Tesla’s Humongous Market Cap Is Merely Greed & Fantasy

Final Up to date on: fifteenth July 2025, 02:02 am

Look, I’ve acquired some good mates who’re Tesla [NASDAQ:TSLA] shareholders. They’re actually good individuals. A few them have had shares within the firm for properly over a decade. A few others joined the social gathering extra lately, however nonetheless years in the past. I held Tesla shares for years, however as I noticed increasingly warning indicators, I acquired out of the inventory.

Naturally, as an open minded individual, I do know that there’s loads of chance Tesla’s inventory worth is far larger in a decade than it’s now. Maybe the corporate finally ends up being disruptive in AI, robots, robotaxis, or different fields. In that case, these mates shall be joyful campers in the event that they proceed to consider within the firm and maintain onto the inventory. For that matter, consider all of the Tesla employees working their butts off who will have the ability to reap the rewards of their efforts.

However these are all factors which can be far-off from the subject of this text, an article I’ve been pondering to put in writing for months. In reality, it was almost definitely these individuals I do know who not directly blocked me from writing this text. I don’t need to criticize them in any respect — they’re nice, sensible individuals — and I don’t need to harm their emotions. And, in fact, they have to not agree with my viewpoint. Nonetheless, because the Tesla story performs out, it’s very laborious to conclude that anybody owns shares within the firm for causes aside from greed or fantasy.

As we’ve identified for a very long time, Tesla has been exhibiting indicators of weakening client demand. Elon Musk claimed that the corporate would have gross sales progress within the midst of that, however then the corporate noticed gross sales decline. (Not signal when your CEO is making incorrect claims and forecasts.) The market cap of the corporate is totally insane in comparison with different automakers. A giant a part of that for years was that the corporate was purported to be rising 50% a yr. It was for some time, however now it’s declining, so how can a market cap to date out of the ballpark make sense?

Tesla’s authentic thesis and mission was easy. Make nice electrical vehicles, and drive down the prices of those electrical vehicles as gross sales quantity goes up. Fundamental. Easy. Clear. That’s what it did. Tesla pushed the auto business — within the US not less than — into the electrical automotive period. However with gross sales now dropping, the market cap doesn’t make any sense with out some type of separate miracle breakthrough. Earlier than shifting on to that, although, it’s in all probability vital to emphasise {that a} refreshed Tesla Mannequin Y — one of the best promoting automobile on the earth — was purported to revive gross sales progress. Manufacturing strains in three factories the world over have been revamped in Q1 to modify to manufacturing of the brand new Mannequin Y. In Q2, presumably, we must always have seen the outcomes of that. However gross sales have been nonetheless down yr over yr! Some individuals I do know don’t consider within the different sides of Tesla’s enterprise, however nonetheless consider its automobile gross sales will develop rather a lot. How? Based mostly on what proof? It’s laborious to see how that’s purported to occur when the Cybertruck has been a complete flop gross sales sensible and the brand new Mannequin Y is already not impressing.

Tesla’s market cap is $993 billion. Ford’s market cap is $47 billion, and GM’s is $51 billion. Ford and GM promote much more vehicles and vans than Tesla. Even Toyota’s market cap is simply $274 billion, and BYD’s is $139 billion. In the event you suppose the way forward for the auto market is electrical autos, BYD is clearly profitable there.

So, why is Tesla’s market cap so freakin’ excessive? Sure, Tesla followers shareholders will discuss robotaxis and robots and AI, and maybe almost limitless future income. Nonetheless, I believe it boils down to 2 issues:

1. Greed. Lots of people have made some huge cash on Tesla inventory, and so they need that to proceed ceaselessly. The anticipate the inventory to soar sooner or later as a result of it soared prior to now, and that may be nice for his or her financial institution accounts. They don’t need to promote inventory and must pay taxes on it. In different phrases, they need to be wealthy, and richer and richer. Human nature at play. You seldom discover a large Tesla fan today who isn’t a Tesla shareholder. Funds and desires are tied up within the inventory, and as I simply stated, the inventory soared prior to now regardless of haters and critics, so logic tells us it ought to soar sooner or later once more within the face of haters and critics. (I do know — that’s not nice logic objectively, however that may be a large a part of the pondering.) Folks desire a magic resolution to make them wealthy. TSLA has been that. So, the pondering is that it’s going to proceed to be that. By no means thoughts stagnant or declining gross sales. By no means thoughts failed robotaxi targets. By no means thoughts hovering AI prices. By no means thoughts a totally flopping Cybertruck, the Semi being years not on time, a non-existent Roadster 2.0 almost a decade after it was “revealed.” The inventory has to rise, as a result of it simply has to.
2. Fantasy. As I famous larger up, Tesla’s authentic mission and marketing strategy was easy and clear, and there was an enormous market alternative left there. Now, Tesla’s valuation relies on fantastical desires of robotaxis, humanoid robots, and AI conquering the world. There’s an concept amongst Tesla followers shareholders that Tesla is in some way finest outfitted to steer all of those large rising markets. Previous failures are disregarded, a decade of missed targets are dropped, arguments about rather more aggressive Chinese language corporations and even large US tech corporations are written off. Perhaps they’re proper, however in my eyes, it’s fantasy. It’s a dream of one thing Elon Musk — a gifted marketer — has bought them/us for years. It’s the assumption that simply because Elon stated it, it should be true — regardless of so many failed tasks and merchandise, and so many shockingly mistaken and absurd statements on a big number of issues. Tesla’s tech is nice, superb, however the concept that the corporate’s going to reside as much as its almost $1 trillion market cap appears to be pure fantasy to me. I really like Marvel motion pictures, I really like Star Wars. I get the enchantment of a dreamy futuristic utopia. However I don’t see Tesla attaining its objectives, quarter after quarter and yr after yr. I see lots of hype and funky Hollywood set dream worlds — actually. Tesla has been promoting fantasy, and buyers have been consuming it up.

Reportedly, BYD has extra R&D engineers than Tesla has complete employees. If considered one of these two corporations was going to steer us right into a futuristic world, is it extra prone to be Tesla — led by a extremely distracted individual concerned in all types of various issues and in addition the daddy to not less than 13 youngsters — or is it extra prone to be BYD? Ignoring BYD, you’ve acquired Waymo (Google/Alphabet) rolling out precise business robotaxis in increasingly cities, you’ve acquired Volkswagen Group and different automakers seeing sturdy EV progress, you’ve acquired a number of different Chinese language EV corporations seeing fast progress. Tesla is wanting increasingly like a bloated, complacent firm that’s dwelling on its legacy and looking for excuses for why it’s not rising.

Anyway, the corporate’s market cap is $993 billion and it’s inventory worth is nearly $317, and possibly that’s not going to drop a lot so long as greed and fantasy rule the day. Nonetheless, if the corporate does proceed to see gross sales declines after which runs into monetary issues, properly, one has to marvel what is going to occur….

Full disclosure: I personal shares in BYD. I don’t present funding recommendation of any form — severely. Seek the advice of an funding skilled earlier than making any vital funding selections.

Replace/addendum: Underneath one other article, a reader wrote the next equally themed remark:

Tesla Market cap: 1 Friking Trillion {dollars}, ($993 billion at time of writing)

BYD Market cap: 127 billion, about 1/eighth.

TSLA buyers, IMHO, are sitting on a bubble and bubbles ultimately pop. I perceive that Tesla isn’t just a automotive firm, or so they are saying, however is the remainder of the corporate price 7 BYDs?

…and BYD makes their very own batteries in PRODUCTION, not a check facility.

Tesla 20 million vehicles a yr by 2030 now appears a bit far fetched, to place it kindly.

DOJO is MIA and presumed useless.
Cyber Truck is a catastrophe,
The Semi is 5 years not on time.
The humanoid is a protracted shot in a crowded discipline.
The Photo voltaic Roof/Cousins Bailout didn’t carry out as promised.
Storage makes use of third social gathering cells, and lately FinDreams. *

Folks consider as a result of they need to consider, even over proof.

* Megapacks use largely CATL cells, and now FinDreams has develop into a provider. FinDrems is a BYD subsidiary.