Tesla's latest moves: from robotaxis to budget EVs - and rising uncertainty
The electric vehicle pioneer pursues dual strategy of autonomous mobility expansion and affordable models, though mixed sales and Morgan Stanley downgrade create uncertainty.
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).
Tesla LSEG Data & Analytics chart
Tesla technical analysis
The Tesla share price – up around 10% year-to-date – whilst remaining above its April-to-December uptrend line, has been capped by its technical $458.00-to-$474.00 resistance area since early October.
Tesla daily candlestick chart
While the Tesla share price remains above its $382.78 mid-November low, the medium-term uptrend will stay intact. Failure at this level on a daily chart closing basis would likely trigger a retest of the May-to-June highs at $367.71-to-$357.54.
While the next lower 200-day simple moving average (SMA) at $343.67 isn’t being slipped through, the long-term uptrend is expected to remain in play.
A rise and daily chart close above the $474.07 early November peak would probably engage the December 2024 all-time high at $488.54.
Tesla weekly candlestick chart
Dual strategy creates execution challenges
For now, Tesla appears to be straddling two parallel strategies: reviving volume EV sales through more affordable models, and forging ahead with high-risk, high-reward bets.
On autonomy, robotics, and software-driven mobility services that could transform the business model.
Whether that dual approach can deliver consistent results remains an open question - and one that could define Tesla's trajectory in 2026.
The complexity of executing simultaneously on volume automotive sales and cutting-edge autonomous technology creates substantial operational and strategic challenges.
Investment considerations for Tesla's dual strategy
For investors considering Tesla amid its dual strategic focus, the company presents both transformative potential and significant execution risks.
- Research Tesla's autonomous driving progress, EV competitive positioning, and strategic priorities to understand both the robotaxi opportunity and volume challenges.
- Consider how your risk tolerance aligns with Tesla's volatility and the binary nature of its autonomous driving ambitions.
- Open an account with IG by visiting our website and completing the application process.
- Search for 'Tesla Inc' or its ticker 'TSLA' on our trading platform or app.
- Implement robust risk management given Tesla's high volatility and valuation sensitivity to execution.
Spread betting and CFD trading provide flexible approaches for trading Tesla.
For longer-term investors who believe in the transformation potential, share dealing offers direct ownership.
Tesla's current positioning reflects the classic growth company challenge of balancing near-term commercial pressures with longer-term transformative ambitions that could fundamentally alter the business model and industry dynamics.
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