Tesla’s stock has plunged nearly 50% in three months. Despite this, investors debate whether its $845 billion valuation is justified. The company’s market cap has dropped $700 billion since December, yet it still outvalues the next nine largest automakers combined.
The Valuation Dilemma
Tesla’s worth hinges on Elon Musk’s vision of an AI-driven future, not its current EV business. While EVs generate 90% of revenue, over 75% of its value is tied to unproven ventures like robotaxis and humanoid robots. Musk has repeatedly missed deadlines for fully autonomous vehicles since 2016.
Market Struggles
Falling profits, rising competition, and Musk’s political activism have hurt Tesla. The Cybertruck’s 2023 sales (38,965 units) fell far short of targets. Price cuts on aging Models 3 and Y reflect slowing EV demand, especially in China, where rivals like BYD undercut Tesla.
Political Risks
Musk’s role as a top Trump advisor has raised concerns. Trump’s election—a win Musk heavily funded—threatens EV subsidies vital to Tesla’s margins. European sales also dipped after Musk aligned with far-right movements.
Regulatory Challenges
Bulls argue Trump could ease robotaxi regulations, but states like California require rigorous safety testing. Tesla’s camera-only autonomy approach faces skepticism compared to rivals using radar/lidar. BYD’s free driver-assistance tech further undermines Tesla’s premium.
Investor Perspectives
- Bulls cite Musk’s track record and speculative models:
- Truist Securities: 52% of Tesla’s value stems from robotaxis and robots.
- Morgan Stanley: 60% tied to autonomy and subscriptions.
- Ark Invest predicts Tesla’s stock could hit $2,600 by 2029.
- Bears warn of “irrational exuberance.” JP Morgan’s Ryan Brinkman questions how long Tesla’s stock can defy weak fundamentals.
The Road Ahead
Tesla’s fate depends on reviving its EV dominance and proving autonomy’s viability. Regulatory hurdles, competition, and investor patience will test whether its valuation is visionary—or a gamble.
