Tesla’s (TSLA +3.53%) $1.2 trillion valuation faces scrutiny as the U.S. National Highway Traffic Safety Administration (NHTSA) escalates its investigation into the company’s full self-driving (FSD) features, now affecting 3.2 million vehicles. This inquiry, which stems from concerns over the software’s ability to detect obstacles in poor visibility, could have significant implications for Tesla’s ambitions in the burgeoning robotaxi market, projected to reach $10 trillion globally.
The investigation arrives at a critical time for Tesla, as its sales growth has slowed, with a notable decline in deliveries in 2025 compared to the previous year. Despite generating less than 1% of its revenue from robotaxis, the market has priced in substantial growth potential for this segment. However, if the NHTSA’s findings lead to a mandatory recall, it could undermine investor confidence in Tesla’s future, especially given the company’s heavy investments in pre-revenue ventures.
For market professionals, the key takeaway is that the ongoing regulatory scrutiny poses a risk to Tesla’s valuation and its transition strategy. A forced recall could prompt a reevaluation of how much growth potential has already been factored into the stock price, adding uncertainty to an already challenging landscape for the EV and autonomous driving sectors.
Source: fool.com