Tesla investors increased their holdings earlier this week, and for good reason—the dream of owning a stake in an autonomous fleet is inching closer to reality.
Tesla CEO Elon Musk confirmed that autonomous taxis have begun testing without a safety driver in the front seat. The news boosted shares of the electric vehicle company, which aspires to become a leader in artificial intelligence and robotics, to their highest level this year, matching the peak seen last December.
Tesla's stock rose 4% on Monday and another 3% on Tuesday, surpassing the record high set nearly a year ago when optimism about Tesla's self-driving business surged following Donald Trump's re-election.
Now, that ambition appears to be paying off. While Tesla's revenue still primarily comes from vehicle sales, the company aims to build an on-demand autonomous fleet and introduce humanoid robots with autonomous capabilities into households. The progress in autonomous taxi testing signals to investors that these grand plans are steadily advancing, with lofty visions translating into tangible developments.
Dan Ives, an analyst at Wedbush Securities, stated in a Monday research note: "We estimate that AI and autonomous driving alone could add at least $1 trillion in value to Tesla. Over the past few years, Musk and his team have faced significant federal regulatory hurdles in deploying full self-driving technology. However, with the Trump administration easing restrictions, we have every reason to expect these core projects to accelerate over the next 3 to 6 months."
Wall Street's valuation of Tesla partly hinges on how quickly its autonomous taxi era arrives. Earlier this month, Musk claimed Tesla was just weeks away from achieving unsupervised autonomous taxis.
Currently, he plans to double the size of the autonomous taxi test fleet this month and expand testing to Phoenix and Nevada. Investors are looking ahead to next year, anticipating the start of mass production for the new Cyber Autonomous Taxi.
Bullish analysts like Dan Ives believe Tesla has begun unlocking the valuation potential of its AI business.
Tesla is not the first in the autonomous driving race—Waymo, owned by Alphabet (Google's parent company), already operates thousands of commercial autonomous taxis in the U.S.
However, Ives predicts Tesla will capture 70% of the global autonomous driving market over the next decade. He reasons: "Globally, no other company combines Tesla's scale, business breadth, and expanding AI capabilities—making its advantage unmatched."
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