Shares of Tesla Inc. (TSLA) declined 3.8% to $406.11 on Monday afternoon, reversing some of the prior week's gains as the broader technology sector came under pressure. The stock opened at $419.15 before sliding to a low of $405.90, with approximately 39.8 million shares changing hands. The move was part of a wider sell-off in growth stocks, with the Nasdaq Composite falling 0.89% and the S&P 500 dropping 0.43% by early afternoon, as oil prices and Treasury yields rose.
Investor sentiment was dampened by concerns over the recent rally in equities. “There’s concern about the rally we’ve had in a short period of time, and there’s some profit taking,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. The rising yield environment has been particularly challenging for high-growth names like Tesla, which trade heavily on future cash flow expectations.
Robotaxi Rollout Faces Real-World Tests
CEO Elon Musk attempted to refocus attention on Tesla's autonomous driving ambitions during a remote appearance at the Smart Mobility Summit in Tel Aviv. Musk stated that Tesla already operates self-driving vehicles without human safety monitors in Texas and expects to expand such operations across much of the United States later this year. He also predicted that within five to ten years, artificial intelligence could account for “probably 90% of all distance driven” in self-driving cars.
However, Reuters reporters testing Tesla's robotaxi service in Austin, Dallas, and Houston encountered significant challenges, including long wait times, occasional unavailability of vehicles, and drop-offs well away from intended destinations. These issues highlight the operational hurdles Tesla faces as it seeks to scale its autonomous ride-hailing business. Additionally, the National Highway Traffic Safety Administration recently announced a recall of 218,868 Tesla vehicles in the U.S. due to rearview-camera delays, while Alphabet's Waymo recalled roughly 3,800 robotaxis last week for a separate safety concern.
Model Y Price Hike Breaks Two-Year Drought
Over the weekend, Tesla raised prices on select U.S. Model Y variants for the first time in two years. The premium all-wheel-drive and rear-wheel-drive models each increased by $1,000, now priced at $49,990 and $45,990, respectively. The Performance all-wheel-drive Model Y saw a $500 bump to $57,990. Tesla did not provide a reason for the price adjustments, but the move could provide a modest boost to margins while potentially testing demand elasticity. The Model Y remains the backbone of Tesla's delivery volumes, and pricing decisions are closely watched by the market as signals of the company's balance between profitability and sales growth.
Autonomy Race Intensifies
Tesla faces increasing competition in the autonomous vehicle space. Chinese electric vehicle maker Xpeng announced Monday that it has begun mass production of its first robotaxi in Guangzhou, with plans to offer fully driverless services by early 2027. This development underscores the growing global race to commercialize self-driving technology.
Despite the challenges, Tesla reported that paid robotaxi miles nearly doubled quarter-over-quarter in the first quarter. The company also noted that it expanded unsupervised robotaxi operations in Austin and initiated unsupervised rides in Dallas and Houston in April. Tesla expects its upcoming Cybercab, once production begins, to eventually replace the existing Model Y-based robotaxi fleet.
Tesla's stock remains above the $400 level, keeping its market capitalization near $1.44 trillion. However, the margin for error is narrow. Any delays in Musk's timeline, regulatory setbacks, or continued pressure from rising interest rates on growth stocks could turn Monday's decline into a more significant correction for the autonomy trade. Investors are watching closely to see whether Tesla can successfully transition from an electric vehicle maker to a high-margin autonomous mobility provider.
