Tesla’s Humongous Market Cap Is Simply Greed & Fantasy

Last Updated on: 15th July 2025, 02:02 am

Look, I’ve got some good friends who are Tesla [NASDAQ:TSLA] shareholders. They are really good people. A couple of them have had shares in the company for well over a decade. A couple of others joined the party more recently, but still years ago. I held Tesla shares for years, but as I saw more and more warning signs, I got out of the stock.

Naturally, as an open minded person, I know that there’s plenty of possibility Tesla’s stock price is much higher in a decade than it is now. Perhaps the company ends up being disruptive in AI, robots, robotaxis, or other fields. If so, those friends will be happy campers if they continue to believe in the company and hold onto the stock. For that matter, think of all the Tesla staff working their butts off who will be able to reap the rewards of their efforts.

But those are all points that are far away from the topic of this article, an article I’ve been thinking to write for months. In fact, it was most likely those people I know who indirectly blocked me from writing this article. I don’t want to criticize them at all — they are great, smart people — and I don’t want to hurt their feelings. And, of course, they must not agree with my point of view. However, as the Tesla story plays out, it’s very hard to conclude that anyone owns shares in the company for reasons other than greed or fantasy.

As we’ve pointed out for a long time, Tesla has been showing signs of weakening consumer demand. Elon Musk claimed that the company would have sales growth in the midst of that, but then the company saw sales decline. (Not a good sign when your CEO is making incorrect claims and forecasts.) The market cap of the company is absolutely insane compared to other automakers. A big part of that for years was that the company was supposed to be growing 50% a year. It was for a while, but now it’s declining, so how can a market cap so far out of the ballpark make sense?

Tesla’s original thesis and mission was simple. Make great electric cars, and drive down the costs of these electric cars as sales volume goes up. Basic. Simple. Clear. That’s what it did. Tesla pushed the auto industry — in the US at least — into the electric car era. But with sales now dropping, the market cap doesn’t make any sense without some kind of separate miracle breakthrough. Before moving on to that, though, it’s probably important to emphasize that a refreshed Tesla Model Y — the best selling vehicle in the world — was supposed to revive sales growth. Production lines in three factories across the world were revamped in Q1 to switch to production of the new Model Y. In Q2, presumably, we should have seen the results of that. But sales were still down year over year! Some people I know don’t believe in the other sides of Tesla’s business, but still believe its vehicle sales will grow a lot. How? Based on what evidence? It’s hard to see how that’s supposed to happen when the Cybertruck has been a total flop sales wise and the new Model 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 sell a lot more cars and trucks than Tesla. Even Toyota’s market cap is just $274 billion, and BYD’s is $139 billion. If you think the future of the auto market is electric vehicles, BYD is clearly winning there.

So, why is Tesla’s market cap so freakin’ high? Yes, Tesla fans shareholders will talk about robotaxis and robots and AI, and perhaps nearly limitless future profits. However, I think it boils down to two things:

1. Greed. A lot of people have made a lot of money on Tesla stock, and they want that to continue forever. The expect the stock to soar in the future because it soared in the past, and that would be great for their bank accounts. They don’t want to sell stock and have to pay taxes on it. In other words, they want to be rich, and richer and richer. Human nature at play. You seldom find a big Tesla fan these days who isn’t a Tesla shareholder. Finances and dreams are tied up in the stock, and as I just said, the stock soared in the past despite haters and critics, so logic tells us it should soar in the future again in the face of haters and critics. (I know — that’s not great logic objectively, but that is a big part of the thinking.) People want a magic solution to make them rich. TSLA has been that. So, the thinking is that it will continue to be that. Never mind stagnant or declining sales. Never mind failed robotaxi targets. Never mind soaring AI costs. Never mind a completely flopping Cybertruck, the Semi being years behind schedule, a non-existent Roadster 2.0 nearly a decade after it was “revealed.” The stock has to rise, because it just has to.
2. Fantasy. As I noted higher up, Tesla’s original mission and business plan was simple and clear, and there was a huge market opportunity left there. Now, Tesla’s valuation is based on fantastical dreams of robotaxis, humanoid robots, and AI conquering the world. There’s an idea among Tesla fans shareholders that Tesla is somehow best equipped to lead all of these big emerging markets. Past failures are brushed off, a decade of missed targets are dropped, arguments about much more competitive Chinese firms and even big US tech firms are written off. Maybe they are right, but in my eyes, it’s fantasy. It’s a dream of something Elon Musk — a talented marketer — has sold them/us for years. It’s the belief that just because Elon said it, it must be true — despite so many failed projects and products, and so many shockingly wrong and absurd statements on a large variety of matters. Tesla’s tech is great, amazing, but the idea that the company’s going to live up to its nearly $1 trillion market cap seems to be pure fantasy to me. I love Marvel movies, I love Star Wars. I get the appeal of a dreamy futuristic utopia. But I don’t see Tesla achieving its goals, quarter after quarter and year after year. I see a lot of hype and cool Hollywood set dream worlds — literally. Tesla has been selling fantasy, and investors have been eating it up.

Reportedly, BYD has more R&D engineers than Tesla has total staff. If one of these two companies was going to lead us into a futuristic world, is it more likely to be Tesla — led by a highly distracted person involved in all kinds of different matters and also the father to at least 13 kids — or is it more likely to be BYD? Ignoring BYD, you’ve got Waymo (Google/Alphabet) rolling out actual commercial robotaxis in more and more cities, you’ve got Volkswagen Group and other automakers seeing strong EV growth, you’ve got several other Chinese EV companies seeing rapid growth. Tesla is looking more and more like a bloated, complacent company that is living on its legacy and trying to find excuses for why it’s not growing.

Anyway, the company’s market cap is $993 billion and it’s stock price is almost $317, and maybe that’s not going to drop much as long as greed and fantasy rule the day. However, if the company does continue to see sales declines and then runs into financial problems, well, one has to wonder what will happen….

Full disclosure: I own shares in BYD. I do not provide investment advice of any kind — seriously. Consult an investment professional before making any important investment decisions.

Update/addendum: Under another article, a reader wrote the following similarly themed comment:

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

BYD Market cap: 127 billion, about 1/8th.

TSLA investors, IMHO, are sitting on a bubble and bubbles eventually pop. I understand that Tesla is not just a car company, or so they say, but is the rest of the company worth 7 BYDs?

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

Tesla 20 million cars a year by 2030 now seems a bit far fetched, to put it kindly.

DOJO is MIA and presumed dead.
Cyber Truck is a disaster,
The Semi is 5 years behind schedule.
The humanoid is a long shot in a crowded field.
The Solar Roof/Cousins Bailout did not perform as promised.
Storage uses third party cells, and recently FinDreams. *

People believe because they want to believe, even over evidence.

* Megapacks use mostly CATL cells, and now FinDreams has become a supplier. FinDrems is a BYD subsidiary.