As of March 2026, Tesla stands at a pivotal moment, pulled between two distinct futures. On one side, regulatory approval has unlocked a multi-billion dollar capital entanglement with SpaceX. On the other, its foundational automotive operations face declining deliveries and intensifying scrutiny over its driver-assistance software. This tension between high-tech ambition and manufacturing reality is defining the current investment debate.
Core Automotive Operations Face Headwinds
The company’s primary vehicle business is showing signs of strain. In 2025, Tesla’s global deliveries fell to 1.63 million units, marking a 9% year-over-year decline. Concurrently, earnings per share saw a dramatic 47% drop. These figures stand in stark contrast to competitor BYD, which reported deliveries of 2.26 million pure electric vehicles for the same period—a 28% increase.
Regulatory pressure on Tesla’s Full Self-Driving (FSD) system is mounting. Since October 2025, the U.S. National Highway Traffic Safety Administration (NHTSA) has been investigating approximately 2.88 million vehicles equipped with the software. The agency documented 80 incidents, including crashes and injuries, through December 2025. Tesla required two deadline extensions to comply with the NHTSA’s data requests.
The performance of its operational robotaxi service, launched in June 2025, has been mixed. Over roughly 800,000 miles driven, 14 incidents were reported. This rate remains significantly higher than the U.S. average of one crash per 222,000 miles.
Regulatory Green Light for SpaceX Capital Shift
A significant capital restructuring received key approval on March 11, 2026. The U.S. Federal Trade Commission (FTC) cleared the conversion of Tesla’s $2 billion stake in xAI into a minority holding in SpaceX. This move followed the completion of a merger between SpaceX and Elon Musk’s AI startup, xAI, in early February 2026, which created a combined entity valued at an estimated $1.25 trillion. Tesla’s previous investment was automatically converted into SpaceX shares as a result.
Analysts estimate Tesla’s resulting stake in the aerospace company at less than one percent. For Tesla shareholders, this creates indirect exposure to SpaceX—a firm that, according to reports, could pursue an initial public offering by mid-2026 with a speculated valuation of $1.5 trillion.
The transaction has drawn scrutiny from some investors, who note that capital from the publicly traded automaker is flowing into Musk’s private technology empire, potentially raising conflict-of-interest concerns. The FTC’s approval, however, removes a major regulatory obstacle.
Divergent Analyst Views and a Silver Lining
Market experts are divided on how to value the company. Analysts at Bank of America, for instance, assign the autonomous driving segment about 52% of their total valuation. This approach frames Tesla primarily as an artificial intelligence and technology enterprise rather than a traditional car manufacturer. Other strategists emphasize the persistent delivery shortfalls and margin compression in the core auto segment.
One area providing a counterbalance is Tesla’s energy division. Revenue from energy generation and storage rose 27% in 2025 to $12.8 billion. Despite this growth, passenger vehicles still account for 73% of total revenue, keeping the overall business exposed to automotive sector pressures.
Tesla’s share price currently trades approximately 18% below its 52-week high from December 2025. The upcoming quarterly report, with its crucial updates on Cybercab development and FSD monetization, is anticipated to tip the scales, revealing which narrative—transformative tech leader or challenged automaker—will ultimately prevail.
