Tesla shares have surged to unprecedented levels, propelled by a significant milestone in its self-driving technology program. The stock reached a new all-time high near $490, marking its first record since December 2024. This rally has elevated the electric vehicle maker’s market capitalization to approximately $1.63 trillion, moving it into seventh place among the most valuable U.S. companies and displacing Broadcom.
The Catalyst: Unsupervised Testing in Texas
The primary driver behind the market’s enthusiasm is the company’s confirmation that it is testing fully autonomous vehicles on public roads in Texas without a human safety driver behind the wheel. This advancement, targeting what is classified as Level 4 or Level 5 autonomy, represents a critical step toward deploying a planned fleet of robotaxis. Market experts are increasingly evaluating Tesla not merely on vehicle deliveries but on the scaling potential of its Autopilot software. Investment firm Wedbush has projected a $3 trillion valuation by the end of 2026, contingent on the successful commercialization of this technology.
In pre-market trading, the stock advanced an additional 3.07%, decisively breaking through the psychologically significant $490 barrier. It closed at $489.88.
Regulatory Headwinds Emerge in California
Despite the breakthrough, Tesla faces a serious regulatory challenge in California, its largest U.S. market. State authorities are threatening a 30-day sales halt, alleging the company has marketed the terms “Autopilot” and “Full Self-Driving” in a misleading manner. Regulators contend the systems do not meet the stringent requirements for true Level 3 autonomous driving.
Tesla currently has a 90-day grace period to either adjust its terminology or upgrade the technology. An actual suspension of sales in California would likely result in substantial short-term revenue loss and could potentially halt the current stock rally.
Divided Analyst Sentiment Reflects High Stakes
Market strategists are split on the stock’s prospects following its rapid ascent. Goldman Sachs maintains a “Neutral” rating with a $400 price target, implying a potential downside of nearly 20%. The bank cites regulatory risks and a valuation that leaves little room for disappointment.
The market, however, has largely disregarded such caution. Investors are betting that the Texas trials will pave the way for a commercial robotaxi service—a business model with potentially far higher margins than traditional car sales.
Operational data presents a mixed picture. While Tesla’s vehicle deliveries in China saw a nearly 10% increase in November, new registrations in the United Kingdom plummeted by 19%. The next critical piece of information for investors will be whether Tesla provides a concrete timeline for the commercial launch of its robotaxi network.
