Tesla Stock Outlook: Competing With Rivian, Robotaxi Potential, and 2026 Prospects

There is much conversation about the prospect of investing in Tesla (TSLA) as we move closer to 2026. The volatility of its share price in 2025 is leading many investors to consider if they should purchase shares of Tesla given the alternatives available in terms of electric vehicles (Rivian(RIVN), etc.). An additional important factor affecting the investment decision at this time is Tesla's expanding software and autonomy ambitions along with changing macro-economic conditions. The news in recent days regarding the Tesla stock provides insight into both potential investment opportunities and risks regarding the company's stock beyond the next year or so.

Position in the EV Market: Rivian vs. Tesla

The biggest competitor of Tesla today is not the legacy manufacturers, but rather the new, up and coming EV companies such as Rivian. Tesla and Rivian have developed two unique strategies: Tesla's consists of producing on a large scale, having a global manufacturing base, and being vertically integrated, while Rivian has carved out a niche for itself as a producer of premium electric pickup trucks and light-duty commercial fleet vehicles.

The 2025 relative performance of the two companies' securities is reflective of these two disparity in performance. The scale of Tesla's operations and higher gross margins have helped support a more favorable valuation than Rivian, which is struggling with a number of demand and cost pressures. While Rivian has generated considerable unit volume growth over the past year, the company's profitability is being evaluated by researchers.

Tesla sees competition from Rivian more as a threat to its ability to produce EV's in volume than as a competitive threat to its market share growth story. This competitive dynamic will continue to be key to the future tesla stock price forecast (2025+) as well as the broader growth prospects for the entire sector.

Tesla’s Investment Thesis of Profitability Through Production Expansion and Model Mix

Tesla’s investment thesis revolves around the company’s ability to continue to grow profitably in a challenging environment, with pressure from price and increased competition. The company has a diversified model mix, including a mixture of Model 3, Model Y, Model S, and Model X vehicles, which appeal to a broad market base. Tesla has developed Gigafactories across North America, Europe, and China, that provide volume and scale needed for effective supply chains.

Historically, Tesla has maintained favorable profit margins in comparison to other EV manufacturers due to software integration, battery costs and direct-to-consumer sales. By improving efficiency in production processes and reducing the per-unit cost of production, Tesla will continue to support healthy operating margins, which will in turn support investor confidence in TSLA stock.

Long-Term Optionality: Robotaxi

Tesla’s robotaxi concept is arguably the most intriguing long-term narrative for them. After all, the company has stated on numerous occasions that their goal is to deploy autonomous robotaxis, which would create a dramatic shift in revenue mix from hardware-driven deliveries to recurring revenue from services. If, and when, Tesla can effectively create a robotaxi business (using its FSD software and being regulated), then share price could be revalued entirely.

The potential evolution towards high margin, recurring service-based (software and services) revenue streams has been a key component of several bullish price predictions for Tesla stock; this would create a major differentiation for Tesla compared to traditional automakers and EV startups.

Of course, there are many challenges to overcome in order to commercialize robotaxis — regulatory issues, safety concerns, and technological hurdles. The time it takes to market, the performance of their technology in real-world scenarios, and the degree to which the public embraces (and uses) them will all heavily impact whether or not this optionality contributes any meaningful value to Tesla shares.

Insider Influence and Ownership of Leadership

Another important factor in the Tesla investor story is the ownership of management/leadership and the continuity of that leadership. Elon Musk continues to be a major contributor to the Tesla strategy and image. His ownership stake has historically been a large share, even with periodic dilution through executive compensation plans, therefore aligning Elon’s interests directly with long-term shareholder value; however, with his involvement in other ventures (SpaceX, xAI, etc.), there are some questions regarding his focus on each company.

Understanding how much of Tesla Elon Musk owns and how that changes over time can give one insight into how confident insiders are and how much influence he has on the strategic direction(s) of the Company. As Musk continues to have a long-term vision for the future of Tesla that includes energy products, autonomous vehicles, and international expansion, this is one reason why institutional and retail investors continue to view Tesla shares as a long-term investment that provides a unique investment opportunity.

Valuation, Analyst Expectations & Guidance

Compared to traditional automakers, Tesla's valuation remains high; however, it is relatively lower than that of high-growth technology companies at their highest expectations. There are a number of variables affecting future guidance and expectations:

• Production and delivery forecast for 2026
• Cost reductions due to economies of scale / automation in production
• Regulatory clarity regarding self-driving vehicles
• Growing sales of energy products & software

Different analyst forecasts (but many analysts based their forecasts on how well the new products will be delivered/produced & improvement in margins).

Near-term volatility in the current stock price of Tesla is attributed to both macro economic (interest-rate expectations) & micro economic factors (earnings surprises, production/delivery numbers).

Risks and Market Headwinds

Multiple factors could negatively impact the bullish case for Tesla - some of which are impacting other companies but not necessarily the automotive industry in general. Some of the reasons for this are as follows:

More Competition: Rivian, OEMs entering into the EV market, and startups entering the EV market will create headwinds for TSLA by eroding the company's market share and price power.

Regulatory/Safety Barriers: The potential rollout of autonomous vehicle driving and the deployment of autonomous robotaxis will depend on receiving regulatory approvals, which is currently without clarity.

Execution risk: Schedule delays, cost overruns, and lower-than-expected deliveries can negatively affect financial results and valuations.

Investor sentiment and macroeconomic conditions: A broad technology sell-off or a tightening of credit can hurt high valuation growth type stocks (including TSLA) more than low valuation growth type stocks.

The aforementioned risks create reasons/output for some investors choosing to wait and see on TSLA compared to those that see long-term value from TSLA.

Is Tesla a Good Investment Right Now?

Whether or not Tesla is a good investment right now will depend on your investment time frame and risk appetite. If you want to invest for the long-term and are looking for companies doing innovative things in the areas of autonomous vehicles, monetizing software, and creating sustainable energy solutions then Tesla has a unique combination of size and optionality that very few other auto manufacturers can compete with.

If you are a short-term trader or an investor focused on valuation then you may have concerns about the current valuation and volatility of the shares of this company given that macro economic factors are still in a state of flux.

Most strategic investors are focused on the ability of Tesla to execute its operations, improve margins, and provide new revenue opportunities (subscription-based software services and robotaxi service) in the future. If Tesla is able to deliver on those items from 2026 onward then the company's stock should appreciate over that period.

Balanced Long-Term Opportunity with Execution Risk

With its intersection within auto, software and autonomy sectors, Tesla has an atypical long-term investment opportunity in the equities of world-wide businesses. The primary areas of return on these investments will most probably come from production execution, margin improvement and technological advances like independent driving improvements. For those investors that can overlook short-term fluctuations in the price of Tesla share's stock, Tesla represents a high risk/high potential growth investment moving forward through 2026+.