<div id="readability-page-1">While it has taken investors on a bumpy drive, no one can deny that Tesla (TSLA 1.14%) has worked out to be a wildly successful stock. In the past 10 years, shares have rocketed 1,700% higher (as of July 10). The company's revenue growth has slowed, to be sure, but Tesla is now consistently profitable, which is a positive development. Even though the business might not be firing on all cylinders right now, the market continues to give Tesla the benefit of the doubt. Shares trade 35% off their peak from December last year, but they're very expensive, at a price-to-earnings (P/E) ratio of 170.4. It seems that Tesla is always at a nosebleed valuation regardless of what's going on with the underlying fundamentals. Existing shareholders, as well as those investors looking to buy the electric vehicle (EV) stock, need to understand what's going on. Here's what matters most as we look at Tesla's future. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjQ2NjcvdHdvLXRlc2xhcy1wYXJrZWQtbmVhci1lYWNoLW90aGVyLmpwZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="420" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjQ2NjcvdHdvLXRlc2xhcy1wYXJrZWQtbmVhci1lYWNoLW90aGVyLmpwZyZ3PTcwMA"/>Image source: Tesla. </div> <h2>Betting on a different future</h2> Anytime there's a valuation as high as Tesla's, it's a clear indication that the market believes the future will be incredibly bright. And that's exactly what founder and CEO Elon Musk has gotten shareholders to believe. In this case, the main thing to focus on is its full self-driving (FSD) technology, which is what Tesla's ultimate success and current valuation depend on. After many delays, Tesla finally introduced a robotaxi service in Austin, Texas in June. It was a very limited and controlled launch to a select number of people in a small area. The cars, which had supervisors in them, did make driving errors. However, the company deserves credit for getting to this point, even though it's significantly behind Alphabet's Waymo in the FSD and robotaxi race. The financial reward of one day bringing a robotaxi service to cities across the world is massive. So, it makes sense why Musk and Tesla are so focused on this top objective. According to Cathie Wood and Ark Invest, this is a multitrillion-dollar opportunity. To make Tesla's strategy a success, it involves not only selling more of its EVs but having these people offer up their cars to the robotaxi service. In this way, Tesla would be able to rapidly scale up its fleet, earning what could be very high-margin revenue if it can chip away at the leading market positions of Uber and Lyft, at least in the U.S. And if FSD can bring down the cost of travel, then perhaps demand would grow meaningfully, providing upside to the equation. <h2>What if Tesla stays the same?</h2> Investors need to realize that it's far from a certainty that Tesla achieves broad robotaxi adoption. Up until this point, Musk has overpromised and underdelivered. There are obviously major regulatory hurdles to overcome, with safety being the leading concern. And riders must get comfortable sitting in a car that has no one behind the wheel (or no wheel at all). These are big question marks that no one has answers for at this point. Time will tell how things play out. This means that investors who are comfortable buying the stock today are implying that Tesla will find monster success with its FSD capabilities, enough so that the company's earnings power will be substantially higher five or 10 years from now. That's a bet I'll gladly skip out on. There remains a good possibility that Tesla's business model doesn't change. And in the future, this company could still be selling EVs. In that scenario, something the Tesla bulls would not be pleased with, Tesla would be deserving of a much lower P/E multiple. </div>

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Tesla's stock has surged 1,700% over the past decade, but its current P/E ratio stands at 170.4, indicating high valuation despite slowing revenue growth. The company's future hinges on its full self-driving (FSD) technology, with a recent limited launch of a robotaxi service in Austin. While this presents a potential multitrillion-dollar opportunity, significant regulatory and safety challenges remain. Investors must consider the uncertainty surrounding FSD adoption and the possibility that Tesla may continue primarily as an EV seller, which could lead to a lower valuation.

- Tesla's stock has surged 1,700% over the past decade, but its revenue growth has slowed, and shares are currently trading 35% below their peak.  
- The company's future success hinges on its full self-driving (FSD) technology, with a recent limited launch of a robotaxi service in Austin, Texas, despite significant competition and regulatory challenges.  
- Investors must consider the uncertainty surrounding Tesla's ability to achieve widespread robotaxi adoption, as the company's business model may remain focused on selling electric vehicles rather than expanding into autonomous services.

1 Thing That Matters Most for Tesla Stock Investors