Tesla (TSLA -3.24%) stock has been on a wild ride in 2025, with shares gyrating between $220 and $430 since the year began. And while many investors believe those shares are overvalued right now, the electric vehicle (EV) company's growth story remains compelling. In fact, there are two encouraging reasons to buy more shares before its next earnings call, which is scheduled to take place in late July.
1. Tesla now has a massive capital advantage
Profitably investing in electric car stocks has proven difficult over the decades. Over the last 10 years alone, at least 30 EV makers have gone under. The most common reason for those failures hasn't been a lack of good ideas or viable products. Instead, most of them simply ran out of money before they could turn the corner to profitability.
The amount of capital and time necessary to bring an electric vehicle to market is far greater than most consumers realize. Rivian and Lucid Motors, for example, took roughly a decade to go from the idea stages to actually producing and selling their first models. Tesla was launched in 2003, but its first model, the Roadster, didn't reach customers until 2008 -- and that was a fairly rapid evolution compared to its competitors. Still, the long delays that plagued its Cybertruck prove that even a mature company can have difficulties getting a new model to market on time.
Right now, Tesla is by far the largest pure-play EV company in North America. Its market cap is around $1 trillion. By comparison, Rivian and Lucid Group have a combined value of just $30 billion. Given that less than 10% of the vehicles on America's roads are electric, there's significantly more long-term growth on the way for EV companies. And in terms of having the raw financial power to not only survive, but to invest aggressively into new models and next-gen technologies, Tesla has few to no rivals. For example, it could raise $30 billion in new cash -- roughly the combined total market caps of competitors Rivian and Lucid Group -- by diluting shareholders by just 2.5%. That ability also gives debt holders more confidence, lowering the cost of debt for Tesla.
In fact, its heavy capital advantages allow it to think big -- far bigger than any of its competitors could afford to think. And that leads directly to the other reason why investors should consider buying its shares now.
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2. Robotaxis could be the next big growth opportunity
If you ask famous tech-sector investor Cathie Wood what the future of Tesla is, she will doubtless reply, "robotaxis."
The EV maker has already unveiled its upcoming robotaxi vehicle, the Cybercab, and announced plans to start operating its ride-hailing service in Austin, Texas, in June -- though it will launch not with Cybercabs, but with 10 Model Ys equipped with the latest version of its full self-driving software, which it has dubbed "FSD Unsupervised." Wood thinks that Tesla's robotaxi service will soon "proliferate" and achieve a stranglehold on the U.S. ride-hailing market. She thinks the service could send Tesla's stock price nearly 1,000% higher, contributing more than 90% of the company's revenues over time.
I'm skeptical of Wood's optimistic timelines and projections. Tesla is currently facing sales declines in its core EV business, and if its own projected timelines are any indication, the robotaxi service will take many more years to build and scale than the company would like investors to believe. Still, the upside potential is clear. And given Tesla's capital advantages, it will have the time and funding necessary to bring this vision to fruition, even if it takes the better part of a decade to fully realize.
Why buy Tesla stock before its next earnings report? Because you believe in the long-term vision of both EV sales growth and Tesla's new robotaxi business. While the road ahead will be difficult, some analysts think Tesla's robotaxi business could bring in $1.7 trillion by 2040. If you believe it can achieve that, Tesla's current $1 trillion market cap will look like a relative bargain, and there's no reason to wait to establish a position. Just be aware that in that context, Tesla should be a decade-long holding, not a short-term bet on the company's near-term prospects.
