Tesla Is an AI Stock. That Matters More Than Cars.

Tesla CEO Elon Musk will need to have one million Tesla robo-taxis in operation to meet all of his performance incentives. The Cybercab is Tesla’s dedicated robo-taxi model slated for sale in 2026. (Photo by ROBYN BECK/AFP via Getty Images)

Tesla stock rose early Monday—a sign that cars simply don’t matter as much for the company as CEO Elon Musk and his artificial-intelligence ambitions—before slipping lower.

Shares of the electric-vehicle maker traded as high as $358.55 before sliding to $346.40, down 1.3% on the day. The S&P 500 and Dow Jones Industrial Average rose 0.2% and 0.3%, respectively.

The moves came after Friday’s 3.6% gain, catalyzed by Tesla’s 2025 proxy statement that outlined a new pay package for Musk worth roughly $1 trillion if all performance incentives were met.

Those include achieving a market capitalization of $8.5 trillion and $400 billion in annual earnings before interest, taxes, depreciation, and amortization, or Ebitda. Tesla would also need to deliver 20 million vehicles, achieve 10 million active Full Self-Driving, or FSD, subscriptions, deliver one million Optimus humanoid robots, and have one million robo-taxis in commercial operation.

“Lofty goals for a lofty reward,” wrote Baird analyst Ben Kallo in a Monday report. “The next step of the [Musk] Master Plan outlines Tesla’s vision for sustainable abundance, which is summarized as the unification of software and hardware at scale for both automotive and humanoid applications.”

The strategic direction of the company is clear in the incentives. FSD, robo-taxis, and robots are all part of Tesla’s AI investments. Selling cars still matters, though. Tesla has sold about eight million EVs over its history. Selling EVs, however, has been getting more challenging. Tesla sold about 721,000 EVs in the first half of 2025, down about 13% year over year.

It isn’t getting any easier. U.S. EV buyers are about to lose the federal $7,500 purchase tax credit at the end of September. And there is more EV competition on the way. Mercedes-Benz and BMW recently unveiled new electric SUVs to compete with Tesla’s Model Y at a car show in Europe.

Kallo calls the long-term opportunity significant but remains cautious about the near term. He rates shares Hold and has a $320 price target for the stock. Overall, about 44% of analysts covering Tesla stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Tesla stock is about $319 a share.

Investors are a little more bullish than the Street, and don’t seem all that concerned with EV sales these days. They are happy Musk is happy. His new pay package would give Musk control of roughly 1.1 billion Tesla shares, excluding any potential selling for tax purposes in the future. The rest of Tesla’s board, outside of Musk, controls about 7.5 million shares and options, according to proxy filings. That’s down from about 12.5 million shares a year ago.

Coming into Monday trading, Tesla stock was down about 13% this year, but up about 66% over the past 12 months.

Write to Al Root at allen.root@dowjones.com