Tesla (TSLA 7.21%) is one of the world’s largest manufacturers of electric vehicles (EVs), but rising competition is slowly chipping away at its market share. EV sales are still the main driver of Tesla’s financial results, but CEO Elon Musk is trying to future-proof the company by steering its resources into new products like autonomous vehicles and robotics.

Ark Investment Management, which was founded by seasoned tech investor Cathie Wood, predicts autonomous vehicles will transform Tesla’s economics. In fact, Ark thinks a whopping 86% of the company’s earnings will come from self-driving robotaxis by 2029, paving the way for a stock price of $2,600. That would be a 615% increase from where Tesla stock trades today.

How realistic is Ark’s forecast? Let’s dive in.

Image source: Tesla.

Tesla’s EV business is sputtering

To meet Ark’s bullish 2029 forecast, Tesla will have to transition from selling passenger EVs to selling self-driving robotaxis, and it will also have to build new services like an autonomous ride-hailing network.

Unfortunately, Tesla is currently operating from a position of weakness, which is forcing this shift earlier than the company perhaps would have liked. After all, government regulators haven’t approved Tesla’s full self-driving (FSD) software for unsupervised use anywhere in the U.S. yet, which is a huge barrier to the success of its upcoming Cybercab robotaxi.

Tesla delivered 1.79 million passenger EVs during 2024, which was down 1% from the prior year, marking the first annual decline since the company launched its flagship Model S in 2011. The situation is much worse in 2025, with deliveries shrinking by a whopping 13% in the first half of the year. This led to a 14% decline in Tesla’s revenue and a 31% collapse in its earnings per share (EPS) during the same period, which is alarming to say the least.

A rapid increase in competition is a key reason for Tesla’s woes. Low-cost EV producers like China-based BYD are making serious inroads into some of Tesla’s biggest markets. Tesla’s sales sank by 40% across Europe in July, despite EV registrations climbing by 33% overall. BYD, on the other hand, saw a whopping 225% increase in sales in the region.

Simply put, Tesla is quickly losing market share in the passenger EV space. The company is launching a low-cost EV of its own in order to compete, but production just started so it probably won’t be a factor until next year at the earliest.

86% of Tesla’s earnings could soon come from autonomous robotaxis

Elon Musk is making a big bet on autonomous ride-hailing. The Cybercab, which will enter mass production in 2026, will run entirely on Tesla’s FSD software, so it’s designed to operate without any human intervention. In theory, that means it can haul passengers and even small commercial loads at all hours of the day, creating a lucrative new revenue stream for the company.

Scaling this business will come with challenges. I mentioned FSD isn’t approved for unsupervised use in the U.S. just yet, but Tesla will also have to compete with established ride-hailing giants like Uber Technologies, which has already partnered with 20 other companies in the autonomous driving space. Around 180 million people already use Uber every single month, so it’s in a much better position to dominate the autonomous ride-hailing industry compared to Tesla, which has to build an entire network from scratch.

However, Ark thinks Tesla will eventually make it work. Its forecasts suggest the company will generate $1.2 trillion in annual revenue by 2029, with 63% ($756 billion) coming from its robotaxi platform alone. Ark says that could translate to $440 million in earnings before interest, tax, depreciation, and amortization (EBITDA), with 86% attributable to the robotaxi because of its high profit margins — human drivers are the largest cost in existing ride-hailing networks, but the robotaxi won’t need them.

Don’t rush to buy Tesla stock just yet

In my opinion, Ark’s predictions are too ambitious. Wall Street thinks Tesla will generate around $93 billion in revenue during 2025 (according to Yahoo! Finance), so that figure will have to grow by almost 1,200% over the next four years to meet Ark’s forecast of $1.2 trillion — driven by a brand-new robotaxi product that hasn’t even hit the road yet.

Tesla’s valuation is another issue. Its stock is trading at an eye-popping price-to-earnings (P/E) ratio of 209, making it almost seven times as expensive than the Nasdaq-100 technology index — which trades at a P/E ratio of 31.6. Remember, Tesla’s earnings are currently shrinking, which makes its premium valuation even harder to justify.

Therefore, I’m hesitant to buy into the idea that Tesla stock could surge by another 615% over the next four years to reach Ark’s price target of $2,600. It might be possible if the company’s robotaxi platform becomes as successful as Ark predicts, but I think that’s unlikely in such a short period of time. After all, Elon Musk has promised unsupervised self-driving cars for the last 10 years, and Tesla still hasn’t delivered.

Waymo announced Tuesday that it’s going to bring both of its vehicles — the Jaguar I-Pace SUV and the Zeekr van — to Denver and Seattle starting this week, the latest move in a continued expansion across the United States.

The vehicles will be manually driven to start, before the company starts testing its autonomous tech in both cities. Waymo told TechCrunch that it hopes to start offering robotaxi trips in Denver next year and the Seattle metropolitan area “as soon as we’re permitted to do so.” Denver and Seattle will be two of the most extreme-weather cities that Waymo is feeling out, giving it a chance to test out its tech in snow, wind, and rain that is harder to come by in places like Phoenix.

The new cities join a growing list of places where Waymo is operating in the U.S. Just last week the company announced that it has more than 2,000 robotaxis in its commercial fleet countrywide, with 800 in the San Francisco Bay Area, 500 in Los Angeles, 400 in Phoenix, 100 in Austin, and “dozens” in Atlanta. Waymo has also announced plans to launch a commercial robotaxi services in Dallas, Miami, and Washington, D.C., next year, and recently received a permit to start testing in New York City.

That’s not to mention the other cities where Waymo has dipped its toes. It’s brought vehicles on “road trips” to places like Philadelphia and plans to do the same in Las Vegas, San Diego, Houston, Orlando, and San Antonio.

Lyft has received the required regulatory clearance to finalize its acquisition of the European app-based taxi company Freenow. First back in April, Lyft’s approximately $197 million agreement with BMW and Mercedes-Benz allows the company to expand outside of North America for the first time.

Freenow’s service will continue to operate as normal, but  reports that users will be prompted to download the Lyft app when travelling in the US or Canada, and vice versa for Lyft riders in one of the nine countries or 180 European cities Freenow currently operates in. Eventually you’ll be able to book a taxi on either app without having to switch.

According to Bloomberg, none of the roughly 600 Freenow employees’ jobs are at risk, and while 50 percent of taxi bookings in Europe apparently still happen offline, the new partners believe there is a desire for that to shift more towards an online majority. In 2024, taxis accounted for 90 percent of Freenow’s income and they will remain the “backbone” of its business going forward.

As well as seamless app integration in the future, Freenow said in April that riders can expect more consistent pricing, faster matching and new features as a result of the Lyft acquisition. Lyft is the second-largest ride-hailing company in the US, trailing Uber, and has been looking to introduce more autonomous vehicles into its network from 2025 onwards after with Mobileye and several other companies last year.

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Owners of Tesla cars will be able to add their vehicles to the company’s robotaxi network sometime next year, Elon Musk said on the company’s quarterly earnings call on Wednesday, potentially allowing hundreds of thousands of customers to make money by remotely renting out their cars as self-driving cabs.