Without a doubt, Tesla (TSLA -0.19%) is one of the most intriguing stocks on the market. The polemical views on the company portray it as either a damaged brand with an aging lineup of vehicles on the cusp of being exposed as a hugely overvalued car company — or a technology company about to explode by unveiling its primary value creator, robotaxis, in due course. Here’s the lowdown.
Getting to a million dollars
First up, some simple math to illustrate how Tesla might make you a millionaire. For the sake of argument, let’s assume that Ark Invest’s “expected value” price target of $2,600 for Tesla stock in 2029 comes true. Then you would have to hold 385 Tesla shares to have $1 million worth of stock. Buying those shares at the time of this writing would cost you just shy of $105,000.
Based on just the significant initial outlay required, Tesla stock is unlikely the best candidate for most individual retail investors to become eventual millionaires. Having said that, the stock still has the potential to generate hefty returns.
Valuing Tesla
I reference Ark’s valuation model because it highlights how investors perceive the stock differently. For bulls like Ark, the case for Tesla rests on its robotaxi offerings, which it attributes as being worth 88% of total company value, compared to just 9% for its electric vehicles.
That consideration goes a long way toward explaining why Tesla trades at nosebleed valuations compared with the more traditional automakers. Although Tesla is a highly successful EV company, the case for its stock lies in long-term revenue generation from profit sharing on miles driven on robotaxis, and the market knows it.
Let’s put it this way: Under the Ark model, roughly $2,288 per share comes from robotaxis, and just $234 to Tesla as an EV company.
TSLA EV to Free Cash Flow data by YCharts.
What you need to believe for the bullish case
Consequently, investors need to accept the following:
- Tesla will release its robotaxi service (possibly featuring its Cybercab) in due course. CEO Elon Musk maintains it will launch “unsupervised full self-driving as a paid service in Austin in June.”
- Tesla’s purpose-built robotaxi, Cybercab, will begin volume production soon. Management maintains volume production will start in 2026.
- Adoption will be rapid, regulatory hurdles will be overcome, and safety concerns will be reassured.
- Tesla will be able to produce a low-cost Cybercab that can generate significantly lower cost per ride than alternatives like Waymo and traditional cab services.
Why Tesla can hit these goals
The good news is investors have reason to be positive. First, while relatively high interest rates have negatively impacted automakers’ EV plans, Tesla carried on investing and reduced its cost per vehicle to below $35,000 at the end of 2024 from above $38,000 at the start of 2023. That matters because EVs need to be affordable to encourage adoption, the Cybercab needs to be affordable, and management claims it will launch a new “more affordable” model in the first half of 2025.
Image source: Getty Images.
Purely by way of contrast, consider that Ford (a company that told investors in 2016 that it would produce driverless cars by 2021) lost $5.1 billion on its EV segment in 2024.
Second, Tesla needs and has leadership in EVs. That’s important for robotaxis because it means Tesla has a huge and continuously growing set of data from its Autopilot and Full-Service Driving (FSD) technology on Tesla cars in continuous use. That should enable it to lower the cost per ride and improve its unsupervised FSD solutions.
Third, while its declining sales in 2025 have attracted much media attention, the reality is that Tesla had more than 44% market share of EV sales in the U.S. in the fourth quarter of 2024. The company has the brand recognition and familiarity to succeed with robotaxis.
Why Tesla stock is risky
Unfortunately, while there are many positives, there are many question marks.
Most of the value in the stock is in a technology that’s not in service yet. Tesla has a record of overpromising and underdelivering on unsupervised FSD and robotaxis/Cybercab. Will the Austin launch happen? Will the Cybercab be part of it, and will Cybercab be in volume production in 2026? Will the “more affordable” model be launched imminently? Will the tariff skirmish with China turn into a war and negatively impact Tesla’s cost base, not least because it buys batteries and other components from China?
Image source: Getty Images.
Is Tesla a millionaire-maker stock?
The upside is significant, but so are the risks, making Tesla a stock only for enterprising and speculative investors or those looking to take a relatively small position in a stock with substantive upside potential.
It won’t suit most investors, and Tesla needs many things to go right before it realizes the potential in Robotaxis/Cybercab. It’s not a millionaire maker because few retail investors will be willing to invest the sums necessary to get there, at least on Ark’s model. Still, it might suit enterprising investors with a diversified portfolio of stocks who can tolerate risk.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and Stellantis. The Motley Fool has a disclosure policy.