AI could unlock autonomous driving and a robotaxi market that expands Tesla’s value beyond just manufacturing, potentially creating substantial future upside.

Industry analyst Dan Ives calls Tesla the most undervalued AI name and treats it as a physical-AI play with a strong buy thesis.

Progress from Tesla’s robotaxi division has been uneven, but investors are watching for expansion into additional cities, which could lift next-quarter results and enthusiasm into early 2026.

Tesla’s AI investments are supported by its manufacturing scale and easy access to capital, reducing risk for investors versus newer EV startups that need years and billions more to reach production.

Over a decade, Tesla has built in-house AI chips and neural networks to process real-time camera data for autonomous navigation, pursuing a vision-only system that cuts hardware costs while boosting performance.

Tesla rapidly expanded its robotaxi service, launching in Austin and broadening coverage in three weeks, with Elon Musk aiming for 10 new cities by year-end to accelerate scale.

Tesla’s vision-only approach relies on limited sensors and advanced AI, contrasting with competitors' lidar and infrared reliance, and is viewed as a potential driver of trillion-dollar value through AI-enabled capabilities.

Tesla trades at about 17 times sales, a premium underpinned by scale and capital access, which may be justified by its AI-driven growth versus Rivian and Lucid.

Tesla’s massive scale and $1.4 trillion market capitalization give it an edge in the EV space, though the valuation remains high relative to traditional automakers and some peers.

Analysts and investors see the robotaxi market swelling toward up to $10 trillion, with Tesla aiming to lead via end-to-end AI systems and in-house autonomous production.

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