Tesla in 2025: Is It Still a Buy or a Risk?

If you thought the Tesla roller coaster was over, buckle up — 2025 is serving up more twists than a Hollywood blockbuster. After a jaw-dropping 90% surge in June, Tesla’s stock is once again the talk of Wall Street and social media feeds. But with wild swings, fierce competition, and Elon Musk’s unpredictable moves, is Tesla still a smart buy or a risky bet for your portfolio?

Let’s break down the facts, the hype, and the hidden surprises that could make or break Tesla’s future.

The Tesla Surge: What’s Fueling the Hype?

Tesla’s stock price soared to $320 per share as of July 1, 2025, marking an 89.99% gain year-to-date — even after a brutal 56% drawdown earlier in the year. What’s behind this comeback?

• Q1 2025 Earnings Beat: Despite a rough Q4 2024, Tesla’s Q1 results exceeded (lowered) analyst expectations, thanks to improved production efficiency and a rebound in deliveries. Investors cheered the company’s focus on cost-cutting and supply chain resilience.

• AI & Autonomous Driving: Tesla’s integration of AI into its Full Self-Driving (FSD) technology and the much-anticipated robotaxi launch have electrified investor sentiment. This isn’t just about cars anymore—it’s about leading the future of transportation.

• Musk’s Return: Elon Musk’s renewed focus on Tesla after a brief political detour has reassured investors that the company’s visionary is back in the driver’s seat.

Growth Potential: Can Tesla Keep Climbing?

Here’s where things get interesting. Tesla’s future growth hinges on several high-stakes bets:

• Robotaxi Revolution: The successful launch of Tesla’s robotaxi could be a game-changer, with analysts projecting a 30% increase in FSD-related revenue by 2026. Some, like Wedbush’s Dan Ives, believe 90% of Tesla’s future valuation will be driven by autonomous and robotics tech.

• Affordable EVs: Tesla is developing a new, lower-cost vehicle platform, aiming to capture budget-conscious buyers and expand its global market share. These models are expected to launch by late 2025, potentially reigniting growth.

• Energy Business Expansion: Tesla’s energy storage segment (think Megapack and Powerwall) is projected to grow profits tenfold by 2030, providing a crucial revenue stream beyond cars.

But here’s the suspense: Tesla’s core EV business is under pressure. Deliveries declined 13% year-over-year in Q2 2025, and the company’s share of the EV market has slipped below 50% in key regions like California and China, thanks to aggressive rivals like BYD.

Valuation: Is Tesla Overpriced?

Let’s address the elephant in the room. Tesla’s forward price-to-earnings (P/E) ratio is a staggering 62 — far above traditional automakers like Ford (P/E of 8) and GM (P/E of 9). Some analysts even peg it at 120, compared to an industry average of 15. That means investors are paying a massive premium for future growth that’s not guaranteed.

• Morningstar’s Take: Tesla is “overvalued,” with a fair value estimate of $250 per share — well below its current price. The stock is rated just two stars out of five, with a “very high” uncertainty rating.

• Wall Street Split: Analyst price targets for 2025 range from $215 (UBS, “Sell”) to $500 (Wedbush, “Outperform”), with a consensus “Hold” rating. The median one-year target is $291.31, suggesting limited upside from current levels.

Risks: What Could Go Wrong?

Before you YOLO your savings into Tesla, consider these risks:

• Declining Sales & Margins: Tesla’s vehicle deliveries and profits are down, partly due to price cuts aimed at fending off competitors. Operating margins have shrunk to just 2.1% in Q1 2025, compared to 19% in 2022.

• Fierce Competition: Chinese automakers like BYD are outselling Tesla in key markets, and legacy brands are ramping up their EV offerings.

• Regulatory & Legal Uncertainty: Lawsuits over self-driving tech and shifting global regulations could slow Tesla’s momentum.

• Market Volatility: Tesla’s stock remains highly volatile, with wild swings driven by macroeconomic shocks, Musk’s public statements, and shifting investor sentiment.

Investor Sentiment: Is the Magic Fading?

Tesla’s stock is losing favor among institutional investors, with holdings dropping to 48.74%. Recent downgrades from Goldman Sachs and Argus reflect growing caution, even as some analysts remain bullish on the company’s tech-driven future.

But here’s the twist: Tesla’s story is far from over. The company’s ability to surprise (and sometimes shock) the market means that betting against it has never been a safe play.

Should You Buy, Hold, or Run for the Hills?

Here’s a quick checklist to help you decide if Tesla fits your portfolio:

• Buy if:

  • You believe in the long-term potential of autonomous vehicles, robotics, and AI.

  • You’re comfortable with high volatility and can stomach big swings.

  • You want exposure to a company that’s as much about tech innovation as it is about cars.

• Hold if:

  • You already own Tesla and are willing to wait out the turbulence.

  • You believe the upcoming affordable models and robotaxi rollout will reignite growth.

• Avoid if:

  • You’re looking for stable, predictable returns.

  • You’re worried about high valuation, declining sales, and rising competition.

Final Thoughts (With a Dash of Comedy)

Investing in Tesla in 2025 is a bit like riding one of Elon Musk’s SpaceX rockets: thrilling, unpredictable, and not for the faint of heart. If you’re ready for liftoff — and the occasional bumpy landing — Tesla could still deliver out-of-this-world returns. But if you prefer your investments with less drama, you might want to keep your feet (and your cash) firmly on the ground. And if you still are uncertain if Tesla is the best option, you can use Savvport´s AI Sandbox to compare Tesla stock to other stocks and get the best option for you.

But whatever you decide, remember: in the market, as in life, fortune often favors the bold — but never the reckless.