Although did not invent modern electric vehicles (EVs), the company played a critical role in popularizing them from niche, awkward-looking products to status symbols. That pivotal breakout was the entire point of Tesla Roadster, pushing through high production costs to generate demand.
Over the years, Elon Musk managed to transform Tesla from an EV company into something that defies traditional categorization. Every product, from its EVs to energy systems and AI initiatives, feeds into an ecosystem set to redefine mobility, infrastructure and intelligence.
This perception is demonstrated by Tesla having a price-to-earnings (P/E) ratio of 255.86 compared to ’s P/E of 16.08. For further comparison, the latest data shows Ford sold 545,522 (+8.2%) cars this Q3, while Tesla delivered 497,099 (+2%).
The question is, in lieu of Tesla’s record sales in Q3, what fundamentals are packed into that enormous 16x P/E difference between Tesla and Ford?
Perception of Elon Musk and Tesla as a Sentiment Stock
During this year, we explored on multiple occasions how the public’s perception of Elon Musk reflects on Tesla’s EV sales. After all, Musk tied himself to the Trump train, just as Tesla remains tied to Musk’s public persona. In turn, he became a target of the vast political machine that was defeated on election day, affecting the sales of Tesla’s EVs.
In early August, a Gallup poll showed a negative net favorability change for Elon Musk (-28), even more so than President Trump’s negative shift (-16).
At the same time, however, the trust in mainstream media hit a new low of 28% in early October, following Charlie Kirk’s assassination and, more importantly, the ghoulish mass gloating of his death across social media. It was in this time frame that Musk bought $1 billion worth of TSLA shares.
Back then, we speculated that Musk realized this was a major cultural turning point that is likely to shift public perception in his favor. Specifically, the unseemly gloating, so clearly displayed, revealed the cynical use of trigger words by which they facilitate stochastic terrorism.
The implications for investors are twofold. First, Musk has a direct-to-fan communication gateway via his X platform, that is more resilient than increasingly fragmented and distrusted legacy media channels.
Secondly, as narratives around Tesla fragment, the public will latch onto Tesla metrics more than on weekly controversies. And there is already some indication this is the case.
Tesla’s EU Recovery Not Happening?
Outside of Elon Musk’s political vulnerability considerations, we’ve maintained that the launch of Cybertruck has been a huge strategic blunder. For the EU market and its urban environments, an ideal and obvious entry would have been an affordable compact EV in the line of or .
Without such options, Tesla suffered a double-whammy of market constriction, compounded by the tightly controlled and centralized media landscape in Europe. After Musk officially left the White House in late May, Tesla’s EU sales nearly halved despite continued EV market growth. Between January and August, Tesla’s EU sales dropped 42.9% year-over-year.
Predictably, the power of aforementioned trigger words still carries on in Germany, with Tesla sales again dropping by 9.4% in September, according to the KBA agency, despite the growth of total BEV registration of 31.9% year-over-year.
However, the revamped Model Y did create some growth in other markets. Specifically, 14.7% in Norway, 2.7% in France, 3.4% in Spain and 20.5% in Denmark. Nonetheless, this should be viewed as a lingering momentum rather than a recovery, as China’s (Seal U), Xpeng (Mona) and MG (MG4) sales not only squeeze out Tesla but European manufacturers as well.
Overall, Tesla’s market share in the EU shrank to 1.2% from 2% a year ago, a trend that is likely to continue as BYD sales increased by 201.3% to a market share of 1.3%.
Tesla’s Hidden Valuation Layer: AI Infrastructure
After a flop such as Cybertruck, any traditional automaker would likely suffer a mortal blow. However, Tesla is not being valued as the likes of Ford, but as a future infrastructure provider. While other companies merely settled for EV outings, Tesla has been using EVs as large-scale data-gathering operations for the ultimate goal – Full-Self Driving (FSD).
This advantage cannot be overstated, given the complexity of real-world driving scenarios. Tesla built an entire computing infrastructure around its super computer Tesla Dojo and its proprietary D1 chips for deep neural network training. Last August, the effort expanded to the Cortex supercompute cluster, based on around 100,000 H100 and H200 GPUs at the Giga Texas facility.
Following the $16.5 billion “bare minimum” deal for Samsung’s A16 chips in late July, the trajectory is clear. Tesla aims to power both EVs and Optimus humanoid robots to tackle real-time perception and decision-making from a unified AI infrastructure.
Although Alphabet’s Waymo, managed by , employs a similar infrastructure to power robotaxies, Tesla’s approach seems to be more future-proof. While Waymo uses retrofitted vehicles, Tesla’s Model Y vehicles are engineered from the ground up for autonomous operation.
This combines well with Tesla’s large fleet data and end-to-end learning models that scale based on machine vision, without reliance on up-to-date maps and geo-fenced areas. Some tests show significant time reduction favoring Tesla, which itself would incentivize customers to pick Tesla over Waymo.
If such performance continues, Tesla is looking at rapid adoption, boosting investor confidence far more effectively than any new model launch. Consequently, Tesla would have plenty of leeway to offset both the Cybertruck mis-investment and EU market constriction.
***
Looking to start your trading day ahead of the curve?
Get up to speed before the bell with Bull Whisper—a sharp, daily premarket newsletter packed with key news, market-moving updates, and actionable insights for traders.
Start your day with an edge. Subscribe to Bull Whisper using this link.