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The Tesla Model 3’s defiance of TSLA critics and its EV market dominance explained

Tesla's Supercharger Network continues to grow. (Credit: Tesla)

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6 years ago

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To state that Tesla (NASDAQ:TSLA) is a polarizing company would be an understatement. Tesla commands a strong following, comprised of avid supporters and passionate critics alike. This was particularly evident in the Model 3, a car that was declared a “lemon” by critics at one point, and a car that has become one of the most popular electric cars in the industry today.  

The Model 3 has its own fair share of critics. Last September, high-profile TSLA short Jim Chanos declared that the Model 3 has inherent problems that make it a “lemon.” Seemingly in response to Chanos’ statement, the Model 3 dominated the US luxury auto market in 2018, and with its international rollout this year, the vehicle has also started making an impact in markets such as Norway and China. 

TSLA investor @Incentives101, an economist with a background in macro research, stated in a message to Teslarati that Tesla’s vehicles, particularly the Model 3, defied several conventions when it was released. With its unique combination of uncompromising performance, efficiency, and a reasonable price, the Model 3 has become a vehicle that constantly defies critics every step of the way. 

The Tesla Model 3’s interior. (Photo: Andres GE)

The economist explained that consumers purchase vehicles according to preferences that are subject to budget constraints. The buying process then becomes a matter of selecting which car is the best option within the confines of a budget. “Consumers preferences can be easily understood when there is data available i.e when they clearly show what they want. With a car or any good for that matter, consumers are basically solving an optimization problem. Hence, this is why advanced economic models — general equilibrium — are on essence an optimization problem,” the economist wrote. 

There are many variables that consumers consider when purchasing a big-ticket item such as a car. Generally, there are no internal combustion vehicles that are as efficient as an electric car, but EVs prior to Teslas usually had worse performance and a higher price, which, in turn, discouraged buyers despite their lower total cost of ownership. Electric cars before the arrival of the original Tesla Roadster and the Model S also introduced a new constraint: range. Under these circumstances, it was not rare to see buyers who valued efficiency and/or are not price-sensitive selecting an EV, and those that valued performance and price opting for a petrol-powered car. 

It is these very metrics that the Tesla Model 3 was able to completely address. Tesla refused to compromise with the Model 3, making the electric sedan a vehicle that is incredibly efficient with performance that matches the best that the industry has to offer. What’s remarkable was that Tesla was able to accomplish this while keeping the Model 3’s price reasonable. And this, according to the economist, has resonated with consumers. “When Elon Musk says it’s insane to buy something else other than a Tesla, it’s because it literally is. You can prove it with math,” the economist stated. 

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The Tesla Model 3 on the track. (Credit: Chris Harris/Twitter)

The researcher added that this is one of the key reasons why Tesla and the Model 3 have proven incredibly resilient despite the negative narrative surrounding the vehicle and the company as a whole. It is also something that is frequently misunderstood by mainstream analysts and the company’s critics alike. Fortunately for Tesla, consumers by nature are drawn to superior products, and this is steadily becoming more and more pronounced with the Model 3’s international expansion. 

“Whenever you read experts saying that Tesla has a 10-year advantage, this is what it means. When the media and Wall Street compare Tesla to other OEMs, when they talk about units of cars vs. other OEMs, it really doesn’t matter. None of them can find an example in history when consumers have behaved as irrationally as what they’re implying. No matter how many hit pieces about Elon Musk or Tesla, how many stock downgrades, how many bear notes, consumers won’t care about it. We already know what consumers care about; it will be impossible to stop it,” the economist wrote. 

Tesla stock has so far slipped around 32% this year, following a challenging first quarter and another loss in the second quarter despite record delivery numbers. By contrast, the S&P 500 has risen about 16.7% year to date. 

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Tesla gets its best analysis from Morgan Stanley as ‘it’s all about to change’

He maintained its ‘Overweight’ rating and the $410 price target Morgan Stanley had on the stock.

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4 days ago

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August 7, 2025

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(Credit: Tesla)

Tesla has gotten perhaps its best analysis from Morgan Stanley in quite some time, as the Wall Street firm claims that “it’s all about to change.”

That phrase could be used for both the company’s status and the world in general.

Analyst Adam Jonas said in a new note on Thursday to investors that Tesla could be one of the major winners in terms of the global transition from what it is now to what it will be.

He describes the global shift that will occur over the next few years:

“Have you interacted with a robot today? Have you even seen a robot today? No? Well, take a mental picture because it’s all about to change. When we meet someone who has never been in a Waymo or a Tesla Cybercab (which is most people), we frequently see a wince and a response such as ‘I’m not sure I’d feel comfortable getting in a car without a driver.’ We imagine going back in time to 1903 and asking people if they’d feel comfortable in an airplane.'”

The same technological revolutions that have occurred over the past 150 years will continue to occur again and again. We are on the verge of another, Jonas believes, as companies like Tesla are working on artificial intelligence tech, which includes changing the way we look at things like transportation and labor.

Jonas includes an interesting tidbit in his note about how humanoid robots could change wages, and how it could work into the advantage of Tesla, especially as it is developing its own Optimus robot:

“We estimate 1 humanoid robot at $5/hour can do the work of 2 humans at $25/hour, generating an NPV of approximately $200k/humanoid. 1 robot shaped car can potentially drive down cost/mile of a ride share vehicle to <$0.20 mile (1/10th human-driven ride-share).”

Jonas sees Tesla as a key player in how AI will impact things like manufacturing and various automotive industries, and he believes there is long-term potential for AI, robomobility, and even autonomous eVTOL platforms.

Tesla stock: Morgan Stanley says eVTOL is calling Elon Musk for new chapter

He maintained its ‘Overweight’ rating and the $410 price target Morgan Stanley had on the stock.

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Tesla stock gets crazy prediction from CEO Elon Musk

Musk says this is what it would take to be a millionaire from a Tesla investment right now.

Published

4 days ago

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August 7, 2025

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A red Tesla Roadster driving around a turn
(Credit: Tesla)

Tesla stock (NASDAQ: TSLA) got a crazy prediction from CEO Elon Musk recently, as the future of the company seems to be moving more toward AI, autonomy, and robotics, and away from automotive, which is what it has traditionally been recognized as.

Over the past few years, as Tesla has prioritized its Full Self-Driving suite, its rollout of a dedicated Robotaxi program, and the development of the Optimus bot, the company has gained a new reputation from analysts.

It was always looked at as a stock with tremendous potential by many Wall Street firms, some more than others.

The most bullish analysts, like Cathie Wood of ARK Invest, believe the company will eventually reach a multi-trillion-dollar valuation and a share price of over $2,000. Her $2,600 price target does not include any contributions of Optimus. Instead, it leans on Full Self-Driving and Robotaxi.

Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

Based on where the company is now, there are a lot of potential catalysts. The Robotaxi expansion, as well as affordable vehicles, its prowess in AI and Robotics, and its powerful energy division are all arguments for investment.

One X user said that a $150,000 investment in Tesla right now would likely make you a millionaire. Musk said he thinks that sentiment is “probably correct.”

He’s echoed this belief in recent earnings calls, including the one for Q2, which happened in July:

“I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world. A lot of execution between here and there. It doesn’t just happen. Provided we execute very well, I think Tesla has a shot at being the most valuable company in the world. Obviously, I am extremely optimistic about the future of the company.”

Tesla is trading at $316.50 at the time of writing, and has a market cap of just under $1 trillion.

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Tesla stock gets another analysis from Jim Cramer, and investors will like it

“Tesla is morphing right now. It’s in transition from being a car company to being a technology company.”

Published

5 days ago

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August 6, 2025

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Credit: CNBC Television/YouTube

Tesla stock (NASDAQ: TSLA) got its latest analysis from Jim Cramer, and investors will like what he has to say.

Cramer has flip-flopped his thoughts on Tesla shares many times over the years. One time, he said CEO Elon Musk was a genius; the next, he said Ford stock was a better play. He’s always changing his tune.

However, Cramer’s most recent analysis is of a bullish tone, as he talks about the company’s evolution from an automaker to a tech powerhouse. He made the comments on CNBC’s Mad Money:

“Tesla is morphing right now. It’s in transition from being a car company to being a technology company. You wanna be in there because the tech is worth a lot more than what it’s selling for right now. Don’t care where you bought it, care where it’s going to.”

Tesla has always been looked at by the mainstream media as an automaker. While that is its main business currently, Tesla has always had other divisions: Energy, Solar, Charging, AI, and Robotics. Some came after others, but the important point is that Tesla has not been an automaker exclusively for a decade.

It launched Powerwall and Powerpack in April 2015, marking the start of Tesla Energy.

But Cramer has a point here: Tesla is truly becoming much more than a car company, and it is turning into an AI and overall tech company more than ever before. Eventually, it will be recognized as such, more so than it will be as an automotive company.

Cramer’s comments also follow a recent prediction by Musk, who stated on X that he believes a $150,000 investment in Tesla shares right now would eventually turn someone into a millionaire:

Musk has said he believes Tesla could be headed to a serious increase in valuation. Eventually, it could become the most valuable company in the world. He said this during the Q2 Earnings Call:

“I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world. A lot of execution between here and there. It doesn’t just happen. Provided we execute very well, I think Tesla has a shot at being the most valuable company in the world. Obviously, I am extremely optimistic about the future of the company.”

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