Could Buying Tesla Stock Today Set You Up for Life?

Lee Samaha, The Motley Fool

Sun, Jun 8, 2025, 3:23 PM 5 min read

• Most of the value in Tesla lies in its robotaxi and full self-driving offerings.

• The company starts with a significant advantage over its competition, and is about to launch its robotaxi concept.

• Tesla is a speculative growth stock, but it has numerous advantages over the typical growth stock.

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For many investors, buying Tesla (NASDAQ: TSLA) has already set them up for life, but will that be true for anyone newly buying into the stock now? Here's a look at what you need to know before buying the stock.

Tesla is an unusual stock, known to most investors primarily as the leading electric vehicle (EV) company, but that isn't the primary value driver of the stock. Indeed, if you look at Tesla solely as a car company, you would likely avoid the stock. Let's put it this way: Tesla currently trades at a price-to-earnings multiple of 192, compared to single-digit multiples at car companies like Ford Motor Company and General Motors.

The valuation discrepancy doesn't stem from Tesla's superior profit margins or its leading position in the electric vehicle market. Instead, it comes down to Tesla being able to do something that rival car companies haven't yet done or have abandoned trying to do: launch a robotaxi service. General Motors has already abandoned robotaxi development, and Ford (which had planned to have a robotaxi service in place by 2021) ended its investment (alongside Volkswagen) in robotaxi company Argo AI in 2022. Volkswagen plans to launch its robotaxi service in 2026.

So, if Tesla's valuation isn't justified in terms of being a highly successful electric vehicle company, then how should it be viewed?

The following key points apply, and they make Tesla a highly attractive stock for the speculative end of your portfolio:

• The value in Tesla lies in its robotaxi business; this is not purely a car company stock, or even an electric vehicle stock, and its valuation reflects that.

• The reliance on robotaxi/full self-driving (FSD) makes it a speculative growth stock.

• Tesla's installed base of vehicles gives it significant advantages over Waymo and others.

• Tesla is not your average speculative growth stock; it holds significant advantages over typical growth stocks.

The robotaxi concept and the FSD that powers it are potentially a huge earnings driver for Tesla. One of Tesla's most vocal and visible supporters, Cathie Wood's Ark Invest, which expected a valuation of $2,600 per share for Tesla in 2029, relies on a model that prescribes 88% of the company's value from robotaxis, compared to just 9% from EVs.