Tesla Files for California Approval of Autonomous Ride-Hailing Service
Tesla (TSLA) has made significant progress towards meeting its goal of launching an autonomous ride-hailing service by applying for regulatory approval in California. The company seeks a transportation charter-party carrier permit from the California Public Utilities Commission, indicating its intention to own and operate a fleet of ride-sharing vehicles in the state. While Tesla’s initial phase will include human drivers, the ultimate aim is to create a driverless robotaxi network that will compete with established players like Alphabet (GOOGL)-owned Waymo, Uber Technologies (UBER), and Lyft (LYFT).
This ambition aligns with CEO Elon Musk’s earlier announcement from January, where he stated that the company plans to introduce an unsupervised Full Self-Driving (FSD) service for a fee in Austin, Texas, starting in June 2025, with plans for further rollout to other U.S. cities.
Year-to-Date (YTD) Performance Review
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So far this year, TSLA shares have declined by 11.9%, compared to a 18.4% decrease in the Zacks Auto, Tires and Trucks sector and a minor drop of 0.7% for the S&P 500. In the same period, TSLA has notably underperformed against UBER, which has risen by 31.6%, and LYFT, up 4.1%. GOOGL shares have also decreased by 2.2% over the year.
Tesla is encountering challenges early in 2025, including a slowdown in vehicle deliveries and rising concerns regarding Musk’s growing political engagements. Investors are anxious about Musk’s divided attention impacting the company’s ability to navigate its current situation effectively — particularly as Tesla requires focused leadership during this transitional period.
Positive Developments Amid Challenges
However, there are several factors favoring TSLA. The company’s Energy Generation and Storage segment has emerged as its most profitable area, contributing to revenue growth driven by the popularity of its Megapack and Powerwall products. Over the last three years, energy storage deployments surged at an impressive compound annual growth rate (CAGR) of 180%. In 2024, deployments alone increased by 113% year over year and are projected to grow at least 50% annually moving forward.
Additionally, Tesla’s charging division is expected to significantly bolster overall profitability. With more than 65,000 connectors in its global supercharging network, several major automotive manufacturers, including Ford and Mercedes, have committed to using Tesla’s North American Charging Standard.
Though Musk has revised Tesla’s vehicle delivery target for 2025, now abandoned at 20-30% growth, he still anticipates some level of expansion this year. The company is expected to produce nearly three million vehicles in 2025, indicating over 60% growth compared to 2024.
Looking ahead, TSLA expects to maintain adequate liquidity throughout 2025 to support its development roadmap, long-term capacity expansion goals, and other expenditures. The company anticipates that it will end the year with a robust balance sheet.
Earnings Estimates and Market Performance
Despite the promising outlook, TSLA’s earnings per share (EPS) estimates are declining. The Zacks Consensus Estimate for TSLA’s first-quarter 2025 revenue stands at $24.15 billion, suggesting a year-over-year growth of 13.39%. Meanwhile, the EPS consensus for Q1 is projected at 59 cents, reflecting a decrease of 19.2% over the past month, yet signaling a potential year-over-year increase of 31.11%.
For the entire year of 2025, the consensus estimate for TSLA’s revenues is $111.07 billion, indicating a year-over-year growth of 13.7%. The expected EPS for 2025 is $2.95 per share, down 9.5% over the last month, but still representing a year-over-year growth of 21.9%.
Tesla has managed to surpass the Zacks Consensus Estimate for earnings in just one of the previous four quarters, missing expectations in three instances, with an average surprise of 0.79%.
Investing Perspective on TSLA Stock
Tesla’s ambitious launch into autonomous ride-hailing, along with the expansion of its energy storage and charging divisions, positions it for future growth. Nonetheless, the near-term challenges within its vehicle segment, Musk’s divided focus, and decreasing EPS estimates pose risks. While TSLA is currently 40% below its all-time high, assessing the market before making an entry might be prudent.
Currently, TSLA holds a Zacks Rank #3 (Hold). Interested investors can find the full list of today’s Zacks #1 Rank (Strong Buy) stocks available online.
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This article was originally published by Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
