> I really don't understand those investors and how they price a struggling company so highly.
Struggling, not so much: '24/'25 revenue of just under $100B, with Q3'25 record profitability and deliveries yielding $1.5B net income. Strong liquidity and a current ratio of about 2, boosting short-term financial stability. Solid cash reserves and relatively low debt ratio.
High stock price: far exceeds that of traditional auto makers even though Tesla's revenue is significantly lower. High valuation reflects investor expectations of growth and future tech upside. Exuberant? Probably. OTOH, Tesla has delivered better ROI for investors than the other automakers.
Tesla is probably the only EV maker with declining sales for the last two years. Quite a feat in a booming market, and remarkable considering that the stock already has a few orders of magnitude of growth priced in.
I really, really doubt FSD is the limiter of European sales. It's pricing and competition. The US car market is laughably uncompetitive, with most manufacturers opting to make luxury landboats. It's easy to compete when all your competitors refuse to introduce an EV under, like, 50 grand.
Absolutely. I know a couple of their early adopters in the EU and they were ashamed to drive their cars once that mess started. They've all since sold them (at massive losses).
EVs are in the Cambrian Explosion state in China right now. There are dozens of companies fiercely competing on price and features.
The two most popular EVs in China are the Wuling Mini and the Geely Xingyuan. The first one costs $4500 for the base model, and the second one is $9800. And you can get a very decent EV for $15k with plenty of options.
In 2-3 years, these $5k and $10k cars will only get better, and they'll just slaughter all the competition in markets outside the US and Europe. Especially once used cars start appearing at a fraction of the cost.
Traditional auto manufacturers are dead. Full stop. They just haven't realized it yet. Tesla had a chance to compete in this market with Model 2 but Musk decided to blow their lead on a completely stillborn and gimmick-filled robotaxi.
> Traditional auto manufacturers are dead. Full stop. They just haven't realized it yet. Tesla had a chance to compete in this market with Model 2 but Musk decided to blow their lead on a completely stillborn and gimmick-filled robotaxi.
Not sure whether you know, but Geely entered the automotive business in 1997 (founded in 1986).
The company has subsidiaries / joint ventures with automakers like Volvo, Polestar, Proton, Smart, Lotus, Renault, etc.
Lin Shufu, Geely’s founder and chairman bought just shy of 10% of Mercedes Benz in 2018, making him the second biggest individual shareholder in the German carmaker. The #1 spot is occupied by The Beijing Automotive Industry Holding Co. (BAIC), via its state-owned parent.
The declining sales is a concern. Was curious though so I looked it up and Tesla is currently selling more than Volkswagen, Ford, Rivian, Mercedes, and Toyota combined. Interesting.
The big dog is BYD though. Twice as many as 2nd place Tesla.
> Was curious though so I looked it up and Tesla is currently selling more than Volkswagen, Ford, Rivian, Mercedes, and Toyota combined. Interesting.
Indeed. Global 2024 data shows Tesla selling about 1.8M.
EV's only by that group of automakers comes to around 1.5M. Toyota and Ford are hybrid-first, not EV. VW is the only legacy automaker that comes near Tesla's EV scale. Mercedes prioritizes margin over volume. Rivian is capacity-limited.
Ah, but you missed the pivot, Tesla is no longer an EV maker, it's now a robotics company.
This fully explains the market valuation, of course! Never mind a swarm of retail investors driven by a news media that covered Musk as if he were Tony Stark for years, this market cap is fully based on solid fundamental analysis of expected future revenue.
The pivot to robotics came exactly when it became clear Tesla is a failed car company. The valuation is not based on solid fundamental analysis of expected future revenue in robotics, because the company is lead by someone who fundamentally does not understand robotics (as evidenced by his continued failure to deliver FSD and robo taxis, his wrongheaded and stubborn insistence on vision-only sensing, and his completely backwards belief that sensor fusion makes belief estimates worse). Tesla's track record on autonomy and robotics is they are responsible for the first autonomous robot death, they invented something they dub "mecha-hitler" due to how vile it is, and they promised a product capable of driving across the US 8 years ago but still can't deliver it today. So no, the valuation is not solid, it's vapor.
there was a rush to buy electric cars in the US for as long as the $7500 incentive was in place, so the Q3 2025 number if inflated; it's a pull forward effect.
Sales have been flat for 3 years and the delivery numbers in Europe are catastrophic
on a fully diluted basis, the market cap is above $1.6tn, so at a PE of 20, they'd have to generate something like $80bn in profit per year - hard to do in an industry that is as brutally competitive and low margin as passenger cars.
It's a myth that China heavily subsidises its EV industry. See e.g. this Bloomberg article titled "China Can't Cut EV Subsidies It Isn't Paying": https://archive.ph/5olix
> It's a myth that China heavily subsidises its EV industry.
We must live in parallel universes.
From 2009 to 2022, China offered national purchase subsidies for EV buyers. Peak subsidies: ¥40,000–60,000 per vehicle (~$6k–9k). Combined with local subsidies, some buyers paid 30–40% less than market cost. These subsidies were phased down and formally ended in 2022, but the industry had already reached massive scale.
This policy alone created the world’s largest EV market.
Even after direct subsidies ended, China continues to provide: EV purchase tax exemptions (10% tax waived), extended through 2027.
China provides EV manufacturers with: Cheap or free land, Low-interest or state-directed loans, Preferential electricity pricing, Grants for factories, R&D, and tooling, State-backed battery supply chains.
China strategically subsidized battery production: CATL, BYD, and others received R&D grants, Guaranteed demand, Export financing.
China now controls ~75% of global lithium refining and ~80% of battery cell manufacturing.
This dramatically lowers EV costs versus foreign competitors.
No value judgement about subsidizing, but to say it is a myth that China has and continues to subsidize their EV industry is false.
From the article that you added in addition to the statements below, I don't think BYD is succeeding only by subsidies. I'm solely stating that they're heavily subsidized. China has a strategy where most western nations don't appear to have one.
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It might be tempting when one has been asleep at the wheel to chalk up the rise of Chinese carmakers led by BYD to unfair subsidies, especially since leaders in Washington and Brussels have done so. No doubt, China is far from a free, fair and open market. The scale and pervasiveness of corporate subsidies at the federal and local level far exceed what other market-based economies offer.
> China has a strategy where most western nations don't appear to have one.
EVs were subsidised in the west, e.g. in California (#4 "country" by GDP), Norway, and US tax incentives - which have gone away after the Trump anti-renewables Bill of 2025. MRSPs for EVs were slashed after September 2025 due to the loss of this subsidy, and 2 months later Ford cancelled it's electric F-150 program.
Lately I've realized that "Chinese subsidies" are psychologically useful for people outside China to believe in, as cope to handwave away their own failing industries. Solar panels aren't really subsidized in China either.
China has a plan. It subsidizes technology that it sees as important. There's nothing wrong with that per se.
It'd like me saying that Barry Bonds only won the home run records because he used steroids. It wasn't entirely the steroids but I'm sure they certainly didn't hurt.
Contemporary western capitalism would disagree. You can never subsidize technology cleanly, only an organization of people working with that technology. We would usually denounce that as "picking winners" in our system.
Solar panels were explicitly targeted as a central planning directive and so manufacturers received many direct and indirect subsidies lol, these are well known facts. We should be subsidizing solar energy in the west too, as we've subsidized the oil and gas industries. To say China haven't subsidized solar is just not being real.
Currently Chinese are competitive because because developers work on burnout level intensity and workers have no life but factory around the clock.
Of course, the salaries and working conditions are going up in China while west is eroding worker rights as fast as we can. One the factories will come back here simply because we'll end up cheaper. Don't buy solar made by Xinjiang forced labor, by solar panels made by illegal immigrant prison labor!
there are around 140 EV companies in china competing very aggressively, they have excess capacity and are flooding the world market with cheap EVs, tough for Tesla to have a healthy margin in that environment
It’s also Americans realized how inconvenient electric cars are. I take a fair amount of road trips. I don’t have the time to wait 30 minutes minimum to charge. And if there’s a line it’s even worse. And in the winter the heater reduces the distance a ton. It just isn’t practical
They lost the massive US subsidy making EV’s appealing and are getting outcomes in China. Model E and Cybertruck have anemic and shrinking sales numbers etc.
Look at the free cash flow, and the situation looks maybe even worse. They're basically not worth much, if anything, from a free cash flow perspective.
With many traditional auto makers you at this point have to wonder if they are still going to be around in ten years. Companies like Ford, Toyota, BMW, etc. are not looking so great. They each have the dilemma of a market that's shrinking by double digit percentages year on year (ICE cars) while another market is growing by the same percentage (EVs).
The way Toyota and Ford deal with this is reducing investments in EVs while at the same time meeting increased EV demand by heavily leaning on other companies to make them some EVs. Ford is working with VW and Renault in Europe. Toyota is working with big Chinese manufacturers in China. So is Ford. BMW has some success with their recent EV models but it is taking big hits with demand for their overall products in markets like the US and China.
The US is clearly lagging the EU and China when it comes to electrification. It's not at all clear that Tesla is doing much better. Their market share has tanked in markets where EVs do well (China, EU). However, it does have its own tech and still plenty of money. Where other manufacturers are leaning on outside suppliers, Tesla is pushing their own technology hard for just about everything. Including self driving cars and batteries. It's a different strategy at least and one that isn't dependent on the ICE market doing well or Chinese manufacturers doing all the technical heavy lifting.
Tesla's stock price is based on investor expectations on some of those bets working out eventually. Even if a lot of that stuff seems like it is struggling right now, it's too early to write all of it off as failed. The 4680 is still expected to be a big part of the semi's Tesla is expected to finally start mass producing in 2026. Self driving tests are still continuing and might eventually add up to something that works well enough. And it's also a relavant format for LFP based chemistries.
The problem for all of them have right now (especially Tesla) is that the Chinese are moving full steam ahead and are doing really well on technology and growth currently. Including things like self driving and of course batteries. The 4680 seems like it is old news when solid state is happening and new chemistries other than NMC are starting to dominate. And FSD while impressive has plenty of competition from other vendors at this point. Rivian has its own version. So do several Chinese vendors. And of course Waymo is actually moving lots of passengers autonomously at this point.
> It has delivered a better ROI in the same way a ponzi scheme can deliver higher ROI.
It sounds like you're arguing that high valuation compared to fundamentals means buyers expect gains from future buyers paying more sounds like a Ponzi, but it isn't, it is speculation.
The comparison doesn't make sense. Some surface features of speculative markets can look Ponzi-like, but the underlying mechanics are very different.
A Ponzi-scheme returns to earlier participants directly from money contributed by later participants, with no real underlying business generating value. In a Ponzi-scheme, there is no real product (or it is irrelevant), the operator controls payouts, and investors are promised steady or guaranteed returns. None of that applies to Tesla stock.
Ponzi-schemes hide losses, smooth returns, collapse suddenly. Tesla stock is volatile, has had large drawdowns, and public reflects bad news, margin compression, demand shifts. Volatility is a sign of a market, not a Ponzi.
Mechanics is exactly the same - it's not Tesla revenues driving returns for investors, it's new investors putting their money into the stock at very high price.
If you believe Tesla is a Ponzi scheme then you also believe that the SEC is either knowingly keeping a Ponzi scheme going (and it is getting included in indexes) OR the SEC doesn’t know OR you are wrong.
The cars are higher quality and, more importantly, cheaper. US manufacturers can't make a cheap car to save their lives. The average age of cars on US roads is now 13 years, nobody can afford new cars.
There's a huge market opportunity here that all our manufacturers are missing, seemingly on purpose. BYD, and others, would absolutely sweep the competition.
> US manufacturers can't make a cheap car to save their lives.
They have a fiduciary duty to their shareholders to never make low-margin (read "cheap") cars. If someone is looking for a competitive automotive market, they won't find it in the US. The financial engineering is world-class though.
High quality? I’ve ridden in several. It’s an all plastic deal with a flimsy feel. The ride is horrible and from the reviews I e read the handling is terrible.
Handling on basically all EVs except maybe what porsche is doing is terrible. And American cars are all plastic and flimsy, and this includes Tesla. But they're also much more expensive.
> The Chinese EVs were particularly atrocious in their handling.
I disagree, again, pretty much all EVs handle like shit because they're very heavy and have a ton of torque. It doesn't help that most American cars are very large and particularly tall, which makes handling even worse. The reality is that a sedan will basically always handle better than an SUV, no matter what, even if it's a piece of shit sedan and a 100K Cadillac SUV. At least, on pavement.
> And sure some American cars are plastic and flimsy
No, like, all of them. You can't buy a Tesla with an interior that isn't mostly plastic. GM is still doing that bullshit where most of their components are binned from 20K shitboxes. There's SOME exceptions, but they're rare. And you'll find that what Xiaomi and some other's are doing is not plastic. They have leather interiors and stuff, this is all very easy to verify online. I'm not telling you anything that isn't trivial to find out.
The only logic anyone really needs is the US's refusal to approve BYD cars for sale in the US because they would destroy US auto manufacturers. Past that the much cheaper price for the same or higher quality level of vehicle.
What does a 2025 US car have over a BYD vehicle? Questionable parts availability?
> In a Ponzi-scheme, there is no real product (or it is irrelevant)
This part is the smell.
"It's not a car company, it's a AI/Robot/whatever company." The valuation is supposedly justified by a future product that perpetually fails to materialize.
It's obviously not a classical Ponzi scheme in the mechanical sense where payouts are controlled by a central party. It has major Ponzi vibes though, with new money continuing to reward old money even though the fundamentals and products haven't done anything to justify that continued influx - only the hype has.
Yeah, the target keeps moving. Earlier it was “it’s not a car company, it’s a battery company”. Then it was all about FSD and robotaxis. Now that that is not working out, it’s going to be a robot company.
The actual underlying product, the cars, don’t match the crazy valuation.
It also has the characteristics that most of the dupes are not pleased that the fraud was discovered to be a fraud. People swindled by Madoff swore that it was all legit. It's not easy to give up a belief one has held fervently for years.
Struggling, not so much: '24/'25 revenue of just under $100B, with Q3'25 record profitability and deliveries yielding $1.5B net income. Strong liquidity and a current ratio of about 2, boosting short-term financial stability. Solid cash reserves and relatively low debt ratio.
High stock price: far exceeds that of traditional auto makers even though Tesla's revenue is significantly lower. High valuation reflects investor expectations of growth and future tech upside. Exuberant? Probably. OTOH, Tesla has delivered better ROI for investors than the other automakers.