With stagnating vehicle sales, losing market share, getting passed by a Chinese competitor (BYD), as other competitors catch up, Tesla is now in the same position as Ford and GM, that trade at P/E ratios between the single digits and maybe 15.
P/E ratios currently:
Ford: 11.1
GM: 5.5
Stellantis: 2.7
Honda: 7.3
Toyota: 9.6
Tesla: 103.2
These legacy automakers with their low P/E ratios are not good deals. They’re not undervalued. That’s where automaker stocks are – and for a good reason.
Tesla is still hyping a lot of stuff that it’s going to blow your socks off with, like it used to hype the Cybertruck, the Semi, and all the other things. The biggest two hype-and-hoopla elements currently are AI and a robotaxi that doesn’t exist yet.
Tesla… shook up the legacy automakers, forced the entire industry to invest huge amounts in developing and manufacturing EVs and batteries for EVs, many of them in the US, which has entailed a boom in factory construction in the US, etc. etc. So this was all good and very hard to do, and Tesla managed to do it.
But now Tesla is just another mid-sized automaker with stagnating vehicle sales amid EV competitors that are eating its lunch. So it should trade like an automaker.
If Tesla share price does suffer does Musk political corresponding suffer too?
Some may conclude such arguments are based in Tesla/Mush hate.
Couldn’t it be that there are people who are unwilling to see what’s happening or accept what’s happening because it goes against what they believed in and/or goes against what’s helpful for them financially.
I disagree with this. It should trade like any other automaker if it’s the same as any other automaker. It’s not. (I also don’t believe it deserves its astronomically high multiple either, but that’s not the point.)
What is Tesla’s margin per car? Is it the same as any other automaker? What are its prospects going forward? The same as Ford?
Even if I think the Robotaxi is overhyped (I do) and the sales are leveling off (they are) and competition is ramping up (it is) Tesla still has plausible initiatives that make it more than “another automaker.”
What that multiple number is is somewhere between the Bear case and the TrueBeliever® case, and I don’t know how far towards each, but saying “It’s Ford” is just as silly.
Tesla has some very good things going for it, and some really cool things coming. I would think that its overall PE value would be some what higher than legacy automakers.
Looking at the SP 500 P/E value, it looks like high end P/E values for the SP 500 are around 30 or so (Tossing out the anomaly in 2008). If you put Tesla at the high end of that, a P/E of 40 or even 50 might be a fair price. The storage business is already being monetized and the stock is in itself a call option on AI.
Things overshoot. I I thinking of throwing a bid out around 150.
a guy is walking home late at night, when he sees a drunk looking in the grass under a street lamp.
The guy asks what the drunk’s doing.
“Looking for my keys,” the drunk says.
The guy takes pity on the drunk and decides to help him look for his keys. They search the grass for about 20 minutes, and finally the guy tells the drunk that he doesn’t think his keys are there.
“Oh, I know,” says the drunk. “In fact, I’m pretty sure I lost my keys about 100 yards up the road that way.”
“What?! Then why are we searching here?”
“Because the light is better here!”
–
People don’t know how to value $Trillions of TAM products like Energy, Robotaxi or Optimus. Therefore they discuss Tesla by comparing with things they understand like other automakers such as GM and Ford.
I believe that the energy business is mature enough to make a guess about valuation. With the real money being in arbitrage. The ability to buy electricity at a point in time and sell it in a different point in time. It is obviously no where near mature, but at least we dan see how it might be monetized.
With Robotaxi and Optimus, there are no functioning Tesla businesses at all. It is pure speculation that they will make money or that they will gain an insurmountable advantage as first mover.
Just as the auto business is no longer the absolute gorilla in the EV market place, there is no guarantee that Tesla will dominate the self driving and humanoid robot sectors long enough to become Amazon or Google. They might, it looks like they have the field to themselves, but it is not written in stone, or even ink for that matter.
For Tesla to grow into a P/E of 10 as a mature business it will need to see its profits rise by 10 x. How long will that take? 1 year, 5 years, 10 years?
If you choose 5 years, and you believe the company will be mature at that time, you are holding dead money at the current P/E. If you think it will still be growing, you are holding dead money plus calls on future growth that while possible, maybe even probable, there are no current incomes from the businesses that are expected to fuel that growth (Robotaxi and Optimus)
Worse, Elon is the source of growth at Tesla. Just like Steve Jobs was at Apple. Elon is no longer a young man and is being distracted by other pursuits. 5 years from now Musk will be 58. Working the way he does will take a toll.
Cheers
Qazulight (Sold my position at 350 ish on the way up)
AI, rockets to Mars, robots, and world girding computers were specially loved in 2026, but only in Jules Verne novels. The amazing part is that many of his pipe dreams came true.
Similar statements were made for Apple ($10 Chinese knock offs coming) , Google (trees don’t grow to the sky), Amazon (high PE, low profit) when these companies were in $500B market cap range.
Here we are with Tesla.: Flying cars, Semis and Robotaxis coming in 2025. Buckle up. Lithium factory and 5380 cells now scaling.
