Cathie Wood's Ark Investment Management is predicting a major shift in Tesla's business.
Tesla (TSLA 7.21%) It is one of the world's largest electric vehicle manufacturers (EV), but the rise in competition is gradually disappearing. Electric vehicle sales remain the main driver of Tesla's financial performance, but CEO Elon Musk is trying to achieve a future company by shifting its resources to new products such as self-driving cars and robotics.
Founded by experienced tech investor Cathie Wood, Ark Investment Management predicts that self-driving cars will change Tesla’s economy. In fact, Ark believes that by 2029, 86% of the company's earnings will come from autonomous Robotaxis, paving the way for the stock price. That would increase trading today by 615%.
How realistic is ARK's prediction? Let's dive.
Image source: Tesla.
Tesla's electric car business is sputtering
To meet Ark's bullish 2029 forecast, Tesla will have to transition from selling passenger electric vehicles to selling autonomous robots, and it will also have to build new services such as new services, such as autonomous ride networks.
Unfortunately, Tesla is currently operating from its weakness, forcing the transition earlier than the company might want. After all, government regulators have not approved Tesla's complete autonomous driving (FSD) software for unsupervised use Anywhere In the United States, this is a huge obstacle to the success of the upcoming cyber cool robot.
Tesla delivered 1.79 million passenger electric vehicles during 2024, down 1% from the previous year, the company's first decline since it launched its flagship model in 2011. In 2025, things were much worse, with deliveries down 13% in the first half. This caused Tesla's revenue to fall by 14%, and earnings per share (EPS) fell by 31% over the same period, which was shocking to say the least.
The rapid increase in competition is a key reason for Tesla's trouble. Low-cost electric vehicle manufacturers, such as China Bit It is seriously entering Tesla's largest market. Despite EV registration the climb Overall, it increased by 33%. On the other hand, Byd's sales increased by 225%.
In short, Tesla quickly lost market share in the passenger electric vehicle space. The company launched low-cost electric vehicles for competition, but production has just begun, so it will be a factor at the earliest until next year.
86% of Tesla's revenue may soon be from automated robots
Elon Musk is making a big bet on automatic rides. CyberCab will enter mass production in 2026 and will run entirely on Tesla’s FSD software, so it is designed to operate without any human intervention. In theory, this means it can haul passengers at all times of the day, or even delay a small amount of business burden, creating a profitable new revenue stream for the company.
Scaling this business will face challenges. I mentioned that FSD has not yet approved unsupervised use in the United States, but Tesla also has to compete with established ride giants Uber Technologyit has partnered with 20 other companies in the field of autonomous driving. Compared to Tesla, about 180 million people use Uber every month, so dominating the autonomous driving industry, which is a better position for Tesla to build the entire network from scratch.
However, Ark believes Tesla will eventually make it work. Its forecast suggests that the company will generate $1.2 trillion in annual revenue in 2029, with 63% ($756 million) of its Robotaxi platform alone. This could translate to $440 million in earnings before interest, taxes, depreciation and amortization (EBITDA), due to its high profit margins, attributed to 86% of robots — the largest cost in existing ride-hailing networks, but Robotaxi doesn't need them.
Don't rush to buy Tesla stocks
I think the Ark's prediction is too ambitious. Wall Street believes Tesla's revenue in 2025 (according to Yahoo!) is about $93 billion, so the number will have to grow nearly 1,200% over the next four years to meet ARK's $1.2 trillion forecast, powered by a brand new Robotaxi product that hasn't reached the road yet.
Tesla's valuation is another problem. Its stock has an astonishing price-to-earnings ratio (p/e) ratio of 209, making it almost seven times more expensive Nasdaq 100 Technical Index – Trading at a price-to-earnings ratio of 31.6. Remember, Tesla's revenue is currently shrinkwhich makes its advanced valuation even harder to prove.
So, I hesitate to think that Tesla shares could increase by another 615% over the next four years to reach the Ark’s target target of $2,600. If the company's Robotaxi platform becomes as successful as ARK predicts, I think it's unlikely in such a short time. After all, Elon Musk still Not delivered yet.