Buy, Hold or Sell Tesla Stock Ahead of Cybercab Launch?

Cybercab in TSLA’s Robotaxi Push

Per Teslarati, Tesla has been producing Cybercab units at Gigafactory Texas since April, initially using them as test vehicles across different environments and climates. The vehicles have been spotted in several states, including California, Nevada, Florida, New York and Pennsylvania.

The company plans to begin by offering Cybercab rides to its employees before incorporating the vehicles into its Robotaxi service in Austin. If executed well, the autonomous ride-hailing network that could generate recurring, high-margin revenue. The opportunity is significant.

There are signs that Tesla's autonomy efforts are gaining traction. Robotaxi service is now live across seven U.S. metropolitan areas, while unsupervised operations are expanding in markets including Austin, Dallas, Houston, Miami, Orlando and Tampa.

Image Source: Tesla, Inc.

On its last earnings call, Tesla noted that its unsupervised miles have been growing at a double-digit rate and expects this momentum to continue through the year.

But the gap with the industry's leader remains substantial.

Alphabet’s Waymo Has a Major Lead

Tesla’s robotaxi hubs have racked up about 380,000 driverless miles in total, per the company’s last quarterly release. Alphabet’s GOOGL Waymo passed that number years ago and has since logged more than 220 million rider-only miles, running a fleet approaching 4,000 vehicles across markets Tesla hasn't even entered yet.

This difference matters because Cybercab's value depends entirely on Tesla's ability to operate it safely and reliably without human intervention. A vehicle with no pedals or steering wheel has little practical value outside areas where Tesla's autonomous software has been validated.

Tesla isn't just racing Waymo, either. Amazon's AMZN Zoox— another purpose-built robotaxi with no steering wheel or pedals— has been running paid rides in Las Vegas and is preparing to expand into San Francisco and Austin, putting it on a very similar playbook to Cybercab.

Tesla is trying to prove that it can scale autonomy beyond relatively small, geofenced areas. Time will tell whether Cybercab accelerates that process, but the launch itself doesn't guarantee commercial success.

EV Demand & Energy Deployments Rise But Margins Weaken

While autonomy remains the long-term story, Tesla’s core automotive and energy businesses continue to drive near-term performance.

The company’s EV business is showing some encouraging signs. Deliveries reached a record 480,126 vehicles in the second quarter, up 34% sequentially and 25% year over year. The company also ended the quarter with its largest order backlog since 2023, with part of the demand recovery tied to rising adoption of Full Self-Driving (FSD). Active paid FSD customers rose 56% year over year to 1.48 million, while more than 55% of North American deliveries included an FSD subscription.

However, stronger deliveries have not translated into equally strong profitability. Automotive gross margin excluding regulatory credits declined to 16.3%, reflecting continued pricing pressure.

Tesla's energy business faces a similar problem. Storage deployments increased to 13.5 GWh, but energy gross margin dropped sharply to 20.4% from 39.5%, partly due to warranty charges and lower industrial storage pricing.

Tesla’s Massive Spending Pressures FCF

Perhaps the biggest concern for investors is how much Tesla is spending to pursue its future ambitions.

Management now expects 2026 capex to exceed $25 billion, with spending estimated to increase further over the next two to three years. High spending is driving free cash flow to negative.  Tesla is investing heavily in autonomy, AI, robotics and manufacturing capacity, but there is still no clear timeline for when these investments will generate meaningful financial returns.

TSLA Price Performance, Valuation & Estimates

Shares of Tesla have declined 25% year to date, underperforming the industry.

Image Source: Zacks Investment Research

From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 11.72, above the industry and its own five-year average. It carries a Value Score of F.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Tesla’s 2026 and 2027 EPS implies year-over-year growth of 8% and 32%, respectively. The EPS estimates have been revised downward in the past 60 days.

Image Source: Zacks Investment Research

How to Play Tesla Now?

Tesla’s long-term story remains compelling. Robotaxis, FSD, energy storage, AI and robotics could eventually transform the company beyond its traditional auto business. The Cybercab launch is an important step in that direction, but Tesla has a lot of ground to make up on this autonomous driving race.

The same caution applies to Tesla’s robotics ambitions. The ramp-up of its humanoid robot is likely to be gradual, with several components and supply chains still under development. At the same time, falling margins and rapidly rising capex make the stock harder to justify purely on the strength of its existing automotive business.

The stock still carries long-term potential, but too much of that potential is tied to businesses that are not yet proven at scale. With the near-term picture being uncertain, Tesla is not a ‘Buy’ yet. But that does not make it a ‘Sell’ either. Existing shareholders can stay invested for the long haul.

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

If Tesla can successfully turn robotaxis into a large, profitable business—and Elon Musk delivers even part of his broader AI and robotics vision—the company could enter an entirely new phase of growth.

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

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