As the market continues to rollercoaster, Tesla (TSLA) would likely love to get off the ride. The company has been in the headlines for all the wrong reasons, and its stock is down 38% year-to-date (YTD) and 48% from its 52-week high. The near halving in stock price might have investors wondering, is now the time to scoop up shares on the cheap?
No. And, I show below, I do not see an honest argument for owning the stock above $50/share.
Tesla lost its first-mover advantage, its profitability and market share are in decline, and there’s no straight-faced argument that the company can reverse these trends. I have reached out to Tesla for comment and will update this post if I receive a reply.
The clear-eyed math that drives my Tesla research leads me to the inescapable conclusion that TSLA is worth less than $50/share or 80%+ below the current price. Yes, there are staunch believers in CEO Elon Musk’s ability to change the world. But, math is math. And, the numbers in this report paint a very clear picture. Sell TSLA now.
Whether you think Tesla is just a car company, or a combination of robot, solar, battery, insurance, FSD, space exploration, and satellite companies, its stock is terribly overpriced. For starters, Tesla’s current stock price implies that the company will become the world’s largest automaker, not just electric vehicle maker, even as the company is losing market share, seeing revenues flatten, and continually misses its delivery goals.
In this report, I address the many reasons why Tesla does not (and hasn’t ever) deserve its lofty valuation.
Reason #1: First Move Advantage Will Last Forever
Market Share Is Declining Rapidly. Tesla’s total vehicle deliveries fell YoY for the first time in 2024, and despite rising deliveries prior to 2024, the company has not been keeping pace with the overall EV market.
Based on sales data from the International Energy Agency, Tesla’s share of global EV sales, which include battery-electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV), fell from 17% in 2019 to 10% in 2024.
For comparison, BYD’s share of the global EV sales, including BEV and PHEV, increased from 10% in 2019 to 22% in 2024, which makes BYD the global leader in EV sales. Wuling had the third highest market share at 4%, and the rest of the main competitors (BMW, Li Auto, Geely, Volkswagen, and more) followed close behind at market shares ranging between 3% and 2%.
As a battery-electric vehicle manufacturer only, I can also compare Tesla’s share of the BEV industry. Per Figure 1, Tesla’s BEV market share, based on number of vehicles sold, fell from 25% in 2019 to 17% in 2024.
Figure 1: Tesla’s Share of Global BEV Sales: 2019 – 2024
Market Share Losses Are Steepest in the More Mature EV Markets. Tesla has been ceding the most share in more mature EV markets, as multiple competitors (old and new) bring numerous, compelling new models to market.
China is the largest EV market in the world with 64% of global EV sales in 2024.
BYD is #1 in China by a wide margin. Its sales were 32% of the EV market, while Tesla was just 6% in 2024. Tesla is not even in second place in China. According to Autovista24, BYD’s EV sales were 5.2x higher than the second-best EV brand Wuling, and 5.3x higher than Tesla’s EV sales in China in 2024.
I expect BYD to widen its lead on Tesla as it rolls out new charging technologies and a wider range of EV models to meet many different price points.
Figure 2: Best-Selling EV Brands in China in 2024
Tesla’s market share in Europe is trending down, too. Tesla’s European sales declined 45% in the first two months of 2025, despite overall EV sales in the region rising 37% over the same time.
Tesla’s market share in Europe fell from 21% in 1Q23 to 9% in 1Q25 according to EU-EVs.com. Volkswagen leads the market with 14% share in 1Q25. See Figure 3. On a monthly basis through February 2025, Tesla’s sales in Europe fell YoY in 10 of the last 12 months.
Figure 3: Europe BEV Market Share: 1Q23 – 1Q25
In the U.S. Tesla still enjoys leading market share. However, I’m not sure how long that will last given that its market share fell from 82% in the first half of 2020 to 44% in 1Q25.
Around the world, the market share trend is not Tesla’s friend. As I stated long ago, competition would erode Tesla’s once-leading market share.
While Tesla is counting on its redesigned Model Y to boost sales, I think that goal looks less and less likely to be met due to production pauses at factories around the world.
Can’t Regain Market Share with Delivery Misses Piling Up. Not only is Tesla losing market share, but it is increasingly missing consensus estimates for vehicle deliveries. Tesla’s deliveries in the first quarter of 2025 missed the consensus estimate by 12% or 40,909 deliveries, which was one of the largest misses to date.
Longer-term, Tesla has missed the consensus estimates for deliveries in 7 out of the last 10 quarters per Figure 4. Such misses add further evidence to Tesla’s ongoing struggles.
Figure 4: Tesla’s Quarterly Delivery Beats & Misses: 4Q22 – 1Q25
Reason #2: Profits to the Moon
Profits Are Headed Down. No doubt, Tesla deserves credit for proving the EV market, but that doesn’t mean EVs are a good business. Tesla briefly boasted high margins and soaring sales, but as inevitably happens in free markets, a flood of competition has forced revenue growth and margins down.
Tesla saw impressive revenue growth for many years, but that trend has stopped in its tracks. Total revenues, excluding automotive regulatory credits, were down ever-so-slightly from $95 billion in 2023 to $94.9 billion in 2024, while automotive revenue, the large majority of the business (more on that topic below), excluding regulatory credits dropped more precipitously (8%) from $80.6 billion in 2023 to $74.3 billion in 2024. Worse yet, Tesla’s net operating profit after-tax (NOPAT) fell 39% from $7.2 billion to $4.4 billion over the same time. See Figure 5.
Tesla’s NOPAT margin fell from 13% in 2022 to 5% in 2024, while the company’s invested capital turns fell from 2.3 to 1.6 over the same time. Falling NOPAT margins and invested capital turns drive Tesla’s ROIC from 30% in 2022 to just 8% in 2024.
Figure 5: Tesla’s Revenue and NOPAT: 2022 – 2024
Tesla’s declining profitability is a window into the competitive dynamics of the EV industry. When Tesla faced less competition, it earned high margins. As companies entered the market, pricing became more competitive, and consumers had greater choice in EVs, Tesla’s profitability declined. For example, Tesla’s return on invested capital (ROIC) was nearly 4 times higher than the average ROIC of its incumbent peers in 2022. Incumbent peers under coverage include Toyota (TM), General Motors (GM), Ford (F), Stellantis (STLA), Honda (HMC), and Nissan (NSANY). However, in 2024, Tesla’s 8% ROIC is equal to the average trailing twelve-month (“TTM”) ROIC of its incumbent peers.
Still Burning Cash Like There’s No Tomorrow. Surprise! Despite showing positive EPS and even a decent ROIC, Tesla has been a major money loser over its life. It doesn’t qualify as a Zombie Stock, due to its large cash balance (Musk is really good at selling stock), but it continues to burn cash at a zombie-like pace.
Tesla’s free cash flow (FCF) has been positive in just one year out of the last 14 years.
Since 2014, Tesla has burned $29.0 billion, excluding acquisitions. In the last three years alone, the company burned through $10.2 billion.
Figure 6: Tesla’s Free Cash Flow: 2014 – 2024
If Tesla could not sustain positive cash flows in the good times, I’m not sure how it ever will, considering the declines in market share, technological advantage and profits.
Reason #3: Technological Advantages Will Last Forever
No More Range Advantage. Tesla once boasted a large range advantage in the EV market, particularly at a time when consumers weren’t sure about the feasibility of EVs as replacement to ICE. That advantage has all but disappeared.
In 2014, Tesla owned the #1 and #2 longest-range EVs in the world and had a big lead of the next closest competitor. Specifically, at #1, the 85 kW-hr version of Model S reported a range of 265 miles, and, at #2, the 60 kW-hr version of Model S reported a range of 208 miles. The next closest vehicle, the BYD e6, reported a range of just 127 miles. With such a big lead over the competition, I can understand why investors might believe Tesla would retain its range advantage for the foreseeable future.
Fast-forward to 2025, and the range discussion looks a lot different. Car And Driver tested many popular EVs to determine a real-world range, rather than the range reported in marketing materials. Through this testing, Car and Driver found that four vehicles have longer “real-world” ranges than Tesla’s Model S. See Figure 7.
Figure 7: Highest Range EV Models in 2025 – Top 5
As you move lower down the list, the differences in range get less significant. For example, the Rivian R1T, which ranked 14th in Car and Driver’s testing, had a range of 280 miles, or just 40 miles less than Tesla’s #5-ranked Model S. In other words, Tesla has fallen behind in range and more firms are catching up to it.
Lagging Behind in Charging Speed. The time it takes to charge an EV is one of the main pain points that make consumers hesitant to purchase an EV. After all, it only takes a few minutes to put gas in a vehicle and be on your way. If EV charging takes 30+ minutes, it’s not be as an attractive alternative.
China’s BYD, the world’s largest EV maker in 2024, recently unveiled new chargers that could erase this concern altogether. BYD’s new 1,000 kW chargers can add almost 250 miles of range to an EV in just 5 minutes.
Tesla’s most powerful charging stations can add 200 miles of range in 15 minutes; so the new BYD charging stations are almost 4 times as fast and make charging time the same as filling up a regular gas car, maybe even faster. BYD aims to install 500 of these new chargers in April
Tesla is “planning” to roll out 500 kW chargers this year, though these charging stations appear to be just half as powerful as BYD’s new chargers.
Autonomous Driving Technology Is Stagnating. Tesla bulls have long maintained the company’s autonomous driving technology, Full Self Driving (FSD), will be best-in-class. The company has marketed that its FSD technology will allow all its vehicles to drive autonomously and create a massive robo-taxi ride hailing service that would instantly convert Tesla vehicles into money-making machines that work while their owners sleep. However, real world data would show that Tesla’s latest FSD, v13, is nowhere close to being fully autonomous. ~3 months after v13 was released, data shows the system can go, on average, 495 miles between critical disengagement. Previously, Tesla has stated that it needs to achieve 700,000 miles between critical disengagement to be safer than humans.
While Tesla is struggling to improve its FSD technology, Waymo, a robotaxi company that is now a subsidiary of Alphabet (GOOGL), already has 700+ fully autonomous cars on the road that provide 200,000 rides a week. And, these cars are not just fully autonomous for arguments sake, they actually have no humans behind the wheel.
According to Guidehouse Insights, Tesla ranks dead last out of the top 20 competitors in autonomous driving technology. The top three companies in the autonomous driving technology race are Waymo, Baidu, and Mobileye. The top 10 are below:
- Waymo
- Baidu
- Mobileye
- Nvidia
- Aurora
- Plus
- WeRide
- Zoox
- Gatik
- Cruise
As noted in Electrek, Elon Musk has promised unsupervised FSD “by the end of the year” in each of the last six years. Tesla keeps promising, but not delivering.
Robotaxis Must Pass Many Legal Hurdles. Even if the technology was more competitive, Tesla must secure a series of approvals from several state regulators to put robotaxis on the road. The company has received only the first approval (of many required) for operation in California. Given the issues detailed in the sections before and after this one, I do not think Tesla will have much success in securing the approvals needed to put its robotaxis, in their current state, on the road.
Safety Issues Present Huge Risk to the Stock. The National Highway Traffic Safety Administration (NHTSA) continues investigations into Tesla’s FSD and autopilot features. Most recently, NHTSA opened a safety probe for up to 2.6 million Tesla vehicles in January 2025. Since 2019, Tesla’s automated driving features have been linked to over 700 hundred crashes and at least 19 deaths. Tesla’s largest ever recall happened at the end of 2023, where the company was forced to recall 2 million vehicles to fix the software related to its Autosteer driver assist feature.
If the NHTSA discovers defects in Autopilot or FSD, Tesla could be on the hook to fund the expenses of a massive recall not to mention the liabilities related to the deaths and injuries from the crashes. Furthermore, any design flaws discovered in the investigation could leave Tesla open to more class action litigation.
Competitors Are Better Equipped to Improve Technology. As Telsa’s vehicles fall behind in range, charging speed, and autonomous driving, incumbent auto manufacturers continue to outspend the company in research and development (R&D). Per Figure 8, Tesla’s R&D spend in 2024 ranks far behind the likes of Ford (F), Toyota (TM), General Motors (GM), Mercedes-Benz, and Volkswagen.
As has long been the case and a key point in my bear thesis on Tesla, one of the most overlooked advantages for incumbent manufacturers is their profit-generating legacy operations that can fund larger R&D budgets.
While Tesla must continue to simultaneously develop new technology and add production capacity from scratch, incumbents can leverage cash flows from existing profitable operations to build new technologies and leverage existing distribution advantages to sell more EVs, if and when the market is ready.
Figure 8: Tesla’s R&D Spend Vs. Major Competitors in 2024
How could one expect Tesla to regain its first-mover advantages when it is falling behind and its R&D budget is so much lower than its competition?
And, given the major drop in profits and consistently negative free cash flow, I see no reason to believe Tesla will ever have competitive R&D budgets.
Reason #4: Tesla Is Not a Car Company, Should Be Valued based on Other Businesses
Other Businesses Aren’t Material. Bulls have long argued that Tesla is not just an automaker, but it’s a technology company with multiple verticals including insurance, solar power, space exploration (Mars anyone?), full self-driving, robotaxis, and, yes, robots. I’ve long refuted these pipe dreams. Regardless of the promises of developing multiple non-auto businesses, Tesla’s revenues remain heavily concentrated in automobiles.
After a steep decline in 2024, auto revenue was 79% of Tesla’s total revenue. In 2023, auto revenue was 85% of total revenue. Energy generation and storage accounted for just 10% of total revenue in 2024. The rest of the company’s revenue comes from the “services and other” segment, which includes insurance, non-warranty maintenance and collision, sales of used vehicles, and retail merchandise sales.
Figure 9: Tesla’s Segment Revenues as a Percentage of Total Revenue in 2024
Energy Generation and Storage…
Solar Power Segment Is Still Weak. Tesla’s energy generation and storage segment includes the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives.
As of the first half of 2024, 8 of the top 10, including all of the top 5, solar panel manufacturers were Chinese companies. I don’t think Tesla has any competitive advantages in the solar power space. It is hard to believe that Tesla will be able to take material market share from the dominant Chinese manufacturers.
Services and Other
Services and other revenue consist of sales of used vehicles, non-warranty maintenance services and collision, part sales, paid supercharging, insurance services revenue and retail merchandise sales.
Insurance Business Is a Nothing Burger. Elon Musk once claimed that the insurance could be 30-40% of the value of Telsa’s car business. Today, it’s so small its bundled within the services and other segment. In 2024, Tesla’s insurance operations generated upward of $1 billion (~1% of revenue) in premiums while accumulated at least $69 million in underwriting losses.
Robots Are Way Behind the Competition. At its “We, Robot” event in October 2024, the company showcased its autonomous Optimus robots walking around, dancing, mixing drinks, and talking. Sounds impressive. However, the robots were actually controlled remotely by humans, which does not seem so groundbreaking after all.
Tesla’s remote-controlled robots are multiple generations behind the industry leaders, and I do not see reason to expect that to change anytime soon.
For example, Boston Dynamics’ humanoid Atlas robot is already fully autonomous and requires no remote controls or pre scripted movements. This video from October 2024 shows Atlas successfully moving engine covers between supplier containers and a mobile sequencing dolly after being provided with only a “list of bin locations to move parts between”. Atlas showcases dynamic movements as well as fully autonomous operational capabilities.
Boston Dynamics’ Spot robot can fully navigate its way through factory floors, construction sites, research labs, etc. while also monitoring and collecting data. Spot can do all the mentioned functions either by remote control or autonomously following a predefined route.
Boston Dynamics is one of many companies that are way ahead of Tesla in the development of robots.
Cybertruck Is Losing Money. Tesla’s Cybertruck hit the market with lots of fanfare. Mr. Musk was able to secure more than a million reservations to buy the vehicle before one ever hit the road. It quickly became the best-selling electric pickup truck in the U.S. However, this demand quickly stalled when consumers actually saw what they were getting. Now, Tesla is struggling to sell its inventory.
U.S. Cybertruck sales fell over 32% between January and February 2025. Cox Automotive estimates that Tesla sold around half the number of Cybertrucks in February 2025 than its best ever month, September 2024. Estimates put Tesla’s inventory of new Cybertrucks at ~2,300 in early April. One would expect with over one million reservations, Tesla would be delivering Cybertrucks as fast as they could build them, not holding increasing numbers in inventory.
In the latest hit to the pent-up demand bull thesis, Tesla is reportedly trying to boost sales by converting its more expensive foundation series trucks to the base model (which costs $20,000 less), by having the special badging buffed off.
Early on, Mr. Musk said the Cybertruck might generate positive cash flow within a few years, once volumes reached certain levels. It appears those volumes have not and will not ever be met.
Other Businesses Are More Liabilities Than Assets. Musk has his hand in many pies outside of Tesla, and some of them appear to be very promising businesses. However, it is important to note that these businesses are not part of Tesla, and they do not contribute to the profits or losses of Tesla.
Many would argue that these other businesses, such as Neuralink, SpaceX, Starlink, xAI, Boring, DOGE, and more do more to hurt Tesla because they take Mr. Musk’s valuable attention away from Tesla. Or worse, they compete directly with Tesla not just for Musk’s attention but also the attention of key Tesla personnel. For example, in June of 2024, Tesla shareholders sued Musk for a breach of fiduciary duties based on comments he made about poaching Tesla employees for the xAI and using Tesla resources for his private companies.
The lawsuit remains unresolved. However, it stands as one of many examples where Musk’s interests are not aligned with those of Tesla shareholders. No matter how talented a CEO might be, if he or she engages in self-dealing on the regular at the expense of the company he/she runs, I raise a big red flag.
Reason #5: Tesla’s Stock Valuation Makes Sense
Despite the challenges above, Tesla’s stock is still priced for extraordinary profit growth, while incumbents are priced for the exact opposite.
While Tesla’s market cap is more than double the combined market cap of incumbents, the company’s economic book value (EBV), or no growth value, is -$11 billion. Meanwhile, each of the other legacy automakers has an EBV that is higher than its current market cap. In other words, the price-to-economic book value (PEBV) ratio of Tesla’s competitors ranges from 0.2 to 0.6. In each of these instances, a below 1.0 PEBV ratio implies the market expects profits for these legacy automakers to permanently decline. See Figure 10.
Figure 10: Tesla’s Valuation Compared to Incumbent Peers*: TTM
*As of market close on April 15, 2025.
Current Valuation Implies Tesla Will Own 31%+ of the Global EV Market
Tesla selling 1.8 million cars in 2024 is no small feat. However, that number is minuscule compared to the 22 million to 38 million vehicles [depending on average selling price (ASP) assumptions] that Tesla must sell to justify its very expensive stock price. For reference, Toyota, the world’s largest overall (EVs and everything) automaker for the fifth straight year, sold 10.8 million vehicles in 2024. Does anyone believe, after what I covered above, that Tesla will ever sell twice as many cars as Toyota?
To provide the details behind this implied vehicle sales analysis, I show my reverse discounted cash flow (DCF) model’s output so investors can decide for themselves whether or not Tesla’s valuation is too high.
Quantifying The Expectations in the Current Share Price. To justify ~$250/share, my model shows Tesla would need to:
- immediately achieve a 15% net operating profit after-tax (NOPAT) margin (1.5x Toyota’s TTM margin, compared to Tesla’s 2024 margin of 5%) and
- grow revenue by 28% compounded annually through 2035.
In this scenario, Tesla would generate $1.4 trillion in revenue in 2035, which is 1.3x the combined TTM revenues of Toyota, General Motors, Nissan (NSANY), Ford, Honda Motor Corp (HMC), and Stellantis (STLA).
In this scenario, Tesla would generate $204.5 billion in net operating profit after-tax (NOPAT) in 2035. At $204.5 billion, Tesla’s NOPAT would be 3.1x all incumbent peers’ combined TTM NOPAT and 1.9x Apple’s (AAPL) TTM NOPAT, which, at $109 billion, is the highest of all companies my firm covers. Additionally, Tesla’s ROIC would rise to 331% (nearly 4x Apple’s TTM ROIC of 81%) in 2035.
If I assume automotive revenue remains 79% of total revenue as in 2024, then Tesla would generate $1.1 trillion in automotive revenue in 2035 in this scenario. This revenue figure implies Tesla will sell the following number of vehicles based on these ASP levels:
- 22.4 million vehicles – ASP of $50k (equal to average new-vehicle price in Dec 2024)
- 25.9 million vehicles – Tesla’s 2024 ASP of $43k
- 38.2 million vehicles – ASP of $29k (equal to Toyota in fiscal 2024)
Next, I can analyze implied market share of such sales volume based on the estimated number of new EV sales in 2035, according to data compiled by Autovista24.
In this scenario, the vehicle sales noted above would represent the following implied market share in 2035:
- 31% for 22.4 million vehicles
- 36% for 25.9 million vehicles
- 53% for 38.2 million vehicles
The likelihood of reaching any of the above-mentioned market share scenarios is extremely unlikely in such a competitive industry. For reference Toyota, the world’s largest automaker, held an 11% share of the global automobile market in 2024.
Figure 11: Tesla’s Implied Vehicle Sales in 2035 to Justify $252/Share
TSLA Has 65%+ Downside Even If the Company is the World’s Largest Automaker
If I instead assume, Tesla’s:
- NOPAT margin immediately improves to 10% (equal to Toyota’s TTM NOPAT margin),
- revenue grows at consensus estimates in 2025 (11%) and 2026 (19%), and
- revenue grows 22% each year thereafter from 2027 to 2035, then
my model shows the stock would be worth just $87/share today – 65% downside to the current price. In this scenario, Tesla’s NOPAT would still grow to $72.8 billion, which is 16x Tesla’s 2024 NOPAT.
At its current ASP, assuming automotive revenue remains 79% of revenue, this scenario implies Tesla will sell 13.8 million vehicles in 2035 at an ASP of $43k, or 19% of the projected global EV market in 2035. 13.8 million vehicles is more nearly 30% higher than the 10.8 million vehicles sold by Toyota, the world’s largest overall automaker, in 2024.
TSLA Has 81%+ Even If Tesla Grows Sales Volume by Over 4x
If I estimate more reasonable (but still very optimistic) market share achievements for Tesla, the stock is worth just $49/share. Here’s the math, assuming Tesla’s:
- NOPAT margin immediately improves to 10%,
- revenue grows at consensus estimates in 2025 (11%) and 2026 (19%), and
- revenue grows 14% compounded annually from 2027 to 2035, then
my model shows the stock would be worth just $49/share today – an 81% downside to the current price.
In this scenario, assuming automotive revenue remains 79% of revenue, Tesla would sell 7.5 million cars (10% of the projected EV market in 2035) in 2035 at an ASP of $43k. Given the required expansion of plant/manufacturing capabilities and formidable competition, I think Tesla will be lucky to sustain a margin as high as 10% from 2025-2035. If Tesla fails to meet these expectations, then the stock is worth less than $49/share.
Figure 12 compares the firm’s historical NOPAT to the NOPAT implied in the above scenarios to illustrate just how high the expectations baked into Tesla’s stock price remain. For additional context, I show Apple’s, Toyota’s, and the combined incumbent peers’ TTM NOPAT.
Figure 12: Tesla’s Historical and Implied NOPAT: DCF Valuation Scenarios
Each of the above scenarios assume Tesla grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely but allows me to create best-case scenarios that demonstrate the high level of expectations embedded in the current valuation. For reference, Tesla’s invested capital has grown 29% compounded annually since 2014. If I assume Tesla’s invested capital increases at a similar rate in the DCF scenarios above, the downside risk is even larger.
Disclosure: David Trainer, Kyle Guske II, and Hakan Salt receive no compensation to write about any specific stock, sector, style, or theme.
Incumbent peers under coverage include Toyota (TM), General Motors (GM), Ford (F), Stellantis (STLA), Honda (HMC), and Nissan (NSANY).
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