Investor's Corner
The Tesla Model 3’s defiance of TSLA critics and its EV market dominance explained
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 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 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.
Tesla bear Michael Burry got blunt with his beliefs over the company’s valuation, which he called “ridiculously overvalued” in a newsletter to subscribers this past weekend.
“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry, who was the inspiration for the movie The Big Short, and was portrayed by Christian Bale.
Burry went on to say, “As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.”
Tesla bear Michael Burry ditches bet against $TSLA, says ‘media inflated’ the situation
For a long time, Burry has been skeptical of Tesla, its stock, and its CEO, Elon Musk, even placing a $530 million bet against shares several years ago. Eventually, Burry’s short position extended to other supporters of the company, including ARK Invest.
Tesla has long drawn skepticism from investors and more traditional analysts, who believe its valuation is overblown. However, the company is not traded as a traditional stock, something that other Wall Street firms have recognized.
While many believe the company has some serious pull as an automaker, an identity that helped it reach the valuation it has, Tesla has more than transformed into a robotics, AI, and self-driving play, pulling itself into the realm of some of the most recognizable stocks in tech.
Burry’s Scion Asset Management has put its money where its mouth is against Tesla stock on several occasions, but the firm has not yielded positive results, as shares have increased in value since 2020 by over 115 percent. The firm closed in May.
In 2020, it launched its short position, but by October 2021, it had ditched that position.
Tesla has had a tumultuous year on Wall Street, dipping significantly to around the $220 mark at one point. However, it rebounded significantly in September, climbing back up to the $400 region, as it currently trades at around $430.
It closed at $430.14 on Monday.
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
-->“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
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Tesla bear gets blunt with beliefs over company valuation
