Even if shifting resources into the development of autonomous vehicles and robots is the right long-term move, shrinking passenger EV sales will leave a huge hole in the company’s financial results in the near term.

Management plans to deploy its Cybercab robotaxi in a ride-hailing network, where it could create a high-margin revenue stream by completing autonomous trips for customers around the clock. However, cars outfitted with the company’s full self-driving (FSD) system are only approved for unsupervised use in Austin, Texas, right now, and a wider rollout will take a significant amount of time due to strict government regulations.

Therefore, even if the Cybercab enters mass production this month, as Musk expects, those vehicles won’t be generating meaningful ride-hailing revenue until its unsupervised FSD is approved for use on the roads more broadly. That means that ride-hailing probably won’t be able to pick up the slack for the company’s sluggish EV sales for at least a couple of years.

The Optimus humanoid robot faces a similar timeline. It will be manufactured in Tesla’s Fremont, California, factory, where it will take over the production capacity previously used for the Model S and Model X. However, robot production won’t ramp up until the end of 2026, so it could be a few years before those are bringing in meaningful revenue.

With that said, Optimus presents an enormous opportunity. Musk believes humanoid robots could outnumber humans by 2040 due to their versatile applications in households and businesses. He thinks Optimus could generate $10 trillion in revenue over the long term, making the robot business orders of magnitude more valuable than the EV business.

The company generated earnings of $1.08 per share in 2025, which was a 47% drop from 2024. Its stock has since declined by around 25% from its all-time high, but I would argue that did not fully reflect the sharp drop in earnings.

The stock is now trading at a price-to-earnings ratio (P/E) of 316, making it 10 times more expensive than the Nasdaq-100 technology index, which has a P/E of around 29.3. It looks heavily overvalued relative to its big-tech peers.

The stock would have to plunge 90% from here just to trade in line with the Nasdaq-100 on a P/E basis. That might sound unrealistic, but something similar actually happened in early 2023 when the broader stock market was in bear territory. Tesla stock slumped by almost 75% from its peak to a low of around $113, taking its P/E to 29.8.

Since the broader market is currently in the throes of a sell-off, I think Tesla presents real downside risks given its lofty valuation, its sluggish EV sales, and the long wait before the Cybercab and Optimus reach commercial scale.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.

Tesla Just Delivered Terrible News for Its Investors was originally published by The Motley Fool