Tesla is set to report quarterly results this week as investors weigh signs that CEO Elon Musk’s long-promised push into fully autonomous driving is beginning to show concrete returns - even as the company’s core electric-vehicle business displays growing pressure.
Competition and controversies surrounding the brand have contributed to headwinds for Tesla’s auto operations, which still account for the majority of the company’s revenue. Deliveries declined in 2025, and estimates compiled by LSEG point to fourth-quarter sales and adjusted profit falling by 3.6% and 40%, respectively.
Despite faltering near-term fundamentals, much of Tesla’s roughly $1.49 trillion market capitalization continues to rest on Musk’s broader autonomy vision - a future that includes robotaxis and humanoid robots. Investors appear willing to look beyond current vehicle metrics and focus on whether Tesla’s software and fleet initiatives can be monetized at scale.
"Investors are largely looking past the near-term fundamentals. Market sentiment is being driven by Tesla’s broader autonomy ambitions, including progress on the robotaxi platform and anticipation of the Cybercab entering full production in 2026," said Matt Britzman, senior equity analyst at Hargreaves Lansdown, who personally holds Tesla shares. He added that with "earnings likely to look soft, keeping the narrative firmly anchored on future growth is crucial in supporting Tesla’s still-lofty valuation."
Recent milestones in the autonomous rollout have drawn particular attention. After previously missing predictions that robotaxis using Model Ys would be widely operational across multiple U.S. metro areas by the end of 2025, Musk said last week that the Austin, Texas robotaxi service now accepts customers in vehicles without a human backup in the car - a development presented as a key step toward fully unattended operations.
Further developments could broaden potential markets for Tesla’s autonomy software. Insurer Lemonade announced it will offer a 50% discount to Tesla drivers for miles driven while using the Full Self-Driving (FSD) driver assistance software. Musk also stated that he expects Full Self-Driving to gain regulatory approval in Europe and China by next month, a move that could enable more extensive overseas usage by individual owners.
To bolster revenue tied to artificial intelligence-driven functionality, Tesla shifted some highway driver assistance features in North America from being available only with a vehicle purchase to inclusion in its monthly subscription. That adjustment signals a push to convert AI-enabled driving capabilities into recurring revenue.
For many shareholders, the two primary focus areas remain the Cybercab - the purpose-built, fully autonomous vehicle scheduled to launch this year - and ongoing progress on Full Self-Driving. "For 2026, you’re essentially seeing if AI becomes revenue + profit, not just spend as it is mostly now," said Ken Mahoney, CEO of Mahoney Asset Management, which holds Tesla shares.
Automotive economics remain central to Tesla’s investment case. Historically, the company’s ability to achieve profitable vehicle manufacturing has been a core attraction for investors. This year, however, attention may shift toward top-line sales after two consecutive years of declines. Wall Street broadly expects deliveries to return to growth in 2026, forecasting roughly an 8% increase.
Visible Alpha estimates indicate automotive gross margin in the final quarter of 2025, excluding regulatory credits, was about 14.3% - likely the lowest in three quarters. At the same time, Tesla’s revenue from regulatory credits is diminishing, removing a source of incremental margin support.
Some analysts interpret recent strategy moves as a deliberate trade-off of short-term per-unit margin for longer-term fleet expansion. "The key signal for 2026 is that Tesla is intentionally trading near-term automotive margin for fleet scale since Elon understands that the value of the platform is not maximizing per-unit vehicle profitability today but maximizing the installed base that can later be monetized through autonomy and software," said Shay Boloor, chief market strategist at Futurum Equities.
Investors may also watch for commentary from Musk on the sales performance of Tesla’s latest lower-priced "Standard" versions of the Model 3 and Model Y. In addition, Tesla’s energy storage business could receive attention: LSEG data show revenue in that division is expected to rise by 44%.
As Tesla reports results, the market will be testing whether recent progress on autonomy and subscription-based software can materially alter the company’s revenue mix and support its valuation while vehicle sales and margins face cyclical and competitive challenges.