From Nasdaq: 2025-06-03 05:56:00

Zacks.com Analyst Blog features Tesla, Alphabet, and BYD Co Ltd. Tesla is set to launch its first robotaxi service in Austin, TX on June 12, allowing users to hail driverless rides using Full Self-Driving software. However, questions about the service’s operation and safety remain unanswered. TSLA stock has seen a 23% rise, but risks and uncertainties persist.

Competitor Alphabet’s Waymo holds a lead in the driverless race, operating commercial services in four U.S. cities. Waymo’s cautious approach contrasts with Tesla’s bold statements, raising concerns about safety and transparency. U.S. regulators have also questioned Tesla’s upcoming launch due to past incidents linked to driver-assist features. Tesla’s cost advantage may help scale the service, but critical questions linger.

Tesla faces declining sales and brand challenges, with China’s BYD Co Ltd. surpassing Tesla in EV deliveries. BYD delivered 416,388 electric vehicles in Q1 2025, beating Tesla for the second consecutive quarter. Tesla’s deep discounts to boost demand are impacting profit margins, leading to lowered growth targets. Estimates for Tesla have been decreasing, and the company has not reaffirmed its 2025 delivery guidance.

From a valuation perspective, Tesla appears overvalued with a price/sales ratio higher than the industry average. The market is pricing in unproven technologies like autonomous driving and robotics, posing risks for investors. Tesla’s upcoming robotaxi launch offers potential, but uncertainties and challenges in the core EV business make it a risky investment. Tesla currently carries a Zacks Rank #5 (Strong Sell).

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