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Tesla (Nasdaq: TSLA) is rapidly closing in on its all-time high of $479.86, achieved mid-December 2024 following Trump’s electoral victory. At Monday market close, TSLA stock was trading at $475.31 per share, after a 5.25% boost over the week.

As tends to be the case with Tesla, the main accelerator of its stock performance is the robotaxi narrative. Specifically, the company transitioned from human oversight testing in Austin, Texas, to fully autonomous driving. However, these have yet to be true robotaxis as they lack any occupants.

In other words, Tesla is approaching a stage where Alphabet’s Waymo was in October 2020, when it first began driverless robotaxi service in the Phoenix metropolitan area.

Yet, while Waymo may be ahead in current operational deployment with a fleet of 2,500 robotaxies across US cities, investors are betting on Tesla’s lower-cost, mass-market and AI-first approach to win the long-term robotaxi race.

With this in mind, let’s examine Tesla’s prospects in 2026.

Tesla’s Transition from an Automotive Company

At this point in time, it is clear that Tesla surpassed its electric vehicle (EV) origins, leveraging it as a baseline to attract investors instead. Case in point, Toyota has a trailing twelve-month (TTM) price-to-earnings (P/E) ratio of 9.08 vs Tesla’s astronomical 317.59 P/E.

For the first nine months of 2025, Toyota sold 8,358,426 units, growing sales by 5.8% year-over-year. In the same period, Tesla sold 7x less, at 1,216,655 units, representing nearly flat YoY growth, especially after the expiry of federal EV tax credits in September.

Despite battery electric vehicles (BEV) accounting for less than 0.1% of Toyota’s sales in Q3, the company continues to dominate the hybrid (HEV) market while expanding its electric SUV lineup, including the upcoming 2026 bZ XLE FWD starting at $34,900.

That is to say, the Tesla investor narrative is not in the electrified automotive industry growth, which expanded 30% year-over-year at total 15,183,434 units sales (Jan.-Sep. 2025), but in the EV platform’s potential to spearhead a robotaxi economy.

During this period, Tesla secured that launchpad in the West by having the 2nd largest global EV market footprint, at 8%, otherwise dominated by Chinese brands BYD, Geely and Wuling.

Specifically, Tesla Model Y is the platform for robotaxi deployment, accounting for 66.4% of its total sales during the first nine months of 2025, at 808,173 units delivered and representing 8.3% of all global BEV sales.

Investors are also weighing Tesla’s vertical integration potential alongside robotaxi. This dynamic favors the company through humanoid robot Optimus development. Elon Musk hyped its potential to $10 trillion revenue beyond 2030, making up 80% of Tesla’s long-term valuation.

Once again, such potential is not transferred to companies like Toyota, expressed as P/E, despite the extensive commitment of Toyota Research Institute (TRI) to develop human-robot pipelines. In 2024, TRI even partnered with Tesla’s humanoid rival, Boston Dynamics (owned by Hyundai) to leverage the company’s expertise in Large Behavior Models (LBMs).

Tesla’s investor narrative is far more cohesive. At the core of it lies the integration of AI across autonomy, robotics, manufacturing and data. This positions Tesla as a vertically integrated AI platform, with EVs being merely the starting point rather than the end product.

Waymo’s Platform-First Robotaxi Strategy

Just as Alphabet cemented its app dominance by offering a neutral Android platform, Waymo is attempting to do the same by leveraging ride-hailing services like Uber Technologies (UBER) and Lyft (LYFT). Waymo is pursuing this by scaling adoption without owning the consuming-facing marketplace.

By November 2025, Waymo increased its fleet to around 2,500 vehicles, typically deployed in metropolitan areas such as Los Angeles, San Francisco, Phoenix, Washington, Atlanta, and Austin. However, Waymo lacks the full stack, as it is dependent on Jaguar’s I-PACE BEV platform. Indian Tata Motors acquired both Jaguar and Land Rover brands in 2008 in an all-cash $2.3 billion deal from Ford.

This made Tata’s subsidiary – Jaguar Land Rover (JLR) – Waymo’s key supplier, after announcing a long-term strategic partnership in 2018. Fast forward to May 2025, and this partnership extended to Waymo’s investment in Arizona’s manufacturing plant in Mesa, together with Canadian auto parts supplier partner Magna International.

More precisely, it is a Waymo Driver integration plant, adopting both Jaguar and Zeekr vehicles for autonomous driving. Waymo began testing Zeekr vehicles for robotaxi use in early 2024, which are Chinese Geely’s premium EV brand.

Tesla’s Unique Vertical Integration Advantage

Now that we clarified Waymo’s robotaxi development, it is apparent that Tesla holds many long-term advantages. The company designs its own vehicles, hardware, software and the AI stack. Moreover, Tesla can purpose-build vehicles with its Gigafactories specifically for robotaxi use. This gives Elon Musk the control of cost structure, iteration speed and integration depth.

On the other hand, Waymo relies on external vehicle platforms, supplier partnerships, and lacks control over manufacturing cadence and long-term platform costs. Instead, Waymo’s core strategy depends on careful coordination between various partners to scale.

It is then easy to see how Tesla’s approach would have less friction from both an economic and technical perspective. This is why even institutional analysts are starting to get bullish on Tesla’s prospects. Recently, Morgan Stanley’s Andrew Percoco projected Tesla’s robotaxi fleet size to increase from the present 150 to 1,000 units in 2026.

Accounting for aforementioned advantages, Tesla should have up to one million robotaxis running by 2035, which may be an ultra-conservative estimate. After all, by having full control of its vehicle design, it is likely Tesla will continue cutting costs, beyond the obvious of removing the steering wheel, pedals and seats.

This could further push Tesla’s cost under $30k to manufacture Cybercabs. On the other hand, Waymo’s multi-sensor fusion system (cameras, LiDAR, radar) may be more difficult to economically scale.

Nonetheless, this puts Morgan Stanley’s target on TSLA stock at $425, above the Wall Street Journal’s average consensus of $408.04 per share. Moreover, now that Elon Musk has retreated from the political spotlight, the hype potential will likely grow higher with more robotaxi milestones crossed next year.

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