Tesla’s Crossroads: Regulatory Scrutiny Meets Robotaxi Ambition

As 2025 draws to a close, Tesla finds itself navigating a complex landscape defined by regulatory pressure, shifting analyst sentiment, and a high-stakes push toward autonomous driving. The central tension lies in whether near-term operational challenges will overshadow the company's long-term narrative built on artificial intelligence and robotaxis.

Several prominent financial institutions have recently updated their assessments of Tesla, presenting a nuanced picture. While delivery estimates for the final quarter are being trimmed, price targets are predominantly moving higher, signaling a focus on future potential over immediate results.

A summary of recent analyst actions:

• Canaccord Genuity raised its price target on December 23 from $482 to $551, maintaining a "Buy" rating. Analyst George Gianarikas cited "constructive developments beneath the surface," even as he significantly reduced his Q4 delivery forecast from 470,000 to 427,000 vehicles.
• Deutsche Bank increased its target on December 19, with analyst Edison Yu moving from $470 to $500 based on his analysis of quarterly delivery performance.
• Truist Securities followed with an uplift from $406 to $444, though it kept a "Hold" recommendation.
• Wedbush's long-time Tesla bull, Dan Ives, reaffirmed his $600 target and "Outperform" rating on December 15. He views 2026 as a pivotal transition year for the company's AI and robotaxi initiatives.

Despite these optimistic valuations, expectations for Q4 vehicle deliveries are softening. New Street Research projects 415,000 to 435,000 units, below the consensus of approximately 440,000. UBS analyst Joseph Spak anticipates just 415,000 deliveries, attributing significant headwinds to the expiration of the $7,500 U.S. EV tax credit. He estimates U.S. deliveries could fall by about 75,000 vehicles sequentially, a drop of over 35% from the previous quarter and roughly 25% year-over-year.

This creates a dichotomous view: operational momentum in the core auto business is cooling, yet valuation benchmarks are rising in anticipation of future revenue streams.

Safety Regulator Expands Probe into Door Design

Adding to the operational challenges, the National Highway Traffic Safety Administration (NHTSA) has intensified its scrutiny of Tesla's vehicle design. Just before Christmas, on December 23, the agency opened a defect investigation into approximately 179,000 Model 3 vehicles from the 2022 model year.

The probe centers on the door's emergency release mechanism. A consumer complaint alleges that the mechanical emergency openers are concealed, unmarked, and difficult to locate in a crisis. Tesla's design philosophy generally favors electronic door releases via button over traditional mechanical handles.

This new inquiry builds upon a preliminary evaluation initiated in September 2025 covering about 174,000 Model Y vehicles, which addressed reports of potential electronic door handle failures. The NHTSA has previously associated Tesla's door design with several fatal incidents, including a Model S crash in Wisconsin with five fatalities and a Cybertruck accident in San Francisco resulting in two deaths.

Should investors sell immediately? Or is it worth buying Tesla?

Regulatorily, the current defect investigation is an initial formal step in a potentially lengthy process. It could lead to further actions, including a recall, but does not guarantee one. Nevertheless, it increases pressure on Tesla to comprehensively address safety concerns surrounding its door systems.

Musk's Year-End Robotaxi Deadline Looms

Concurrently, Tesla is aggressively advancing its autonomous driving story. CEO Elon Musk has set a firm deadline: to have Model Y robotaxis operating in Austin, Texas, without "Safety Monitors" in the passenger seat by December 31, 2025.

Videos circulating on social media, reportedly showing Tesla employees taking rides in such unsupervised vehicles, suggest the company is ramping up its driverless testing in Austin ahead of the year-end target.

Market observers note a perceptible shift in focus. Discussions are increasingly veering away from the next delivery figures and toward progress on robotaxis and the humanoid "Optimus" robot. UBS's Joseph Spak openly questions whether "the market even cares about deliveries anymore and is only looking at Robo-Taxi and Optimus." Recent trading patterns and valuation metrics appear to support this thesis.

Stock Performance: A Strong Rally Shows Signs of Overheating

Tesla's shares have experienced significant volatility in 2025 but currently trade firmly in positive territory. The stock closed at $475.19 on Friday, having rallied approximately 29% over the preceding 30 days. This places it just over 2% below its recent 52-week high and well above all key moving averages. However, a Relative Strength Index (RSI) reading of 73.7 signals the stock may be in overbought territory.

Upcoming Catalysts: Delivery Figures and a Robotaxi Milestone

The coming weeks hold several critical milestones. Tesla is scheduled to report its Q4 and full-year 2025 delivery numbers on January 2, 2026. Analyst consensus points to global deliveries of 1.65 million vehicles for the year, which would represent a 7.7% decline from 2024.

The subsequent Q4 earnings report in late January 2026 will provide deeper insight into margins, investments in AI/robotics, and the outlook for 2026. Running parallel to this is the expiration of Musk's robotaxi deadline on December 31. This serves as a practical stress test for Tesla's ambition to evolve from an automaker into a proven AI and robotics company with tangible products and services.