Tesla's ambitious vision of autonomous robotaxis ferrying passengers through American cities is colliding with an uncomfortable reality: the company is falling further behind competitors even as its core electric vehicle business shows signs of strain.

The electric vehicle pioneer reported an 8.6% decline in deliveries for 2025, marking the second consecutive year of falling sales—a troubling trend for a company whose stock trades at valuations that assume transformative growth. Tesla delivered 1.64 million vehicles last year, well short of the 1.79 million it delivered in 2023 at its peak.

The Robotaxi Gap

Perhaps more concerning for long-term investors is Tesla's position in the autonomous vehicle race. While Musk has long promised that self-driving technology would transform Tesla into the world's most valuable company, the data tells a different story.

As of early 2026, Tesla's robotaxi service operates in just two locations—Austin and the San Francisco Bay Area—and requires a company employee to be present in every vehicle. In contrast, Alphabet's Waymo completed 14 million fully autonomous paid rides in 2025 without any employees aboard, operating in multiple major metropolitan areas.

"Waymo crossed 4 million weekly paid rides in Q4, and 14 million total for the year. We're seeing strong demand across all our markets."

— Waymo spokesperson

The Numbers Don't Lie

Tesla has yet to offer a single fully autonomous robotaxi ride to a paying customer. The company's Full Self-Driving (FSD) software, despite years of development and billions in investment, still requires constant driver supervision and has faced regulatory scrutiny over safety incidents.

According to Musk, the dedicated Cybercab robotaxi won't enter mass production until the end of 2026, pushing back yet another timeline that investors had built into their models.

Delivery Woes Mount

The delivery decline reflects multiple headwinds facing Tesla's core business:

  • Aging Lineup: Tesla's vehicle designs have remained largely unchanged since their introductions, with the Model 3 now in its eighth year and the Model S approaching its 14th anniversary. Competitors have flooded the market with fresh EV offerings.
  • Musk's Political Involvement: The CEO acknowledged that "some blowback" from his high-profile political activities has hurt sales, particularly in markets where his polarizing positions have alienated potential buyers.
  • Competition Intensifies: Chinese rival BYD outsold Tesla globally by more than 600,000 vehicles in 2025, claiming the title of world's largest EV maker—a position Tesla had held since the dawn of the mass-market electric vehicle era.

The Valuation Conundrum

Tesla's stock trades at over 200 times trailing earnings and nearly 100 times forward EBITDA—multiples that assume the company will successfully execute on transformative technologies that remain years away from commercial viability.

Deutsche Bank analysts acknowledged the disconnect in a recent note: "While the autos business at Tesla may underperform in 2026, we think more attention is directed towards the company's robotaxi expansion and efforts at humanoid development."

That assessment requires a significant leap of faith. The Optimus humanoid robot Musk has championed remains even further from commercialization than the robotaxi, with no clear timeline for when—or if—it might generate meaningful revenue.

What Investors Should Watch

Several key milestones will determine whether Tesla can justify its premium valuation:

  • Regulatory Approvals: Tesla needs permits to operate truly driverless vehicles. So far, regulators have been cautious, and the company's safety record with FSD has raised questions.
  • Production Ramp: The Cybercab's 2026 production target is ambitious given Tesla's history of manufacturing delays. Any slippage will further erode credibility.
  • New Model Launch: A more affordable Tesla model, long rumored, could reignite delivery growth if executed successfully.

The FSD Pivot

Musk recently announced that Tesla will discontinue one-time purchases of its Full Self-Driving software after February 14, 2026, shifting entirely to a $99 monthly subscription model. The change may improve recurring revenue but also signals that the company needs to find new ways to monetize its existing technology while the robotaxi dream remains deferred.

For investors, the fundamental question remains unchanged: Is Tesla an automaker with interesting technology projects, or a technology company that happens to make cars? The stock price suggests the latter, but the financial results increasingly point to the former.

As 2026 unfolds, Tesla faces mounting pressure to close the gap between its soaring ambitions and its grounded reality. The robotaxi revolution may still arrive—but it increasingly appears that Tesla might not be driving it.