> later this year
One can hope that reality intrudes before the bubble gets even more dangerously inflated, but how many years has Tesla had a ridiculous P/E ratio. Even after growth stagnated and market leadership was lost in Asia and Europe. Number still goes up.
I hate Musk, and I'm not going to justify Tesla's crazy stock valuation, but consider the following:
Outside of China, Tesla's probably the only company that can compete on battery prices. I don't know how accurate it was, but a news report was comparing the cost the manufacturer's pay to build the battery. Chinese companies were around $6000. Tesla was at $7000. Everyone else was around $12-15K. This is why a number of companies have exited the EV market - they just can't compete. This is why Ford lost money on every EV, despite the high MSRP. This is why the Ford CEO says "We're f####d" when he saw Chinese cars.
The only hope regular Japanese/American/European auto manufacturers have is if EVs do not gain substantial market share.
If the future is EVs, Tesla is the only non-Chinese company that has a chance.
It's depressing.
This assumes it is literally impossible for anyone else to reduce their battery costs to a level which makes them competitive with Tesla in an environment when battery prices are falling rapidly and the tech continues to evolve (and Tesla's EVs are not even unusually cheap or experimental in their battery supply chains)
That sounds less likely than the bull case Tesla is trying to make on "we're a robotics company now" or "one day all cars will be autonomous taxis controlled by us".
Exactly. Looking at competition from China, but also the West, I don't see Tesla having a moat in EVs, in robots, or even in batteries in the medium term (compare e.g. [1]).
How can they produce the extraordinary growth and excess profits that would justify their valuation?
Fundamentals will reassert themselves sooner or later, but as we see it can take a long time.
[1] https://electrek.co/2026/05/07/tesla-4680-battery-cell-perfo...
Their per-car profit margin is the moat. Which non-Chinese company can compete?
Tesla's moat is bipartisan support for 100%+ tariffs on Chinese EVs in the United States.
How long that lasts remains to be seen. American consumers living close to either border are going to be able to see Chinese EVs themselves.
Tesla has vertical integration with their batteries, which is why they can make them cheaply.
> This assumes it is literally impossible for anyone else to reduce their battery costs to a level which makes them competitive with Tesla in an environment when battery prices are falling rapidly and the tech continues to evolve
No - it just means they can't do it as fast as the Chinese. The Chinese have been investing in battery technology for 10-15 years longer than most auto manufacturers. (And their labor is cheaper).
It's not depressing because it's not true. Tesla isn't investing in battery technology. Tesla also isn't developing new models at the same rate as VW, BMW, Mercedes, Hyundai Kia, etc.
> Tesla also isn't developing new models at the same rate as VW, BMW, Mercedes, Hyundai Kia, etc.
BMW and Mercedes are not in the same class. They can afford to get away by charging a premium.
VW: I'd love to know how much it costs them to make/buy a battery, and their profit margins on EVs. Ditto Hyundai and Kia.
(Edit: See https://carbuzz.com/ev-profit-margins/ for VW).
Look at all the companies scaling back on EVs or exiting them altogether (e.g. Honda). It's not that Honda can't make EVs. It's that they can't compete on profit with Tesla + Chinese EVs. It's likely why Hyundai is dropping the Kona and the Ioniq 6.
Nissan dropped the Ariya, I believe. The Bolt is also out. The general shift is for more luxury EVs (BMW/Mercedes), and not EVs for the average Joe.
See also https://www.bain.com/insights/electric-vehicles-profit-puzzl...
Giving up on EVs is crazy though, it seals their fate and guarantees the death of the company in exchange for a few more years of profit. The EV takeover will not stop, as of roughly this year they’re going to be cheaper than equivalent ice cars, it’s going to accelerate quickly. It’s suicide in slow motion
This. It doesn't really look like Tesla is doing anything rn but selling old cars. They don't appear to be the future any more.
It doesn't look like they are developing self-driving?
What other company is developing self-driving at a level of sophistication as Tesla that you can actually buy in a consumer vehicle?
I don't think self-driving is remotely close to working at any scale. I also don't think it's the killer-app. Right now, cheap electrics and moreso cheap hybrids are the killer.
I don’t know if you’ve tried Tesla FSD, but I use it almost every day. It is not perfect, but it is amazing.
Waymo, of course, is everywhere here in the Bay Area. The tech works at scale today.
it works in the west. In specific areas and under specific conditions.
Driving data is cultural data.
This is one of the many blind spots from commenters, when they think about their own experience and generalize it to the larger global market.
The companies that have real boards would never take the risk.
Once Elon’s air cover is blown, the government is going the dissect Tesla. Once someone gets the injunction to stop deletion of crash data and allow for inspection, they are cooked.
I suppose, if you live in a jurisdiction/insurance regime where it's usable.
But people like buying new cars, new models, new designs. Not just features - those are just options.
Its interesting, practically all car makers seem to have factories in China, why cant they compete?
If anything though, this shows that at least tech driven hype bubbles can stay around way longer than we think if we are looking at it from a product POV.
This just means short sellers might have a hard time sinking a hype-category stock with reasoned research because the irrationality keeps it afloat.
"Markets can remain irrational longer than you can remain solvent." - John Maynard Keynes
Sometimes I wonder if Keynes would under the current conditions see fit to differentiate "merely irrational" from "absolutely insane".