Tesla shares closed at a record high on Tuesday, capping a sharp reversal from what had been a bruising start to the year for investors and lifting the electric vehicle maker back into the top tier of global companies by market value.
The stock climbed 3.1% to finish at $489.88, surpassing its previous closing peak and extending a rally that has pushed Tesla up 21% so far this year. The move followed renewed enthusiasm around the company’s autonomous driving ambitions, after chief executive Elon Musk said Tesla has been testing fully driverless vehicles in Austin, Texas, without anyone inside.
That disclosure reignited a long held belief among bullish shareholders that Tesla can eventually convert its existing fleet into robotaxis through software updates. While the automated systems under test remain limited in scope and availability, the announcement offered a tangible milestone after years of promises.
The rally lifted Tesla’s market capitalisation to about $1.63 trillion, placing it as the seventh most valuable publicly listed company, just ahead of Broadcom and behind names such as Nvidia, Apple, Microsoft and Amazon. Musk’s personal fortune rose alongside the shares, with Forbes estimating his net worth at roughly $684 billion.
The renewed confidence marks a dramatic turnaround from earlier in the year. Tesla shares plunged 36% in the first quarter, their worst three month stretch since 2022, as slowing demand, political controversy and intensifying competition weighed on sentiment. At that point, the stock appeared to be losing momentum after years of dominance in the electric vehicle market.
Operational results reflected those pressures. In the first quarter, Tesla reported a 13% drop in vehicle deliveries and a 20% slide in automotive revenue. The second quarter brought a rebound in the share price, but sales trends failed to improve, with auto revenue falling another 16%.
The second half of the year has told a different story. In October, Tesla posted a 12% increase in third quarter revenue as U.S. buyers rushed to purchase vehicles before a federal tax credit expired at the end of September. That report triggered a 40% jump in the stock during the period and helped reset expectations.
Still, the business faces clear headwinds. The loss of the tax incentive has dampened demand, while backlash tied to Musk’s political activity continues to weigh on brand perception in key markets. Tesla has also come under pressure from rivals offering cheaper or more compelling alternatives, including BYD and Xiaomi in China and Volkswagen in Europe.
In an effort to defend volume, Tesla introduced lower priced versions of its Model Y and Model 3 in October. So far, those releases have not translated into stronger sales in the United States or Europe. In the U.S., industry data from Cox Automotive show Tesla sales fell in November to their lowest level in four years, with the pared down models appearing to cannibalise demand for higher margin vehicles.
Against that backdrop, the focus has shifted toward autonomy as a potential catalyst for the next phase of growth. Analysts see improvements in Tesla’s Full Self Driving technology as central to that narrative. Mizuho this week raised its price target on Tesla to $530 from $475, maintaining a buy rating.
The firm said reported gains in FSD performance “could support an accelerated expansion” of Tesla’s robotaxi ambitions in Austin, San Francisco and beyond, and potentially allow for the earlier removal of human supervisors.
For now, Tesla’s Robotaxi branded ride hailing services in Texas and California still operate with drivers or safety monitors onboard. Regulatory approval, safety validation and public trust remain significant hurdles before any large scale rollout.
From a business perspective, the latest rally underscores how tightly Tesla’s valuation remains linked to future technology bets rather than near term fundamentals. Investors have once again chosen to price in long range potential, even as traditional automotive metrics lag.
Whether that confidence proves durable will depend on Tesla’s ability to convert testing milestones into commercial reality. For the moment, the market has delivered its verdict. After a turbulent year, Tesla’s comeback story has regained momentum, driven by the promise that autonomy could still redefine the company’s next chapter.
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