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Tesla’s Performance and Valuation Concerns
Tesla, a member of the “Magnificent Seven” alongside Nvidia, Microsoft, Apple, Alphabet, Amazon, and Meta Platforms, is facing challenges as its core electric vehicle (EV) business shows signs of slowing growth. In the third quarter, Tesla reported a 6% year-over-year increase in automotive revenue, but its operating margin fell to 5.8%, down from 10.8% a year earlier. Despite being the market leader, Tesla’s EV deliveries were trending downward in early 2025.
The company’s autonomous Robotaxi service, launched in Austin, Texas, has expanded to other markets but remains unproven in profitability. Currently, Tesla is utilizing standard Model Y vehicles equipped with Robotaxi technology, as the much-anticipated Cybercab is not yet in production. Tesla’s stock valuation is notably high, trading at 178 times expected 2026 earnings, prompting analysts to recommend caution and to consider other investment opportunities among its peers.
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