Tesla TSLA has taken a major step toward launching its long-anticipated autonomous ride-hailing service, filing for regulatory approval in California. It has applied for a transportation charter-party carrier permit from the California Public Utilities Commission, signaling its intent to own and operate a fleet of ride-sharing vehicles in the state. While Tesla’s initial rollout will involve human drivers, the ultimate goal is a driverless robotaxi network, directly competing with industry leaders like Alphabet GOOGL-owned Waymo, Uber Technologies UBER and Lyft LYFT.

This move aligns with Tesla CEO Elon Musk’s announcement in January that the company will introduce unsupervised Full Self-Driving (FSD) as a paid service in Austin, Texas, starting June 2025, before expanding to other cities in the United States.

Year to date (YTD), TSLA shares have plunged 11.9% compared with the Zacks Auto, Tires and Trucks sector and the S&P 500 index’s decline of 18.4% and 0.7%, respectively. Tesla has also underperformed UBER and LYFT shares, which have gained 31.6% and 4.1%, respectively, over the same time frame. GOOGL shares have lost 2.2% in the year-to-date period.

YTD Performance

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Tesla has had a rough start to 2025, facing slowing vehicle deliveries and concerns over Musk’s deepening involvement in politics. With his attention spread thin, investors worry about his ability to steer the company through its current challenges — especially when Tesla needs his full focus.

Nonetheless, a few things are working in TSLA’s favor.

TSLA’s Energy Generation and Storage business is its most lucrative segment and is boosting its top-line growth on the back of the strong reception of its Megapack and Powerwall products. Over the past three years, energy storage deployments have skyrocketed at a CAGR of 180%. In 2024 alone, deployments increased by 113% year over year. It expects energy storage deployments to grow at least 50% year over year.

Tesla’s charging division is also set to significantly enhance the company’s overall profitability. The company’s global supercharging network boasts more than 65,000 connectors. Several automotive giants like Ford and Mercedes have already enlisted to use TSLA’s North American Charging Standard.

While Musk has abandoned Tesla’s 20-30% vehicle delivery growth target for 2025, he still expects the company to see some level of growth this year.

Advancements in vehicle autonomy and the introduction of new products bode well. The company expects to produce close to three million vehicles in 2025, suggesting more than 60% growth over 2024.

TSLA expects to have sufficient liquidity in 2025 to be able to fund its product roadmap, long-term capacity expansion plans and other expenses. It anticipates a strong balance sheet during the year.

TSLA’s EPS estimates for the year, however, are trending downward. The Zacks Consensus Estimate for TSLA’s first-quarter 2025 revenues is pegged at $24.15 billion, suggesting year-over-year growth of 13.39%. The consensus mark for first-quarter EPS is currently pegged at 59 cents, down by 19.2% over the past 30 days, but indicating growth of 31.11% on a year-over-year basis.

The Zacks Consensus Estimate for TSLA’s full-year 2025 revenues is pegged at $111.07 billion, suggesting year-over-year growth of 13.7%. The consensus mark for 2025 EPS is currently pegged at $2.95 per share, down 9.5% over the past 30 days and indicating growth of 21.9% on a year-over-year basis.

Tesla beat the Zacks Consensus Estimate for earnings in just one of the trailing four quarters and missed thrice, the average surprise being 0.79%.

What Should Investors Do With TSLA Stock?

Tesla’s aggressive push into autonomous ride-hailing, alongside its expanding energy storage and charging businesses, is positioning it for long-term growth. However, near-term challenges in its vehicle segment, Musk’s attention split and declining EPS estimates cause concern. So, even while the current price levels are 40% down from their all-time high, it’s wise to wait for a better entry point.

TSLA currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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