Tesla Stock Is Up 219% Since 2020. Can Investors Still Make Money With This Texas-Based Company?

Tesla (NASDAQ: TSLA) is now one of the most valuable companies in the world, with a market cap of $1.4 trillion. Shares have more than tripled in value since 2020. Yet trouble is on the horizon.

This year, the company actually saw its sales decline. Competition in the electric vehicle (EV) space, meanwhile, looks to heat up intensely in 2026.

But there are some bright spots. Tesla's robotaxi division, for example, could eventually be worth more than $1 trillion on its own, one analyst believes.

Is it still a reliable investment for the years ahead? After crunching the numbers, the answer to this question might surprise you.

The future of electric vehicles isn't positive for Tesla

It's been a difficult year for Tesla is some ways. Wall Street analysts expect sales to fall by around 4% in 2025. Earnings, meanwhile, may end up down by nearly 30%.

The problem is multifold. First, CEO Elon Musk has drawn consumer backlash for his controversial public opinions. So while total EV sales continue to rise globally, the company's market share has slipped, resulting in sales growth declines.

Second, competition is heating up, yet Tesla's lineup remains stale, with no new major model introductions in nearly five years. Previously, the company largely had the U.S. market to itself thanks to its early-mover advantage. But rising competition has eroded that lead, especially in 2025.

According to Reuters, "Tesla, which once held more than 80% of the U.S. EV market, accounted for 38% of the total EV sales in the United States in August, the first time it has fallen below the 40% mark since October 2017, when it was ramping up production of the Model 3, its first mass market car."

Looking ahead, it's possible the automaker faces another difficult year in 2026, at least when it comes to EV sales. Major demand drivers -- including a federal tax credit that reduced the cost of a new EV by up to $7,500 -- will no longer be available.

And promising competitors like Rivian plan to begin production of several models with starting prices under $50,000. Considering that more than 90% of Tesla's vehicle revenue now comes from just two affordable models, the Model Y and Model 3, increased competition in this category could add significant sales pressure next year.

It maintains heavy technological and capital advantages versus the competition, but when it comes to raw EV sales, the near-term future is fairly gloomy. Still, all of that will be manageable if the company can execute on perhaps the biggest growth opportunity in its history: robotaxis.

Keep your eyes on the robotaxi division

Tesla launched its robotaxi service in Austin, Texas, earlier this year. Many analysts, including Wedbush Securities veteran Dan Ives, were immediately impressed. "We believe Tesla and Musk are heading into a very important chapter of their growth story as the AI revolution takes hold, and the robotaxi opportunity is now a reality on the doorstep," Ives said after testing the service for himself. "We estimate the AI and autonomous [driving] opportunity is worth at least $1 trillion alone for Tesla."

Ives isn't alone in his optimistic projections. Cathie Wood, a major Tesla investor, believes the global robotaxi market should eventually be worth between $5 trillion and $10 trillion. According to research from Wood's firm, ARK Invest, "Tesla's robotaxi business could represent [about] 90% of its enterprise value by 2029, capturing a significant share of ARK's projected [approximately] $10 trillion global robotaxi market."

It's no wonder, then, that shares have continued to climb in value even as its vehicle sales struggle. Major investors no longer see the company as a vehicle manufacturer, but as a technology and service provider. When it comes to Tesla's ability to control the U.S. robotaxi market, ARK Invest rightfully says, "Tesla's end-to-end vision-only AI, vertically integrated manufacturing, and data advantages position it to dominate in the U.S., and perhaps globally, during the next few years."

Is Tesla still a compelling investment today at a $1.4 trillion market cap? Only for investors willing to bet on its robotaxi ambitions. The era when its stock was valued solely as that of an EV manufacturer is simply over.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.