Tesla’s earnings momentum is faltering. Elon Musk has staked the company’s future on a commitment he is still a long way from fulfilling.

Tesla's Robotaxi Launch: Progress and Challenges

In June, Tesla introduced its robotaxi service in Austin, Texas, marking its first day on the road. However, the vehicles are not yet fully autonomous—company "safety monitors" still accompany passengers during each ride.

Ambitious Goals and Shifting Targets

While Tesla's robotaxi initiative has long been discussed, its actual implementation has only just begun. The company launched its ride-hailing service featuring its so-called Full Self-Driving (FSD) technology in Austin. At the debut, CEO Elon Musk set an ambitious objective: to reach half of the U.S. population by year’s end.

By October, however, those plans were scaled back to cover only eight to ten metropolitan areas. As of early 2026, the service operates solely in Austin and the San Francisco Bay Area, and both locations require a Tesla employee to be present in the vehicle.

Tesla did not provide comments in response to inquiries about the service.

Stock Performance and Financial Outlook

Despite the limited rollout, Tesla’s stock (TSLA) has surged over 50% since June, reaching record highs on the back of Musk’s bold projections. Musk has previously claimed that the robotaxi service could dramatically transform Tesla’s financial future, potentially making it the world’s most valuable company.

However, Tesla’s primary revenue stream—electric vehicle sales—has faltered, dropping by a record 9% in 2025. This downturn makes 2026 a pivotal year for the company, which now faces pressure to deliver on its robotaxi promises or risk losing investor confidence.

“I think in the next six months there’s a reckoning coming for Tesla,” remarked Ross Gerber, an early investor and CEO of Gerber Kawasaki, who has become a vocal critic of Musk.

“Once analysts realize these robotaxi projections are unrealistic and car sales continue to decline, Tesla could face significant challenges,” Gerber added.

Robotaxi Hype Meets EV Market Realities

American consumers rushed to purchase EVs before a $7,500 tax credit expired on October 1, boosting Tesla’s global sales to a record high in the third quarter of 2025. But after the credit ended, EV sales plummeted. According to Cox Automotive, U.S. EV sales dropped nearly 50% from the third to the fourth quarter.

This decline led to a 16% decrease in Tesla’s global vehicle sales during the same period, marking the second consecutive year of falling numbers—a stark contrast to the company’s previous years of rapid growth.

Tesla’s difficulties extend beyond the loss of tax incentives. The company has faced backlash over Musk’s political involvement, particularly with the Trump administration, and faces mounting competition from rivals, especially in China. Chinese automaker BYD has even surpassed Tesla as the world’s top EV seller, despite not operating in the U.S. market.

Given these challenges, Musk’s hopes for the robotaxi service have become even more crucial. Yet, Musk has a history of making ambitious promises—he has been forecasting the imminent launch of robotaxis since 2019.

Competition and Safety Concerns

Meanwhile, Tesla is lagging behind competitors like Waymo, Alphabet’s self-driving car division. Waymo reported providing 14 million fully autonomous paid rides without any employees on board in 2025, totaling 20 million rides over the past five years. Tesla, in contrast, has yet to offer a single fully driverless robotaxi ride. Waymo’s service is now available in five major cities: Atlanta, Austin, Los Angeles, Phoenix, and San Francisco.

Despite Waymo’s clear lead, investor optimism for Tesla’s robotaxi project remains strong.

“I believe we’ll see robotaxis in 30 cities by 2026,” predicted Dan Ives, an analyst at Wedbush Securities and a long-time Tesla supporter. “Building this out will be the most significant growth phase in Tesla’s history.”

Such optimism seems to overlook the rocky start of Tesla’s service. The Austin robotaxi program has already reported eight accidents to the National Highway Traffic Safety Administration, even with employees present in the vehicles.

The NHTSA is also conducting multiple investigations into the safety of Tesla’s autonomous driving features, fueling concerns that the robotaxi service may not be ready for widespread deployment.

“Musk has made promises he can’t possibly fulfill. He won’t deliver,” said Gordon Johnson, an analyst and outspoken critic of Tesla and Musk. “When a company is losing money in its core business and failing to meet its commitments, investors will eventually start to sell.”