Tesla stock (TSLA) moved lower in early trading on Wednesday as renewed tensions in the Middle East weighed on broader market sentiment and pushed oil prices higher.
Shares of the electric-vehicle maker fell 1.5% to $390.91 in early trading. The stock plunged around 3% on Tuesday.
The decline came as US equities weakened after President Donald Trump signaled growing frustration with negotiations involving Iran and suggested additional action could be forthcoming.
The Dow Jones Industrial Average fell 251 points, or 0.5%, while the S&P 500 and Nasdaq Composite traded around the flatline.
Trump wrote early Wednesday that Iran had “taken too long to negotiate a deal that would have been great for them, now they will have to pay the price!!!”
Oil prices moved higher following the comments. West Texas Intermediate crude futures rose more than 1% to trade around $89 per barrel.
Piper Sandler says Tesla has solved self-driving
Despite the stock’s decline, Piper Sandler reiterated its Overweight rating on Tesla and argued that the company has effectively achieved Level 4 autonomy in most driving conditions.
In a note to clients, analyst Alexander Potter outlined several reasons why he believes Tesla has largely solved the self-driving challenge, despite continued skepticism among investors and industry observers.
Potter acknowledged that Waymo’s larger robotaxi deployment remains a common point of comparison raised by clients and noted that the lack of universally accepted safety datasets makes direct comparisons difficult.
Nevertheless, Piper Sandler maintained that Tesla has “solved the self driving puzzle.”
Among the factors cited was Tesla’s decision to offer insurance discounts tied to Full Self-Driving-enabled policies, which Potter viewed as evidence of the company’s confidence in the technology’s safety and reliability.
The analyst also pointed to Tesla’s production ramp of the Cybercab, the company’s purpose-built robotaxi vehicle that lacks both a steering wheel and pedals.
According to Piper Sandler, volume production began in April, with hundreds of units now being built each week.
The firm estimates the production line required an investment of “several hundred million USD (if not $1B+),” arguing that such a commitment suggests confidence in the readiness of the underlying software.
Potter also highlighted Tesla’s decision to disclose Full Self-Driving subscription figures for the first time during the first quarter of 2026.
According to Piper Sandler, the move suggests that “FSD is ready for dissemination beyond early adopters.”
Tesla reported growing adoption of the subscription service and outlined plans to significantly expand its robotaxi operations.
The company said it intends to launch robotaxi services in seven additional cities by the first half of 2026, building on current operations in Austin and the Bay Area.
Tesla has already launched robotaxi services in Houston and Dallas, while service coverage in Austin has expanded to include the entire metropolitan area and interstate highways.
Piper Sandler noted that recent versions of Full Self-Driving are capable of autonomous operation, particularly under favorable weather conditions.
Tesla is also seeking permits for a 35,000-square-foot facility in Irving, Texas, designed to support robotaxi operations.
The site would include 212 parking spaces and 16 Supercharger stalls for vehicle storage and charging.
AI strategy remains central
Tesla’s investment story has increasingly shifted beyond vehicle deliveries and manufacturing metrics toward artificial intelligence and autonomy.
Investor attention remains focused on Full Self-Driving software, robotaxi deployments and the Optimus humanoid robot program as potential long-term growth drivers.
While vehicle sales remain critical to Tesla’s near-term financial performance, many investors increasingly view the company’s long-term valuation through the lens of its AI strategy and its ability to establish leadership positions in autonomous driving, robotics and other emerging technologies.
For now, however, broader market concerns and geopolitical developments appear to be exerting greater influence on Tesla’s share price than company-specific developments.
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