Could Buying Tesla Stock Today Set You Up for Life?

Key Points

• Tesla's declining automotive sales and margins aren't about Elon Musk. They are more about new entrants taking losses on the sale of electric vehicles to grab market share in the sport utility vehicle (SUV) market.

• The key to Tesla notching huge returns involves its nascent robotaxi business.

• The key economic advantage of electric vehicles is their low running and maintenance costs; they are ideal for the robotaxi concept.

• These 10 stocks could mint the next wave of millionaires ›

If buying Tesla (NASDAQ: TSLA) is indeed going to set an investor up for life, then its robotaxi business will have to be successful, and CEO Elon Musk will have to achieve his aim of making unsupervised full self-driving (FSD) software publicly available. While it's uncertain if those things will happen, there's one trend in the electric vehicle (EV) industry that significantly strengthens the case for Tesla. But to understand it, it's important to start by addressing one key issue.

What's going wrong with Tesla's electric vehicle sales?

Musk is a divisive figure, but he's not the only CEO to attract controversy or take positions that some find disagreeable and others find enlightened. This isn't the place to enter that debate, but it is the place to look at matters rationally. A standard narrative has it that Tesla's declining electric vehicle sales in 2025 are a consequence of Musk's political involvement. If this were the case, Tesla would, indeed, have a major structural issue that definitely wouldn't make it a stock to buy in hopes of it putting you on easy street.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

My opinion is that the evidence for this argument is weak. Tesla doesn't have a sales problem because of Musk. It has a Model Y problem, and it has an interest rate problem. Let's put it this way: According to Cox Automotive's Kelley Blue Book report, sales of Tesla's Model Y (its best-selling sport utility vehicle, or SUV) were down more than 24% in 2025 year to date through mid-July compared to the same period in 2024. In contrast, sales of its second best-selling car, the Tesla Model 3 (a mid-size sedan), rose almost 38% on the same basis.

If anti-Musk sentiment were behind the sales drop, that would show up for both models. Something else is going on.

Competition is coming for Tesla

More likely, it's the fact that other automakers have developed SUVs at price points that are highly competitive to the Tesla Model Y, even though many of them continue to lose significant amounts of money on EVs. Examples of SUV EVs gaining market share in the U.S. are Chevrolet's Blazer and Equinox, Nissan's Ariya, Hyundai's Ionic 5, and Honda's Prologue.

Image source: Getty Images.

General Motors' (NYSE: GM) Chevrolet is a case in point. Earlier in the year, GM Chief Financial Officer Paul Jacobson said, "We achieved variable profit positive on our EVs in the fourth quarter." This is a good step, but it only means that revenue from its EVs covers the cost of labor and materials to build them. That's fine if GM is going to make the same model in perpetuity. It's not fine if GM is going to spend on research and development, factories, and other capital investments to develop a new car.

In reality, what's happening to Tesla is a textbook example of new entrants driving down the sales and margins of an established industry leader by building loss-making vehicles with the intent to build the scale and market presence to turn profitable at some point.

As such, Tesla's margins are being squeezed by a combination of competitors entering the SUV EV market and by ongoing relatively high interest rates -- it's not a coincidence that its well-performing Model 3 is its cheapest model.

Data source: Tesla.

It's also not a coincidence that Tesla's response to these conditions is to create a long-awaited, low-cost model, which is "just a Model Y" according to Musk.

What it means for Tesla investors

The key to Tesla's future is the robotaxi and unsupervised FSD. Both are subject to debate, and Tesla remains a high-risk/high-reward stock that won't suit most investors.

But here's the thing. The profitability challenges inherent in EVs, combined with the difficulty of producing low-cost, affordable EV models at a profit for all automakers, strengthen the idea that robotaxis and ride-sharing have a big future as a solution to the problem.

EVs tend to have high upfront costs, but low operating and maintenance costs. Therefore, their most economically productive use could turn out to be as robotaxis, where they are heavily utilized to take advantage of their low running costs and justify their upfront price tags.

As such, if the future is EVs, whether by personally owned cars or robotaxis, then Tesla's approach is the right one, and it has the potential to generate significant returns for investors if it gets robotaxis and unsupervised FSD right. Whether it will set investors up for life is an unknown -- and planning on any one stock to do that would be foolish -- but it's got lots of promise.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $461,605!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,287!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $649,657!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of August 18, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.