Complex moment for EV pioneer
Tesla is navigating a complex moment. On one hand, the company is pushing forward with bold bets on artificial intelligence (AI)-driven vehicles and mobility services. On the other, traditional electric vehicle (EV) demand – especially in key markets – is showing strain.
Some analysts are growing cautious about the stock’s lofty valuation amid execution uncertainties.
In the US, Tesla has announced that its autonomous “robotaxi” fleet in Austin, Texas is set to begin operating without safety monitors in just a few weeks.
This marks a major milestone in the company’s long-term vision of offering a network of self-driving ride-hailing cars.
Robotaxi ambitions accelerate
CEO Elon Musk described the technology as “pretty much solved,” and hinted at a new FSD (Full Self-Driving) software model arriving in early 2026.
Alongside this, Tesla aims to double its robotaxi fleet in Austin in December – a step towards a broader rollout across multiple cities.
The wider ambition: to expand to multiple major US metro areas by the end of 2025, creating a nationwide autonomous ride-hailing network.
The company isn’t relying solely on autonomous mobility to drive future growth and justify current valuations, though.
Budget models target volume recovery
On the product side, Tesla has reintroduced a lower-cost version of the Model 3 in Europe, priced to appeal to more budget-conscious buyers amid weakening demand and heightened competition from Chinese automakers offering compelling alternatives at lower price points.
This follows a similar approach earlier in the year when Tesla launched a more affordable Model Y variant – signalling a renewed focus on sales volume and accessibility rather than purely premium positioning that had characterised the brand previously.
UK sales decline reflects competitive pressure
But the sales picture remains mixed across different markets. In the United Kingdom, registrations of new Tesla cars in November fell by 19% compared with the same month last year.
That decline reflects intensifying competition – notably from Chinese rival makers – and backlash tied to Musk’s public profile and political associations which seem to be affecting buyer sentiment in some markets more than others.
The UK weakness demonstrates how brand perception and competitive dynamics can vary significantly across different geographical markets.
Morgan Stanley downgrade signals valuation concerns
Against this backdrop of uncertainty, one of Wall Street’s major voices, Morgan Stanley, has downgraded Tesla’s stock to “Equal Weight,” citing valuation concerns.
While Morgan Stanley raised its price target slightly to $425.00, it warned the current share price already reflects much of Tesla’s expected gains.
From its EV business, FSD ambitions, and robotics roadmap, leaving limited room for further valuation expansion.
Still, not everyone is bearish on Tesla’s prospects. Optimism remains among long-term investors and some analysts, who highlight ongoing strengths.
According to LSEG Data & Analytics, the majority of analysts retain a ‘buy’ recommendation but with a long-term mean price target at $375.71, around 17% below the current share price (as of 12/12/2025).