For decades, the automotive sector was generally a boring industry to watch. When Tesla (TSLA 2.47%) entered the scene, though, things changed. The company's tech-enhanced and well-designed cars pushed the electric vehicle (EV) market forward. And its shareholders profited: Over the past decade, the stock is up by 3,190% (as of Jan. 22).
But is the EV powerhouse still a buy now?
Image source: Tesla.
The present and the future
Investors who look at Tesla's business today will struggle to find anything to get excited about. Its EV deliveries fell 9% in 2025, and through the first nine months of the year, its automotive revenue declined by 9%. Competition in the EV space is stiff, President Donald Trump’s "big, beautiful bill" ended the federal tax credit on EVs, and CEO Elon Musk's political actions have damaged the Tesla brand with a large swath of consumers. Meanwhile, Musk also instituted a series of price cuts that reduced the company's margins.
But Tesla is also a disruptive and innovative operation that's always looking ahead. Its longer-term goal is to become the operator of a global robotaxi fleet that Musk thinks will experience "quasi-infinite" demand. If that strategy plays out as he hopes, eventually, the business will one day depend far less on car sales. Instead, it will generate high-margin recurring revenue from its artificial intelligence-powered self-driving software and the robotaxi service that software will enable.
When it comes to driverless miles driven, Tesla is far behind some others in the space. And its robotaxi service is today only carrying paying passengers in Austin, Texas, and the San Francisco Bay Area. (There are plans to bring it to other cities in 2026, though.)
But the tech sector investing specialists at Ark Invest believe that over time, Tesla will accrue substantial value as an autonomous vehicle tech provider. That, however, will depend on its ability to bring cost per mile down and manufacturing capacity for self-driving EVs up.
NASDAQ: TSLA
Key Data Points
Its valuation isn't rooted in reality
Tesla is a polarizing stock for numerous reasons. Its critics will continue to point to the current state of the business, which could understandably lead one to take a pessimistic stance. Tesla is a struggling company with a damaged brand that faces intensifying competition in an industry that isn't growing as fast as it once was.
On the other hand, Tesla's biggest bulls couldn't care less about the present situation. They continue to believe whatever Musk says -- and lately, his narrative has been that the company will look radically different in the not-too-distant future thanks to huge leaps in self-driving and robotics technologies. In this light, Tesla is a story stock.
If you're in the bearish camp, then Tesla is clearly a stock to avoid.
But even if you're a strong supporter of Tesla and Musk, buying the stock still doesn't look like a smart money move. Shares trade at an excessive price-to-earnings ratio of 293.
To justify the optimism baked into that lofty valuation, Tesla will need to execute flawlessly. Not only that, but it will need to make substantial progress on its ambitious technological goals within a reasonable time frame. Given the uncertainties it faces on the technological, regulatory, safety, and consumer comfort fronts, betting that it will pull those things off is a risky bet to make.
