The market buzz surrounding Tesla’s stock last Friday, which saw it move against the broader market trend, was primarily triggered by a significant, publicly acknowledged development in its Robotaxi/Full Self-Driving (FSD) program. Specifically, the news revolves around the sighting of a driverless Tesla Model Y operating on public roads in Austin, Texas. This was given immense credibility when Ashok Elluswamy, Tesla’s Head of AI and Autopilot, effectively confirmed the authenticity of the test with a simple but powerful comment on social media: “And so it begins.”
This isn’t just another incremental FSD update; it represents one of the clearest public indicators yet that Tesla is nearing the threshold for fully autonomous, unsupervised commercial deployment. The market’s reaction suggests that institutional investors may have been moving based on this accelerating timeline, reflecting a profound shift in how the company is valued—from an automotive manufacturer to an Artificial Intelligence and robotics powerhouse.
The Trillion-Dollar Market Beckons
The shift to autonomous ride-hailing is not merely an improvement on existing transportation; it is a disruptive revolution with massive market potential.
Market Capacity and Forecasts:
- Global Trajectory: The global robotaxi market is currently a nascent but rapidly expanding field. Various research firms project exponential growth, with the market size soaring from an estimated $1.71 billion in 2022 to figures ranging from $45.7 billion to $118.61 billion by 2030 or 2031, according to reports from MarketsandMarkets and Fortune Business Insights, respectively. This implies a phenomenal Compound Annual Growth Rate (CAGR) of up to 91.8% in the coming years.
- The U.S. Opportunity: In the United States, the robotaxi market is expected to reach approximately $3.30 billion by 2027, with some analysts, like TrendForce, estimating the U.S. market alone could hit $36.5 billion by 2035, growing at a CAGR of 61% between 2025 and 2035. Bank of America further suggests the sector could become a $1 trillion-plus market in the U.S. as autonomous ride-hailing potentially captures up to 20% of all miles driven.
- Cost Advantage: The core of the disruption lies in the economic model. Autonomous taxi services are projected to drastically reduce the cost per mile. ARK Invest estimates that at scale, autonomous taxis could cost consumers as little as $0.25 per mile, a stark contrast to the estimated $2 per mile for traditional human-driven ride-hailing services. This enormous cost advantage is the engine for widespread adoption.
Tesla’s Competitive Edge and Valuation Impact
Tesla’s approach, leveraging a massive fleet of existing vehicles with proprietary FSD hardware and a vast data collection advantage, sets it apart. While rivals like Waymo and Zoox employ different sensor arrays (including LiDAR) and have launched supervised or geo-fenced commercial services, Tesla’s “vision-only” strategy, if proven safe and scalable, offers a crucial cost and deployment advantage.
The Impact on Tesla’s Valuation:
- Re-Rating the Stock: For years, a significant portion of Tesla’s valuation has been a bet on its autonomous future, and the recent Austin development de-risks this vision. Analysts from firms like Wedbush and Morgan Stanley increasingly see Tesla less as an automaker and more as an AI/robotics company. They argue that the stock’s intrinsic value is now divorced from its core EV sales, which are expected to face slower growth or even decline in the near term.
- Massive Upside Potential: The successful commercialization of Robotaxis is the single largest catalyst for the stock. ARK Invest has gone so far as to suggest that autonomous ride-hailing could account for 67% to 90% of Tesla’s total business value by 2029. The commencement of a scalable, fully driverless service will unlock this massive value proposition. A full-scale rollout, even if starting with 10 to 20 vehicles in Austin and quickly scaling to a planned 1,000 robotaxis by 2026, will be the first tangible proof point.
- The Cybercab Factor: The planned mass production of the purpose-built “Cybercab” by 2026, which is expected to have superior cost efficiency, is the second critical factor for scaling. This specialized vehicle will directly translate autonomous software success into high-margin revenue generation, further cementing Tesla’s AI/Robotics company status.
Risks and Conclusion: The Road Ahead
Despite the optimism, significant risks remain. The speed of regulatory approval for genuinely unsupervised operations is highly uncertain and jurisdiction-dependent. Furthermore, the competition is fierce: Waymo, for instance, is already running fully driverless vehicles in multiple cities and expanding rapidly, while Chinese players like Baidu are also scaling their efforts. Most critically, a single safety incident involving an unsupervised vehicle could cause catastrophic reputational and regulatory damage, plunging the stock into a crisis.
Investment Recommendation: Overweight/Buy
While the EV sector faces headwinds, the narrative for Tesla stock has fundamentally changed. The recent Robotaxi development, confirmed by high-level engineering leadership, provides a tangible timeline for the company to transition its immense FSD data and software advantage into a new, high-margin revenue stream. The market’s immediate, positive reaction underscores the critical importance of this milestone. Investors are advised to maintain an Overweight/Buy position, understanding that the stock is now a volatility-prone but high-reward play on the future of autonomous mobility. The key metrics to watch are the rate of fleet expansion in Austin and new cities, and the speed of regulatory approval for truly driverless operations. Any concrete evidence of a safe and rapidly scalable deployment will trigger the long-awaited valuation re-rating.