Tesla's Robotaxi Optimism Faces Harsh Reality of Declining Auto Business and Regulatory Risks

What happened

A new article touts Tesla's robotaxi progress in Austin and projects a 24% earnings CAGR from revenue mix shifts, but the DeepValue report reveals this optimism clashes with two consecutive years of declining auto deliveries and mid-teens margins. Tesla's valuation at ~275x trailing EPS already embeds substantial future success in autonomy and robotics, which remain unproven and face intensifying NHTSA scrutiny over FSD safety. Energy storage is growing rapidly with high margins, providing a second earnings engine, yet its base is too small to offset auto weakness without timely robotaxi or Optimus contributions. Market sentiment has shifted toward an AI and robotics narrative, but operational realities include a small, geofenced robotaxi pilot in Austin and no external contracts for Optimus, lagging behind competitors like Waymo. The upcoming earnings call and NHTSA response deadline will test whether Tesla can deliver on its promises or face further multiple compression.

Implication

The bullish projections in the article ignore Tesla's persistent auto delivery declines and margin compression, which undermine the stability needed to support current multiples. Regulatory risks, particularly from NHTSA's expanding FSD investigation, could impose restrictions that delay robotaxi monetization and erode software revenue assumptions. Energy storage offers a positive offset with strong growth, but it cannot alone justify the stock's premium without scalable autonomy or robotics proof points. Without clear milestones, such as robotaxi expansion beyond Austin or external Optimus contracts, investor patience may fade, leading to a re-rating toward the DeepValue report's base case of $380. Prudent investors should trim positions above $520 and await concrete evidence of profitability in Tesla's high-risk bets before considering new entries.

Thesis delta

The new article does not alter the DeepValue report's core thesis that Tesla is overvalued, as it repeats optimistic assumptions without addressing the operational headwinds and regulatory uncertainties detailed in filings. Auto deliveries have fallen for two years despite global EV growth, and NHTSA scrutiny threatens the autonomy narrative, reinforcing the view that earnings pressure and multiple compression are more likely than rapid margin expansion. A shift to a more favorable stance would require demonstrable, revenue-meaningful progress in robotaxi scaling or Optimus commercialization, which remains absent.