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Assessing Tesla (TSLA) Valuation After A Second Year Of Falling Deliveries And Intensifying EV Competition

Simply Wall St · 5d ago

Tesla’s latest delivery miss puts the focus back on its core car business

Tesla (TSLA) has released fourth quarter and full year 2025 delivery figures, confirming a second straight year of lower vehicle volumes as competition intensifies and previous U.S. tax incentives roll off.

See our latest analysis for Tesla.

Tesla’s Q4 delivery shortfall and loss of the global EV sales lead to BYD have come just as the share price sits at US$451.67, with a 1 year total shareholder return of 14.53% and a very large 3 year total shareholder return of 280.03%. This suggests long term holders have seen strong gains even as shorter term momentum has cooled.

If Tesla’s recent swings have you thinking about what else is moving in autos and electrification, it could be worth scanning auto manufacturers for other listed car makers to compare.

With Tesla now trading above its average analyst price target and its core EV business under pressure, the key question is whether you are looking at an overhyped AI and robotaxi story or a genuine mispricing of future growth.

Most Popular Narrative Narrative: 6.2% Overvalued

BlackGoat’s narrative puts Tesla’s fair value at US$425.37 versus the current US$451.67 share price, framing today’s market level as a premium to that estimate.

Tesla’s business model is shifting from one-time car sales to AI-powered software and service-based recurring revenue models.

To estimate Tesla’s intrinsic value over the next 10 years, we model:

  • Automotive Growth: Continued expansion of Model Y sales and new models, with projected annual revenue growth of 15%.
  • Robo-Taxi Monetization: Gradual deployment and scaling of robotaxis, contributing to high-margin, recurring revenue.
  • FSD Licensing: Tesla monetizing self-driving technology by licensing FSD to other automakers.
  • Energy Business Expansion: Increased Megapack and Powerwall adoption, adding further revenue stability.
  • Optimus & Robotics: Potential long-term revenue stream that revolutionizes labor-intensive industries.

If Tesla executes on these high-growth, high-margin opportunities, it could reach a multi-trillion-dollar valuation by 2035, making today’s sentiment-driven sell-off an attractive buying opportunity. You can view my valuation model and assumptions here: https://docs.google.com/spreadsheets/d/1VsYZE6TRMpp_j7ba9NDZCNqBBRGYYlJa1w7D9WTLvY0/edit?usp=sharing

Read the complete narrative.

Curious how a car maker gets treated like a future tech platform? The narrative leans heavily on margin-rich software, ambitious growth curves and a punchy future earnings multiple. Want to see how those moving pieces stack up into that valuation call?

Result: Fair Value of $425.37 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this hinges on big ifs, including regulatory pushback on Full Self Driving and intense EV competition in China that could pressure Tesla’s core car economics.

Find out about the key risks to this Tesla narrative.

Build Your Own Tesla Narrative

If this view does not quite fit how you see Tesla, you can stress test the numbers yourself and build a custom narrative in minutes: Do it your way

A great starting point for your Tesla research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Tesla has sharpened your appetite for stock picking, do not stop here. Use the tools available to you and keep widening your opportunity set thoughtfully.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.