges the company is having with the Starship. Are they making progress? Yes. Is that progress fast enough to meet the timeline of Artemis and the moon missions? Maybe not. Delays are a fact of life with space exploration, but being NASA (government agency, no profit motive) is very different from being a for-profit business with much of your business tied to successful, profitable launches. I have a hard time giving SpaceX a trillion+ valuation when other space companies are so much less. It's a Musk/hype premium, and I doubt it persists over the next five to 10 years.
SpaceX's valuation seems mostly vibes and hope, an idea that this company will be massively profitable in the future, at some point, with no real connection to the reality of today.
SpaceX is also suing the state of Minnesota to overturn a law that bans apps that allow users to create non-consensual sexualized content. So we're talking about a company that seems to believe banning non-consensual porn is a threat to its business. That is very problematic in my opinion.
Also, my price target assumes a merger with Tesla (TSLA +2.30%) in the next five years. At least Tesla is making money and generating cash, so a merger would likely be a stabilizing force, financially, and it would eliminate the problem of Elon Musk's attention being split. If no merger is forthcoming, I might have to lower my price target a bit.
Let me walk you through how I came up with the $157.14 target that I submitted to the project. To set the stage, here is a table with SpaceX's revenue by segment over the past 3 years.
Segment202320242025Space$3,557$3,796$4,086Connectivity$3,869$7,599$11,387AI$2,961$2,620$3,201Total$10,387$14,015$18,674 Source: S&P CapitalIQ (dollars in millions).
With a quick look at the past, let's look into the future, because that's what we'll need to make projections about in order to make a valuation estimate today and a 5-year price target for the future.
Analysts expect significant revenue growth at SpaceX. Let's assume revenue in 2030 is $350 billion, which is a little bit less than analysts estimate. Capex requirements will likely remain elevated, and I agree with analysts that SpaceX will not be generating free cash flow.
To get to the price target, let's assign a reasonable EV/Sales multiple of 7. After all, the company is still growing, would have a strong margin profile, is generating operating cash flow, and has plenty of opportunities to invest that capital. From there, I calculate a five-year price target of $157.14 (please excuse the significant digits) based on 14 billion shares outstanding at the time.
My price target range ($180-$220) reflects some deep pessimism on the actual financial numbers working out within the next five years, the eventuality (I believe) that SpaceX will dispose of some assets/businesses to raise more capital, plus investors' willingness to be repeatedly diluted via equity and debt in the short term in order to look ahead to the 2030s.
This is based not on nihilism but the case study in hand: just look how Tesla investors have supported that business over the years, from negative returns to profitability and positive free cash flow. Despite the potential for losses, it won't surprise me if SpaceX can add another $70 to $100 to the share price by 2031.
To be clear, I'm deriving my price range from narrative and intuition, because my standard valuation model can't supply a useful swag on a business that will likely sport not just negative free cash flow, but capital expenditures in excess of sales for the next couple of years. In a weird twist, GAAP profits for SpaceX will arrive a lot sooner than positive free cash flow. And SpaceX is going to have to invest in its space business and AI infrastructure madly for years to justify its valuation today.
I believe SpaceX will be one of the hungriest consumers of capital that we'll encounter in our investing careers. It's easy to see how Elon Musk can supply the funds SpaceX will need through economic and shareholder dilution (Tesla merger, anyone?!) through the end of the decade. The harder question for me is what happens in years five to ten, when I think the buy thesis either solidifies into outsized returns, or just breaks completely (to quote the Beatles, "All the money's gone, nowhere to go").
One thing's for certain, however: there's no harm in waiting a few quarters to get a clearer picture of this business in order to make a "buy" or "take a pass" decision.
Key Takeaways Tesla and SpaceX are investing $16.8B initially in Terafab, a vast AI chip complex in Texas.KLA and Onto could benefit from Terafab's inspection, measurement and advanced packaging needs.Applied Materials and Lam Research could gain from demand for logic, memory, etching and deposition tools. Elon Musk is betting big on chips. SpaceX (SPCX - Free Report) and Tesla (TSLA - Free Report) have committed an initial $16.8 billion to build Terafab, an AI semiconductor complex spanning more than 100 million square feet in Grimes County, TX. The vertically integrated facility is designed to handle chip manufacturing, packaging, and testing all under one roof.
A buildout of this scale could create opportunities for chip equipment makers like KLA Corp (KLAC - Free Report) , Onto Innovation (ONTO - Free Report) , Applied Materials (AMAT - Free Report) and Lam Research (LRCX - Free Report) .
Musk has pegged Tesla and SpaceX’s future AI compute needs at over 1 terawatt annually— a figure that dwarfs current global chip output— and Terafab is meant to help close that gap. The chips from the Terafab plant will be engineered for edge computing and inference, purpose-built to power Tesla's Optimus robots and Cybercabs, alongside high-performance processors for SpaceX's space-based data centers.
As Tesla and SpaceX lean further into AI-dependent products, including autonomous robots, self-driving vehicles and orbital computing, owning manufacturing capacity in-house could mean fewer bottlenecks, less reliance on external suppliers and faster execution on projects central to Musk's roadmap. To pull it off, Intel has also stepped in as a manufacturing partner, lending its process technology and high-volume production expertise to the facility.
Beyond Intel, Terafab's buildout will require enormous amounts of specialized equipment— the tools that actually construct, inspect, and calibrate a fab of this size. No vendors have been named publicly yet, but a handful of companies dominate that space, and they stand to benefit as Terafab’s plans unfold.
4 Top-Ranked Chip Equipment StocksKLA helps chipmakers detect defects and measure chip quality during the manufacturing process. It’s like the quality-control specialist of a semiconductor factory. Since Terafab plans to manufacture logic chips, memory chips, and package them all in one facility, maintaining high production quality will be critical.
As chips become more advanced, manufacturers need even more inspection and testing, which should support demand for KLA's tools. The stock sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for KLA’s fiscal 2027 and 2028 EPS implies year-over-year growth of 44% and 21%, respectively.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Onto provides inspection and measurement tools, with a strong focus on advanced chip packaging, including tools that help align and connect chip components as they are assembled. Terafab plans to handle packaging in-house, and since Musk's roadmap spans different chip types, that likely means a mix of packaging methods too.
As AI chips grow more complex, demand for advanced packaging keeps rising, and Onto has been benefiting from that trend. The stock sports a Zacks Rank #1. The Zacks Consensus Estimate for Onto’s 2026 and 2027 EPS implies year-over-year growth of 45% and 40%, respectively.
Applied Materials sells a broad range of chipmaking equipment along with the installation and support services that go with them. That breadth matters for Terafab, which plans to produce advanced logic and memory chips in a single facility.
AI-driven demand is pushing more equipment spending toward this kind of advanced chipmaking, where Applied Materials already has an established presence. The stock carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AMAT’s fiscal 2026 and 2027 EPS implies year-over-year growth of 29% and 34%, respectively.
Lam Research specializes in etching precise patterns into wafers and depositing thin material layers onto them, both essential for building advanced memory and logic chips. The company’s specialty lines go well with what the Terafab plant will need.
As chip designs get more complex, demand for etching and deposition tools tends to rise. The stock carries a Zacks Rank #2. The Zacks Consensus Estimate for Lam Research’s fiscal 2027 and 2028 EPS implies year-over-year growth of 59% and 23%, respectively.
SpaceX said this week that it will build natural gas power plants to supply electricity to the Terafab semiconductor factory it plans to build in Texas, according to a report from Bloomberg.
Riley Trettel, who leads energy and data center development for SpaceX, said in a public meeting on Wednesday that his company will be “bringing our own power” for the project, which will also include “very large battery arrays.”
Notably absent from the Bloomberg report — and other SpaceX announcements related to Terafab — is any mention of terrestrial solar power for the facility. Tesla, which is also a solar developer, is a partner in the project.
Despite his investments in solar power, SpaceX and Tesla’s CEO Elon Musk has bet heavily on natural gas lately. The xAI data centers in Memphis run almost exclusively on the fossil fuel. Musk also recently bought a company that specializes in natural gas power plants, and SpaceX has said it plans to buy $2.8 billion worth of gas turbines over the next three years.
Terafab will be built in Grimes County, which is about 45 miles northwest of downtown Houston. SpaceX, which recently went public in an IPO that raised $87.5 billion, received a 100% tax abatement from the county in exchange for spending at least $5 billion by 2030 and creating at least 1,800 full-time jobs by 2035. Texas is also providing $30 million in incentives.
The initial phase of the fab unit is expected to cost $16.8 billion, though SpaceX had previously estimated it would cost $55 billion. The fab is intended to build chips for data centers that will be run by SpaceX and its xAI subsidiary.
The AI data center boom has driven a surge in proposals for new natural gas power plants across the industry, which has in turn driven up costs for natural gas power plants by 66%. Google, Meta and Microsoft have all announced massive projects in recent months.
Texas has been ground zero for these so-called “bring your own power” data centers, and more than 70 gigawatts of capacity has been charted out.
Such schemes are intended to speed up project development while addressing concerns about rising electricity prices for consumers, but natural gas turbines can release significant amounts of pollution. SpaceX subsidiary xAI has been sued over its use of unpermitted natural gas turbines in one of the most polluted parts of the country.
When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.
Tim De Chant is a senior climate reporter at TechCrunch. He has written for a wide range of publications, including Wired magazine, the Chicago Tribune, Ars Technica, The Wire China, and NOVA Next, where he was founding editor.
De Chant is also a lecturer in MIT’s Graduate Program in Science Writing, and he was awarded a Knight Science Journalism Fellowship at MIT in 2018, during which time he studied climate technologies and explored new business models for journalism. He received his PhD in environmental science, policy, and management from the University of California, Berkeley, and his BA degree in environmental studies, English, and biology from St. Olaf College.
You can contact or verify outreach from Tim by emailing [email protected].
The Tesla Model X, with its gullwing doors, was discontinued in 2026. Coming into Friday trading, shares of the EV maker were down 29% year to date. (Photo by MARK RALSTON/AFP via Getty Images)
Tesla stock rose early Friday, giving shares a chance to snap a three-week losing streak. Retails traders, as usual, are helping.
Investor and television personality Kevin O’Leary said he may begin buying SpaceX (NASDAQ:SPCX) shares once post-IPO volatility settles, arguing that the bigger long-term opportunity lies in Elon Musk potentially connecting SpaceX with Tesla Inc. (NASDAQ:TSLA), artificial intelligence, robotics and autonomous driving.
O’Leary Eyes Entry After IPO Volatility"I passed on my IPO allocation because liquidity matters to me. But as the stock settles over the next 30 to 60 days, I’ll be watching closely, and I may start building a position," O’Leary said on X. He identified $100 to $110 as a range where volatility could clear.
O’Leary said investors should not judge SpaceX on one quarter. "The bigger opportunity is what Elon could eventually build" by bringing Musk’s businesses closer together, he said. Previous reporting highlighted Tesla-SpaceX merger speculation, while O’Leary has urged investors to own SpaceX, OpenAI and Anthropic rather than pick one winner.
SpaceX Earnings Strengthen Long-Term Bull CaseSpaceX’s first public earnings report gave bulls fresh data. Second-quarter revenue jumped 92% to $7.8 billion, beating the $6.9 billion consensus estimate, while its loss of 9 cents per share beat expectations for a 26-cent loss. Starlink subscribers doubled to 12 million, and AI revenue surged about 250%.
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Capital expenditures topped $18 billion, including $15.83 billion for AI, while operating losses narrowed to $143 million from $970 million. Musk said SpaceX expects a $100 billion revenue run rate by December, and CFO Bret Johnsen said another $6.7 billion of cloud-services contracts will begin ramping in October.
Analysts praised the growth while flagging execution risk. RBC Capital Markets analyst Ken Herbert called the results "positive," saying SpaceX beat expectations. Zacks strategist Brian Mulberry called AI monetization a "tremendous upside surprise," according to Reuters.
Lockup Expiration Keeps Shares Under PressureSpaceX shares have fallen more than a quarter since their June 12 debut, even after Thursday’s first lockup expiration made 911.5 million additional shares eligible for sale.
Benzinga’s Edge Stock Rankings indicate that SpaceX stock maintains a weak price trend in the short, long, and medium terms.
Price Action: SPCX rose 0.05% to $114.98 in pre-market trading on Friday.
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Peter Andersen of Andersen Capital Management explains why he is short SpaceX stock. He says a Tesla-SpaceX merger would not be a “solution” to the companies' challenges and adds that Starlink, which he views as SpaceX's only profitable business, could be spun off.
Tesla stock (NASDAQ: TSLA) closed 1% lower at $319.53 on Thursday as Elon Musk revealed the extraordinary scale of the company's next industrial gamble. Tesla and SpaceX will initially invest $16.8 billion in Terafab, a 100-million-square-foot semiconductor complex in Grimes County, Texas.
SpaceX (SPCX +6.14%) and Tesla (TSLA -0.63%) are preparing for a megamerger. At least that's what a growing number of reporters and experts believe.
"Investors and analysts have long speculated about the possibility of combining Musk's electric vehicle and space firms, with the discussion intensifying during SpaceX's record $75 billion initial public offering process," Reuters reports.
SpaceX and Tesla CEO Elon Musk has done little to temper the speculation.
"As you can tell from the many collaborations on so many fronts with SpaceX, there's more and more overlap ... We can't talk about, you know, combining companies and that kind of thing on an earnings call," Musk recently told investors. "It's got to be done with the appropriate process."
How likely is a potential megamerger? "I would put the odds that these two will combine at 90% today," one industry analyst revealed after hearing Musk's comments. "If you were going to ask me yesterday, I would have said it's 80%."
While I'm not sure the odds are that high, I do believe it's more likely than not that a merger will eventually be attempted. And there's one obvious reason why.
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Here's why Tesla and SpaceX will eventually try to merge Speculation surrounding a potential merger between Tesla and SpaceX stems from several fronts.
First, the two companies already work very closely together. Take a look at SpaceX's IPO prospectus, and you'll see Tesla mentioned more than 80 times. The two companies are already partnering on a variety of projects, including a massive chip manufacturing facility, Starlink integration for Tesla's Cybercabs, AI agent Digital Optimus, and Macrohard, an agentic artificial intelligence platform.
The two companies also already buy each other's services. SpaceX, for example, has purchased hundreds of millions of dollars of Tesla Megapacks: large battery systems that can help power SpaceX's AI data centers. Tesla, meanwhile, owns a direct stake in xAI, SpaceX AI division, and will likely be reliant on that business's products and services to help scale its robotaxi and self-driving car efforts.
Image source: Getty Images.
Both Tesla and SpaceX are increasingly focused on becoming AI powerhouses. Given that AI development is largely a function of compute power, access to funds, and access to data, a megamerger brings many direct benefits.
The biggest reason I suspect a megamerger is on the horizon, however, is Musk's ownership stakes. Musk only owns around 15% of Tesla's outstanding shares. That has created difficulties for him personally. Many shareholders voted against his proposed pay package, though the efforts did ultimately pass. And while Musk owns just 42% to 46% of SpaceX's outstanding shares, he controls more than 80% of the voting power.
Depending on how a deal was structured, a merger between Tesla and SpaceX could give Musk full control over the combined entity. I wouldn't expect Musk to pursue a deal if that meant giving up control over SpaceX and Tesla. The benefits for him personally would be far less in such a situation.
"The most important additional reason a merger makes sense is that Tesla and SpaceX CEO Elon Musk wants to consolidate his companies into one conglomerate," observes Morningstar. "This would allow him to run all their operations under one roof without tripping on as many governance issues."
So while a merger makes sense on multiple fronts, it may simply come down to one question: Will a merger benefit Elon Musk, whose voting power is ultimately needed to execute such a merger? If the answer is yet, expect the firms to attempt a tie-up. Whether regulators approve such a deal, however, remains to be seen.
Tesla reported Q2 revenue of $28.24B, up 26% YoY, with two consecutive quarters of growth acceleration. Despite strong sales, gross margin contracted to 16.83% and operating margin fell to 1.41%, raising profitability concerns. Significant progress continues in Optimus, with factory buildouts, and in Robotaxi, with coverage expansion and Cybercab testing.
Tesla's (TSLA -0.63%) share price is down 30% this year, and it's hardly surprising, given the shifting near-term narrative over the stock. Still, the company's long-term growth prospects remain undiminished, and now that investors' expectations over the robotaxi rollout have been reset, this could prove an excellent opportunity for long-term-focused investors.
Why Tesla's stock crashed in 2026 It isn't the recent sell-off in AI stocks or any other market-related issue; the reality is that expectations for near-term earnings and margin expectations have been driven lower by a pincer-like movement of higher costs and high capital spending from the bottom up, and a combination of lower-than-expected revenue per EV and pushout of expectations for robotaxi revenue from the top down.
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This stands in contrast to where many investors might have expected the company to be at the start of the year. Buoyed by expectations of an exponentially growing robotaxi rollout, not least due to CEO Elon Musk's overly optimistic pronouncements; a recovery in electric vehicle (EV) sales driven by lapping the Model Y refresh; and the release of newer, lower-cost models, investors were expecting a different outcome.
Fast-forward to August 2026, and the situation is different:
Capital spending is expected to be in excess of $25 billion in 2026 and is forecast to grow over the next two or three years Cost increases are in play due to raw material prices, the cost of providing financing for EV sales, and research and development, including preproduction ramp-up costs for new products like the Semi truck, Optimus, Cybercab, and other AI initiatives, according to CFO Vaibhav Taneja on the earnings call. Management is resetting expectations for the robotaxi rollout by emphasizing a safety-first approach and the importance of releasing its next version of full self-driving (FSD) software, v15, before a wide-scale ramp-up. Lower-than-expected average revenue per unit (EV) due to discounting and an unfavorable sales mix (more sales of lower-priced models).
Image source: Tesla.
Capital spending and cost increases Increased capital spending and associated research and development costs shouldn't be an issue in themselves. In fact, it's arguably a positive, as investors want Tesla to invest in growth initiatives such as robotaxi and Optimus. Meanwhile, the investments in securing its supply chain (lithium refinery, lithium iron phosphate batteries, semiconductor fabrication) and ramping production (Semi truck, Cybercab, Optimus, megapack) will de-risk the company and fuel growth.
As for the increased cost of financing to spur EV sales, it aligns with Tesla's strategy to aggressively expand production and win market share in EVs. It also contributed to the 56% year-over-year increase in FSD subscriptions.
In addition, Tesla's aggressive paying for financial inducements may stem from ending the first quarter with relatively high inventory; now that it's cleared, Tesla's discounting and incentives may be less aggressive, and its pricing power may well improve.
Data source: Tesla presentations. Chart by author.
Robotaxi expectations reset Arguably, the real issue here is the pushout in expectations for the rollout. In truth, back in April, on the previous earnings call, Musk said there wouldn't be a large-scale rollout until the next version of its FSD (v15) software was released. Given that that wasn't expected before the end of 2026 or early 2027, it's unlikely that robotaxi will ramp at anything like the magnitude investors were expecting at the start if the year, or when Tesla first launched robotaxis last year.
While tying growth in the rollout to ensuring the FSD software is perfected makes sense, it doesn't necessarily fit many investors' narratives of monitoring the number of cars in the unsupervised robotaxi fleet or the number of cities with robotaxi. The latter metrics are closely watched by investors, but on the recent earnings call, management downplayed them, with head of AI Ashok Elluswamy noting "relatively less effort on our front" in expanding into new cities. Regarding operational readiness, CFO Vaibhav Tadeja emphasized, "We are able to sort these things out in a smaller fleet in a controlled manner."
Image source: Getty Images.
Why Tesla stock can appreciate Tesla's management has made it clear it's not cities or fleets that matter now but perfecting FSD v15 and growing miles driven under the developing versions of FSD v15 it's already implementing.
This probably isn't what most investors want to hear, but the reality is now reflected in the price; developments in robotaxis should be more positively received in the future. When that happens, investors will view the increases in capital spending as growth investments rather than a handicap to the stock.
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SPCX stock is up Thursday. See the chart and price action here. Foundation prep starts almost immediately. Renderings are expected within days, and construction should follow within months, Teslarati reported.
The confirmation followed a $10 million payment SpaceX sent to Grimes County earlier this week, satisfying a deadline built into the tax abatement agreement both sides signed in June.
Site Selection Came Down to Water and WorkersSpaceX chose the Gibbons Creek Reservoir, former home of the Gibbons Creek Steam Electric Station, for its rainwater storage capacity and its proximity to Houston’s deep labor pool, with more than 15.9 million people living within three hours of the site.
The company plans to power the facility with its own natural gas plants rather than draw from the ERCOT grid, and it now owns the Navasota River pumping station it will use to divert stormwater into the reservoir.
Terafab brings together three of Elon Musk‘s companies — SpaceX, Tesla and xAI — as well as Intel Corp. (NASDAQ:INTC). Musk first unveiled the venture in March.
An initial prototype fab is already underway at Tesla’s Giga Texas campus in Austin, feeding into the full-scale Grimes County complex, which SpaceX estimates could cost $55 billion in its first phase and up to $119 billion across all phases.
Behind the price tag sits a supply problem SpaceX spelled out plainly in its IPO paperwork. Its Form S-1 warns that orbital AI ambitions depend on chip access “significantly more than are currently available,” pointing to capacity constraints at foundries including TSMC and Samsung Foundry.
Musk has long argued that existing global fab output covers only a sliver of what Tesla and SpaceX will eventually need to power vehicles, Optimus robots and space-based data centers.
At full scale, Terafab targets 1 terawatt of annual AI compute capacity, roughly double current U.S. semiconductor output, with a goal of 1 million wafer starts per month using Intel’s 14A process.
Wednesday’s confirmation pushes the project from paperwork toward ground-breaking. Even so, SpaceX’s own S-1 cautions that Terafab “may not be successful” in closing the chip gap it was built to solve.
Photo: Shutterstock
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Tesla Inc. (TSLA, Financials), the electric-vehicle and artificial-intelligence company, is moving forward with a $16.8 billion semiconductor complex designed t
Tesla, Inc. is showing signs of improvement in some areas, but its stock is still much too expensive. The company's renewed top-line growth is offset by deteriorating gross, operating, and EBITDA margins. Considered in terms of profitability, TSLA is still in decline. You can buy other tech stocks with growth and profit numbers better than TSLA's at far lower multiples.
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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Tesla (NASDAQ:TSLA | TSLA Price Prediction) currently trades at $327.35 against an average Wall Street price target of $397.87, an implied upside of 21.5%.
Wedbush’s Dan Ives holds a $600 price target on Tesla, roughly 83% upside from here and close to a double. Tesla is valued as an AI, autonomous fleet, and humanoid robotics platform wearing an automaker’s revenue base. The gap between analyst models and market pricing captures how much of that pivot investors are willing to pay for after a bruising earnings report.
Q2 Spending Compressed Margins Tesla’s second-quarter earnings collapsed despite accelerating revenue. Non-GAAP EPS of $0.33 missed the $0.5367 consensus by 38.51%, while revenue of $28.24 billion beat by 7.10% on 25.52% growth.
Operating margin compressed to 1.4% as operating expenses surged 47% to $4.35 billion, driven by AI infrastructure spending, R&D, and stock-based compensation tied to Elon Musk’s 2025 CEO Performance Award. Free cash flow flipped to negative $1.09 billion, a 847.95% reversal, as capex climbed 141.81% to $5.79 billion.
Shares fell 17.5% the day after the filing while SPY gained 4.5%. Record deliveries of 480,126 vehicles and 13.5 GWh of energy storage were overshadowed by a $25 billion capital plan investors are no longer willing to underwrite on faith.
Why Ives and the Bulls Are Doubling Down The bull thesis rests on four pillars: an AI and autonomous mobility re-rating toward a $2 trillion to $3 trillion market cap, high-margin recurring revenue from FSD subscriptions, Optimus humanoid mass production, and vertically integrated compute and battery capex of roughly $20 billion annually.
FSD active subscriptions reached 1.48 million, up 56% year over year, with attach rates above 55% of new North American deliveries. Robotaxi has logged more than 380,000 miles of unsupervised robotaxi across six cities with an “impeccable safety record” and weekly mileage growth Musk pegged at “more than 10% a week”. Cybercab production has started at Gigafactory Texas, and Optimus lines are being installed at Fremont.
Tesla carries 23 Buy, 18 Hold, and 6 Sell ratings, with recent revisions skewing toward reiterations rather than downgrades after the Q2 miss. Prediction markets are cold: Polymarket puts the average August 2026 landing spot at $315.72, and traders assign only 14.5% odds to Optimus reaching commercial release by year-end. Ives’ timeframe is measured in years. The market is measured in weeks.
The EV Peer Group Is Splintered Rivian (NASDAQ:RIVN) trades at $15.76, down 20.04% YTD, against a consensus target of roughly $18.86, implying about 20% upside. The setup depends entirely on R2 launch execution rather than any AI re-rating.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Tesla didn't make the cut. Grab the names FREE today.
Lucid (NASDAQ:LCID) sits at $7.78 after a 26.4% YTD decline, with a consensus target near $9.56 for roughly 23% upside. Ratings skew Hold on a new CEO’s turnaround plan and widening cash burn.
General Motors (NYSE:GM) has done the opposite of Tesla. Shares trade at $88.31, up 9.09% YTD, versus a consensus of $101.41, or roughly 15% upside, after GM beat and raised full-year guidance to $12.00 to $14.00 adjusted EPS.
The largest consensus-implied upside sits with Tesla at 21.5%, and by a wide margin if the Ives $600 case is included. Tesla’s dislocation is being priced against expectations no legacy peer carries.
Down 27% While the S&P Ripped Higher Tesla is off 27.21% year to date and 16.80% over the past month. The S&P 500 is up 13.11% YTD. That is a roughly 40-point spread in seven months.
The stock sits at $327.35 with a consensus target of $397.87 across 47 analysts, with a Buy-lean split. The Ives outlier at $600 is the ceiling. TSLA trades at a P/E of 295, which prices in the AI story analysts are asking investors to believe.
The Bottom Line The bull case works if robotaxi unit economics scale before Optimus and the Terafab budget swamp free cash flow. Musk’s “10% a week” autonomous mileage compounding, FSD’s 55%-plus attach rate, and $43.5 billion in cash arguably back that bet. Ives’ $600 is the payoff if margins snap back on software and fleet revenue in 2027.
The bear case rests on the risk of another quarter or two of 1% operating margins, negative free cash flow, and Musk-driven headline risk while the market waits for AI monetization to show up in the income statement. Prediction markets are already leaning that direction. The cautious lean is toward the consensus target, with healthy skepticism on the Ives ceiling until deliveries of Cybercab and Optimus become concrete numbers.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Tesla didn't make the cut. Grab the names FREE today.
Tesla (TSLA -0.03%) stock is coming off its worst month in over three years. The electric vehicle (EV) leader lost 26% of its value in July, according to data provided by S&P Global Market Intelligence. That was the largest monthly drop since December 2022.
The stock plunged 40% that month but rebounded strongly, posting a 47% gain in January 2023. If history repeats itself, now may be a great time to jump into Tesla stock. Investors should be cautious, though.
Image source: The Motley Fool.
Time to buy the dip? Tesla CEO Elon Musk has been driving the narrative that the EV leader should be seen as an artificial intelligence (AI) technology company. He has positioned its autonomous driving software and robotics businesses as the company's future. While Tesla announces incremental progress in its driverless robotaxi rollout, growth has been slow. That is likely why investors have become less enamored with Tesla stock.
It's also possible that the initial public offering (IPO) of Musk's Space Exploration Technologies has attracted some investor capital that had been with Tesla. If one just looks at Tesla's business results and trends, though, the selling makes sense. Tesla's trailing 12-month (TTM) net income has dropped 64% over the past three years, even as revenue has risen by 8%. Profitability is trending in the wrong direction, making robotics and autonomous vehicle technologies the true hope for an already expensive stock.
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Speculating on Tesla Despite declining profitability, Tesla remains an EV leader. That business helps fund its other aspirations, including an energy storage segment that continues to grow robustly. An investment in Tesla now, though, is a speculative bet on its AI and robotics segments. It's still a profitable company selling EVs, but investors have bid the stock up beyond what that segment is worth.
The stock trades at over 150 times forward earnings and even pushes 200 times, depending on earnings estimates. The EV business won't reach that valuation without a successful driverless robotaxi fleet.
That's Musk's vision, though, along with a humanoid robot line that goes into mass production. Speculating on the stock means believing in those new business lines. Both have massive potential, but come with high risk.
Holding speculative stocks in a portfolio isn't a bad thing, though. It just needs to be properly allocated so that failure won't wipe you out, and a small investment could be enough to make a big impact. July's stock swoon made it a better time to bet on Tesla, as long as investors realize it remains a bet on future business lines.
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
Tesla and SpaceX said Thursday that “Terafab,” the advanced chip factory they are jointly developing, will be built in Grimes County, Texas, outside Houston, and that they will make an initial investment of $16.8 billion in the project.
The factory will be “the largest and most valuable building on Earth by far,” Elon Musk, CEO of both companies, wrote in a post on Thursday. More than 100 million square feet of manufacturing space is planned for the facility, according to SpaceX.
The companies say the facility will employ at least 3,000 people from Grimes and nearby Brazos County.
“The facility will be an advanced semiconductor fab that will bridge the divide between current global chip supply and the compute demand of the future,” a post on SpaceX’s website reads.
The animus behind Terafab is that Musk’s vision of the future — one where millions of robots take over human jobs, robotaxis do all the driving, and satellites become data centers for AI training and inference — requires a phenomenal amount of computing power, far more than what current production rates support.
SpaceX alone has suggested in filings that it may spend as much as $119 billion on the project across a “multi-phase” construction plan — although the company didn’t talk about Terafab at all on its first earnings call earlier this week.
Intel has said it will contribute to the Terafab project, although it’s been cagey about its exact contributions.
“Terafab will be epic in both its mission and in its sheer size, designed to build new compute at an unprecedented scale and speed. A vertically integrated factory with more than 100 million square feet of manufacturing space is planned. This facility will house the manufacturing, packaging, and testing of advanced logic and memory devices,” SpaceX writes on its website.
“Bringing these aspects together in one location will enable fast, recursive improvements and accelerate new compute deployed. Terafab will produce chips optimized for edge computing and inference for use in hardware like Tesla’s Optimus robots and self-driving Cybercabs, along with high-power chips designed for operating SpaceX’s space-based data centers,” the company wrote.
SpaceX said in its post that it is “committing to the use of” water from the local Gibbons Creek Reservoir instead of local groundwater.
The announcement followed a heavily-attended county meeting on Wednesday where hundreds of residents attended and raised concerns about millions of dollars in tax breaks awarded to the project, as well as a lack of transparency.
“We believe this agreement will strengthen our district, expand opportunities, and better prepare our students for their future,” Anderson-Shiro Consolidated Independent School District Superintendent Dr. Sarah Borowicz said in a statement released by the Texas Governor’s office. “There are defining moments in the life of a school district, and this is one of those moments. Our commitment now is to ensure that every opportunity created through this agreement is managed wisely, transparently, and always with students at the center of every decision.”
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Sean O’Kane is a reporter who has spent a decade covering the rapidly-evolving business and technology of the transportation industry, including Tesla and the many startups chasing Elon Musk. Most recently, he was a reporter at Bloomberg News where he helped break stories about some of the most notorious EV SPAC flops. He previously worked at The Verge, where he also covered consumer technology, hosted many short- and long-form videos, performed product and editorial photography, and once nearly passed out in a Red Bull Air Race plane.
You can contact or verify outreach from Sean by emailing [email protected] or via encrypted message at okane.01 on Signal.
On August 6, Direxion broadened its leveraged single-stock ETF lineup with the launch of the Direxion Daily SpaceX Bear 2X ETF (LOFD). This fund seeks daily investment results of 200% of the inverse daily performance of SpaceX (SPCX). The fund launches with an expense ratio of 97 basis points.
Key Takeaways Direxion launched the Direxion Daily SpaceX Bear 2X ETF (LOFD). LOFD seeks daily investment results of 200% of the inverse daily performance of SpaceX. The launch comes just two days after SpaceX reported earnings. There, they climbed roughly 9.5% during the day before falling 10.5% following the earnings announcement of elevated AI capex spending. Direxion now offers a full bull and bear lineup across both of Elon Musk’s publicly traded companies. LOFF and LOFD provide leveraged exposure to SpaceX, while TSLL and TSLS provide amplified exposure to Tesla. Quarterly Results and Lock-Up Expiration Just a few days after SpaceX’s historic IPO, the company reached an all-time high share price of $225.64, marking a 67.14% increase from the IPO price of $135. Since then the company has seen large declines. It fell roughly 53.54% from June highs to an all-time low of $104.83 in early August.
The company reported a loss per share of -$0.09 on revenue of $7.8 billion, marking a 92% revenue increase year over year. These results beat analyst consensus of a loss per share of -$0.26 and revenue of $6.93 billion. Looking at segment revenues, the company continued to perform. Space revenue came in at $962 million, compared to an expected $835 million. Connectivity revenue drew in $4.29 billion versus estimates of $3.83 billion. The company’s AI business brought in $2.56 billion in revenue, beating the consensus estimate of $2.18 billion, according to StreetAccount.
SpaceX stock climbed nearly 9.5% leading up to the report. Despite better than expected headline numbers, the stock fell 10.5% in after-hours trading after the company reported, due to soaring AI capital expenditures. The company spent $15.83 billion on AI capex in the second quarter. That reflects approximately a 105% increase compared to $7.72 billion the first quarter of 2026.
The same day LOFD launches, the initial expiration of SpaceX’s post-IPO lockup begins. The lockup expiration will free up 911.5 million shares, approximately 12% of total shares for sale. That raises concerns that the added supply will keep the stock under pressure, according to Yahoo! Finance. Events like these can trigger sharp single-day moves in either direction, potentially creating the high-volatility that the Direxion Daily SpaceX Bull 2X ETF (LOFF) and LOFD are built to capture.
Expanding Musk-Linked Offerings With the launch of LOFD, Direxion offers a full bull and bear lineup across both of Elon Musk’s publicly traded companies. Investors seeking magnified exposure to SpaceX can turn to LOFF to capture higher upside and LOFD to hedge against drawdowns. For Tesla (TSLA), bullish investors can look to the Direxion Daily TSLA Bull 2X ETF (TSLL). Meanwhile, the Direxion Daily TSLA Bear 1X ETF (TSLS) provides an inverse vehicle to profit from downward price action.
“A complete toolkit enables traders to act on conviction in either direction,” said Mo Sparks, chief product officer at Direxion, in a press release. “LOFF gave them a way to express the bull case on SpaceX. LOFD adds the bear side, and a way to hedge, arriving as the stock heads into a stretch of closely watched catalysts. Across Tesla and SpaceX, Direxion offers a complete bull and bear single-stock lineup and, by assets, is the largest provider of that exposure.”
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Coming into Thursday trading, Tesla stock was down 29% year to date and up 1% over the past 12 months. (Brandon Bell/Getty Images)
Tesla stock rose modestly early Thursday as it continues to work toward European approval for its Full Self-Driving driver-assistance product, which could unlock a new stream of earnings for the car maker.
Let's get to the bad news first. Tesla (TSLA -1.77%) posted a disastrous second-quarter earnings report, sending the stock down 18% to a 52-week low. The week following Tesla's July 22 report was its worst since 2022, and the stock drop reduced CEO Elon Musk's net worth by $130 billion.
But on the other side of the coin, Tesla stock seems to have found a bottom and has risen 8.7% since hitting that low. Is this a good time to purchase the leading electric vehicle stock, given that it is apparently heavily discounted?
Tesla CEO Elon Musk. Image source: The White House.
Why did Tesla's stock fall? On the surface, Tesla's earnings report didn't look horrendous. Revenue was $28.23 billion, up a solid 26% from a year ago. Automotive revenue was strong, at $20.51 billion, up 23%. Tesla also reported delivering 480,126 vehicles, up 25% from last year.
The problem for Tesla, however, came in the company's rising expenses and falling margins. Operating expenses soared 47% from a year ago to $4.35 billion. Operating margins were nearly wiped out. Earnings per share were $0.33, badly missing consensus expectations of $0.54, as compiled by Yahoo! Finance.
On top of that, Tesla disclosed that its cash and investments dropped $1.2 billion in the quarter, and it reported negative free cash flow of $1.1 billion. CFO Vaibhav Taneja said capital expenditures more than doubled sequentially, and capital expenditures (capex) will increase in the second half of the year to more than $25 billion. Tesla will also borrow up to $30 billion for capex and plans to increase its capital spending over the next two to three years, Taneja said, adding:
We believe this is the right strategy to position the company for the next era. We'll always make such investments in a very capital-efficient manner. The path to amazing abundance is ever challenging and requires making bold bets. Our progress will be nonlinear. The future is going to be great. We are ready to rise to the occasion.
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Will investors come back to Tesla? One thing was abundantly clear from this earnings season: The market is rewarding companies that invest in AI when they deliver results. That's why Amazon, which raised its capex budget to $220 billion but showed massive gains in Amazon Web Services and its chips business, saw its stock price jump 20%.
Tesla isn't at that level yet. It's still working on full self-driving technology, and unsupervised drives are only available in a handful of cities. Musk has high hopes for the company's planned Optimus robots, which he plans to deploy in factories and as household assistants, but that technology also appears to be a long way from commercialization.
Autonomous driving and robot personal assistants are much longer-duration bets than Amazon's investments in semiconductors, data centers, and AI computing capacity. Tesla will struggle to deliver near-term results, and that will likely continue to pressure the stock. This might be a stock to avoid for now.
Tesla's (TSLA -1.77%) latest earnings report gave investors plenty to worry about.
Automotive profits remained under pressure. The company warned that investments in artificial intelligence (AI) will continue to ramp up. And the stock fell as Wall Street questioned whether Tesla's ambitious AI projects would take longer than expected to pay off.
But if you're thinking about buying Tesla after the pullback, the headline numbers don't tell the whole story. In fact, Tesla's biggest green flag may also be its biggest red flag. Here's why.
Image source: Getty Images.
One green flag: Elon Musk is becoming more realistic For years, one of Tesla's biggest criticisms has been its ambitious timelines. Whether it was full self-driving cars, robotaxis, or Optimus, investors often felt commercialization was just around the corner, but the reality has often been otherwise.
This quarter felt different. Rather than making bold promises, Elon Musk spent much of the earnings call discussing the challenges that still lie ahead.
Speaking about Optimus, Musk said, "It is a very complex problem to solve. It's one of the hardest things to solve, to make an autonomous humanoid robot that can do tasks that you, if you simply ask it to do something or show it a video, it can do the task without any programming."
He went further, describing the manufacturing challenges:
So, it's a lot of work to scale -- to get the design right and to scale production. And I really want to emphasize here that the production scaling challenge is very, very substantial. 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.
Those comments matter. They suggest management is becoming more focused on execution than on setting aggressive expectations. That's encouraging, because commercializing breakthrough technologies is rarely easy or straightforward. Developing a working humanoid robot is one challenge. Producing millions of reliable, affordable robots is another entirely.
The same principle applies to robotaxis, its other major growth project. Building impressive technology that grabs headlines is not that difficult. But building a profitable business around it to create long-term shareholder value is going to be a completely different thing altogether.
The good news is that Musk's comments suggest Tesla understands that difference.
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One red flag: Tesla's biggest investment cycle is just beginning Ironically, the same comments also highlight Tesla's biggest risk. The company isn't simply developing new products. It's investing heavily to build entirely new businesses, or arguably new ecosystems altogether.
That means spending billions of dollars on AI infrastructure, custom chips, manufacturing capacity, robotaxis, and Optimus -- all while its core automotive business faces weaker profitability than in past years. To put the capital expenditure (capex) size into perspective, Tesla's capex for 2026 will exceed $25 billion -- more than double that of 2025.
That's an enormous amount of money. The risk isn't that Tesla is investing aggressively. The risk is that these investments may take much longer to generate meaningful profits than investors expect, or even fail to meet the expected hurdle rate.
If robotaxis and Optimus become commercially successful, today's spending could prove to be one of the smartest investment decisions Tesla has ever made. If commercialization takes longer, however, shareholders may have to endure years of elevated spending and volatile earnings before seeing the payoff.
What does it mean for investors? Tesla's latest earnings didn't weaken its long-term vision. If anything, they reinforced it.
What changed was management's tone. Instead of focusing on exciting possibilities, Musk acknowledged the difficulties of the next stage of growth.
That's both the company's biggest green flag and its biggest red flag. The green flag is that Tesla appears increasingly focused on execution rather than optimistic timelines. The red flag is that execution will require enormous amounts of capital, patience, and flawless operational discipline.
For long-term investors, that means your conviction shouldn't be based on next quarter's earnings -- but on whether you believe Tesla can eventually turn its ambitions into highly profitable businesses.
Only if the answer is yes does buying the dip make sense.
SummaryCompaniesDutch regulator approves Tesla's FSD driver-assistance system but won't release safety-test detailsTesla has pressured officials to withhold safety-testing results from the publicTesla and regulators say the information amounts to trade secrets; safety experts disagreeAug 6 (Reuters) - Four months ago, the Netherlands approved Tesla’s Full Self-Driving (FSD) system and has since then advocated for its adoption across the EU.
But Dutch road regulator RDW won’t tell the public why it concluded the driver-assistance system is safe or how it evaluated the technology, which for years has faced regulatory investigations and lawsuits over FSD-involved crashes in the United States.
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Releasing such details would violate Tesla’s commercial secrets, the regulator told Reuters, echoing the automaker’s own demands on the regulator for confidentiality. Since late 2024, Tesla has pressed RDW to keep documentation about the FSD safety review secret, according to previously unreported email correspondence between the Dutch regulator and Tesla, obtained by Reuters through a public-records request.
Tesla has called FSD approval key to boosting sales in Europe, where it’s trying to regain market share lost in recent years and faces fierce competition from Chinese EVs.
European regulators have historically been more cautious about automated driving than the United States, requiring automakers to get approval before deploying driver-assistance systems such as FSD.
Tesla CEO Elon Musk has repeatedly said FSD, which requires a human driver to pay strict attention, will soon be fully autonomous. A Reuters investigation in May found that Tesla’s self-published FSD safety statistics are highly exaggerated and the company is nowhere near releasing self-driving technology at scale.
Reuters reported in June that Tesla had shared inflated FSD-safety data from the United States with several EU regulators including RDW as it sought approval. RDW said it did not rely on Tesla’s statistics and did its own “extensive testing” on closed tracks and public roads, in various conditions, without specifying how it measured performance or safety.
European vehicle-safety law experts say RDW is withholding far too much information under the guise of trade secrets, potentially at the expense of public safety. Details on RDW’s testing and Tesla’s performance are matters of broad public interest, said Oliver Carsten, a transportation-safety professor at the University of Leeds who has been involved in crafting European automated-driving regulations.
“I don’t see any reason why that couldn’t be public,” he said.
Frank Mutze, policy and project manager for the advocacy group European Transport Safety Council, said the public is left to trust that authorities “have done their homework, which of course isn't good enough for us.”
RDW declined to say how it evaluated FSD safety testing or to release documents on the testing, citing an “obligation to protect manufacturer-specific information.” The agency did not explain how details of its testing or conclusions about the system’s performance could reveal commercially sensitive information.
Tesla did not respond to requests for comment.
TESLA DEMANDS FOR SECRECYRDW announced in April that it had concluded FSD is “safer than other driver assistance systems.” In June, RDW said it is “at least as safe as other driver assistance systems.” The agency offered no data or evidence supporting those statements.
RDW is now seeking EU approval for FSD, which requires a “yes” vote from representatives of 55% of member states that make up 65% of the bloc’s population. A vote could happen in October.
Tesla made secrecy a priority throughout its application, according to correspondence between the automaker and the regulator beginning in late 2024.
In one example from April 2025, a Tesla representative sought to confirm RDW would “never” release a particular document and asked how it would ensure it was “withheld from public disclosure.” Tesla, the employee said, could not provide more information to RDW “until this matter is clarified.”
RDW told Tesla that disclosure under public records law shouldn’t be a problem because “manufacturers always have the option to request an exemption from disclosing certain information.”
RDW told Reuters it has not withheld information at Tesla’s request but rather makes its own decisions on how to protect company trade secrets.
Tesla has a history of trying to shield information it gives regulators from public view. In the United States, it petitions federal safety regulators to redact basic details about every crash involving its driver-assistance systems.
Other European regulators, who are getting some unspecified FSD testing information from RDW, have taken a similar line on confidentiality. Regulators in six European countries including Germany, Norway and Denmark all told Reuters they could not release data on FSD testing or performance because of concerns about trade secrets. The Norwegian Public Roads Administration said it had reviewed data the Dutch provided on its assessment of FSD and that the data “is not the same as what Tesla publishes on its website,” referring to the inflated safety statistics examined in the Reuters investigation.
Tesla’s statistics claim the vehicles are safer than what’s documented in the data European regulators are reviewing, the Norwegian agency has told drivers in emails reviewed by Reuters.
European traffic-safety experts said that regulators’ insistence on confidentiality is particularly concerning given the unorthodox way Tesla is seeking FSD approval. Tesla is pursuing a special exemption from EU motor-vehicle regulations, which currently only allow hands-free automated driving systems like FSD to operate on highways and prohibit their use on more congested urban roads.
Some regulators have provided clues about their concerns. France’s transportation minister last month said the country would not approve FSD in its current form because of concerns about speeding and insufficient technology to ensure the human driver is paying attention.
Finland’s Transport and Communications Agency said the system “has been observed to often make safer decisions than a human driver” but also highlighted concerns about its operation on steep, windy roads and questioned whether drivers could safely retake control if the system makes sudden mistakes.
Reporting by Chris Kirkham and Marie Mannes; additional reporting from Toby Sterling, Christina Amann, Gilles Gillaume and Stine Jacobsen; editing by Mike Colias and Brian Thevenot.
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Chris Kirkham is a business reporter in Los Angeles who writes about Tesla, electric vehicles and the wider automotive industry. He previously worked at The Wall Street Journal and the Los Angeles Times, and has covered topics including tobacco, worker safety, gambling, and the economy over a two-decade career. Contact him at [email protected] or on Signal at chris_kirkham.51
Stockholm-based company news correspondent who mainly covers anything to do with retail and industrial companies in Sweden as well as other sectors with Swedish companies. She previously covered the general Nordic stock market from Gdansk, reporting on a range of subjects, from companies exiting Russia to M&As and supply chain concerns. Marie has degrees in journalism and international relations and is keen on finding stories that drive the market and that have unreported elements to it.
