Tesla hits record high as robotaxi optimism outweighs EV sales headwinds

Tesla's stock price has soared to a new all-time high as investors react positively to renewed optimism surrounding autonomous driving. This surge has lifted Tesla's market capitalization to approximately $1.63 trillion, confirming its status among the world's most valuable publicly traded companies. The catalyst for this rally was CEO Elon Musk's announcement of testing fully driverless vehicles in Austin, Texas, without safety monitors. This development revives hopes that Tesla can convert its vehicle fleet into robotaxis through software, potentially unlocking a high-margin revenue stream beyond traditional automotive manufacturing. Earlier this year, Tesla shares had dropped 36% due to declining deliveries and rising concerns related to Musk's political activities. Recent developments indicate a rebound, with third-quarter revenue returning to growth and a surge in enthusiasm around Full Self-Driving features, leading to a nearly 40% increase in the stock since October. Nevertheless, the operational outlook remains mixed, with uneven EV demand in the U.S. and Europe, offset by stronger performance in China and substantial investments in battery operations in Germany. The stock's valuation is increasingly stretched, raising concerns over future performance. Moving forward, Tesla's prospects hinge on its ability to transform autonomous driving from promise to scalable reality. Continued progress in robotaxi testing could sustain investor enthusiasm, but challenges such as regulatory hurdles, safety concerns, and intensifying competition are likely to introduce volatility in Tesla's next phase.