Is it a good idea to invest in TSLA stock as Tesla prepares to introduce new FSD model and eliminate robotaxi safety drivers?

Excitement around autonomous driving continues to influence electric vehicle stocks, where even a single update can sway share prices significantly. Investors are betting on a future where robotaxis and ride-hailing could reshape automaker profits, though regulatory approval and execution remain critical.

Tesla (TSLA) recently added a new development. Elon Musk announced that safety drivers will be removed from Austins robotaxis within roughly three weeks. He also revealed plans for a much larger Full Self-Driving (FSD) version, described as an order of magnitude bigger, expected to launch in January or February 2026.

If Tesla can successfully implement unsupervised driving and monetize robotaxis, it could boost the stock. However, regulatory challenges, rare driving scenarios, or hardware limitations could slow progress. For investors considering TSLA now, the potential is attractive but comes with considerable risk.

Tesla Stock Overview

Founded in 2003, Tesla is a leader in electric vehicles and clean energy solutions. The company pioneered advanced driver-assist software with FSD and is developing robotaxis and humanoid robots called Optimus. Tesla is currently valued at around $1.4 trillion, reflecting heavy investment in factories and autonomous technologies.

TSLA stock has experienced significant volatility this year. Year-to-date, the stock is up about 11%, recovering from April declines caused by delivery concerns and investor worries over Elon Musks political distractions. Momentum returned in mid-2025 following rate-cut optimism and Musks $1 billion insider purchase.

From a valuation perspective, Tesla remains expensive. The stock trades at a price-to-earnings ratio of 240, far above the sector median of 16, and a price-to-sales ratio of 15, well above the sector median of 1. These high multiples reflect investor optimism around FSD and robotaxis but also limit upside if these initiatives are delayed.

Robotaxi and FSD Developments

Teslas news of unsupervised robotaxis and a new FSD model generated cautious optimism. Removing safety drivers would bring Tesla closer to competitors like Waymo, which has already logged over 100 million miles without safety drivers. Analysts note, however, that these tests are still small-scale and not yet revenue-generating.

Investor reactions were mixed. Some celebrated the technological progress, while others highlighted execution and regulatory risks, noting that full profits from robotaxis remain years away. The announcement reinforced confidence in Teslas technological leadership but had limited immediate impact on the stock price.

Financial Performance

Teslas third-quarter results showed record revenue and cash flow but compressed profit margins. Revenue hit $28.1 billion, driven by vehicle sales and energy deployments, while net income fell 37% to $1.37 billion due to increased AI, R&D, and SG&A expenses. Automotive gross margin stood at roughly 15.4%.

Operational cash flow remained strong at $6.24 billion, capital expenditures decreased to $2.25 billion, and free cash flow reached a record $4 billion. Cash on hand rose to approximately $41.6 billion, providing Tesla substantial financial flexibility.

Future growth is expected from new models, including a long-wheelbase Model Y in China and lower-priced 3/Y models under $40,000. Energy products like Megapack and Megablock also showed momentum. However, demand in key markets has softened, with U.S. deliveries declining, European registrations flat, and competition from Chinese brands intensifying.

Autonomy as a Growth Driver

Autonomous driving remains Teslas headline growth story. The company continues to innovate with FSD and robotaxi trials in multiple cities. While full-scale unsupervised driving could significantly increase revenue and margins, regulatory scrutiny and edge-case safety issues are key considerations.

Analyst Perspectives

Wall Street opinions on Tesla are mixed. Morgan Stanley moved TSLA from Buy to Hold with a price target of $425, citing progress in FSD and robotics but softer EV demand. Goldman Sachs also maintains a neutral stance with a $400 target, highlighting mixed Q3 results and upcoming catalysts like the shareholder meeting and Optimus rollout.

Piper Sandler remains bullish with an Overweight/Buy rating and $500 target, citing improved production efficiency and potential from FSD and robotaxis. Wedbushs Dan Ives is the most optimistic, forecasting a magical 2026 driven by autonomy and AI, with a $600 target. Overall, consensus among 41 analysts is Hold, with an average 12-month target of $386.29, though the high-end target of $600 suggests 35% upside potential.

Sources:

• As Tesla Gets Ready to Remove Its Robotaxi Safety Drivers and Launch New FSD Model, Should You Buy TSLA Stock Here?

Author: Logan Reeves
Logan Reeves is a sports analyst and journalist. He writes match reviews, conducts athlete interviews, and produces data-driven predictions.