Investor's Corner
Tesla upsells Model 3 Performance as Musk ponders ‘mental scar tissue’ from production ramp
Tesla is starting to upsell the Model 3 Performance to reservation holders, with CEO Elon Musk announcing more exciting aspects of the vehicle on Twitter. Musk’s recent announcements describe the vehicle’s suspension and brakes, as well as the company’s ongoing test drive program for the compact electric car.
According to Musk, the Model 3 Performance will feature a lower ride height helped by the performance suspension system and stronger brakes than non-Performance variants, which would enhance the vehicles’ track capabilities. The upgrade would further bolster claims that Model 3 Performance will outperform all vehicles in its class on the race track, including the BMW M3.
Performance version suspension is 1cm lower & has stronger brakes in upgrade package
— Elon Musk (@elonmusk) July 13, 2018
Equipping larger brakes on the Model 3 Performance is definitely the right decision from Tesla. The car’s stock brakes, after all, are unable to handle hard track driving, as evidenced in a Laguna Seca run by a mostly stock Model 3 earlier this year. With upgraded brakes, the Model 3, even the single motor, non-Performance Long Range RWD version, becomes a formidable vehicle on the racecourse, recently beating Porsche to win a Time Attack challenge in a Canadian racing event.
Overall, Musk’s recent Twitter statements for the Model 3 Performance comes amidst the company’s latest attempt to upsell the vehicle. Tesla, after all, has been putting some extra attention on the Model 3 Performance, with the electric car maker recently showcasing the car’s drifting capabilities in a skidpad testing video. Elon Musk also noted that the company had produced approximately 100 units of the Model 3 Performance to date, which would be used for test drive units in the company’s showrooms. In a recent Twitter announcement, Musk further encouraged reservation holders to test drive the Model 3 Performance regardless of whether they plan to buy the top trim variant or not.
These sure look like the ~100 performance #Model3 that $TSLA says were built for test drives. Question is when will they move off the lot into stores? Or have they already and these are leftovers? Images are from July 10th. https://t.co/PRuKZUvBtf #Tesla pic.twitter.com/SpU3ivTIA7
— RS Metrics (@RSMetrics) July 12, 2018
Tesla’s upselling of the Model 3 Performance comes amidst the company’s push to sustain mass production of its electric car. Since the company achieved its ever-elusive goal of producing 5,000 Model 3 per week during the end of Q2 2018, Tesla has been ramping the deliveries of the vehicle. Recent signs from Tesla also appear to be teasing that the company would be able to sustain a 5,000/week pace this Q3 2018. Among these are frequent mass VIN registrations, a new 5-minute Sign & Drive delivery program, and recent statements related by Senior Director of Investor Relations Aaron Chew, who reportedly stated in meeting with investors and analysts that the company is targeting a sustained 5,000-6,000/week production pace for the current quarter.
Whether you plan to buy a Dual Motor Performance Model 3 or not, take it for a test drive anyway. It’s like having pure fun jacked straight into your brain whenever you want.
— Elon Musk (@elonmusk) July 13, 2018
While Tesla appears to have broken through a massive roadblock with the Model 3, Elon Musk’s recent statements to Bloomberg reveal that the manufacturing feat came at a high price. As noted by Musk in a recent interview with the publication, the Model 3 ramp has been incredibly difficult for him and Tesla, to the point where he feels he developed permanent mental scars from the experience.
“It’s been super-hard. Like there is for sure some permanent mental scar tissue here. But I do feel good about the months to come. I think the results will speak for themselves,” Musk said.
Musk, however, noted that the risks Tesla took with the Model 3 ramp, such as betting the entire company on the vehicle’s success, will likely not be replicated in the future. According to Musk, he does not foresee any bet-the-company situations arising, regardless of Tesla’s upcoming projects and vehicles.
“To the best of my judgment, I do not think we have any future bet-the-company situations. We will still need to work hard and be vigilant and not be complacent because it is very difficult just to survive as a car company. But it will not be the same level of strain as getting to volume production of Model 3,” he said.
There are a lot of Tesla bulls out there who have astronomical expectations for the company, especially as its arm of reach has gone well past automotive and energy and entered artificial intelligence and robotics.
However, some of the most bullish Tesla investors believe the company could become worth $100 trillion, and CEO Elon Musk does not believe that number is completely out of the question, even if it sounds almost ridiculous.
To put that number into perspective, the top ten most valuable companies in the world — NVIDIA, Apple, Alphabet, Microsoft, Amazon, TSMC, Meta, Saudi Aramco, Broadcom, and Tesla — are worth roughly $26 trillion.
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Cathie Wood of ARK Invest believes the number is reasonable considering Tesla’s long-reaching industry ambitions:
“…in the world of AI, what do you have to have to win? You have to have proprietary data, and think about all the proprietary data he has, different kinds of proprietary data. Tesla, the language of the road; Neuralink, multiomics data; nobody else has that data. X, nobody else has that data either. I could see $100 trillion. I think it’s going to happen because of convergence. I think Tesla is the leading candidate [for $100 trillion] for the reason I just said.”
Musk said late last year that all of his companies seem to be “heading toward convergence,” and it’s started to come to fruition. Tesla invested in xAI, as revealed in its Q4 Earnings Shareholder Deck, and SpaceX recently acquired xAI, marking the first step in the potential for a massive umbrella of companies under Musk’s watch.
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Now that it is happening, it seems Musk is even more enthusiastic about a massive valuation that would swell to nearly four-times the value of the top ten most valuable companies in the world currently, as he said on X, the idea of a $100 trillion valuation is “not impossible.”
It’s not impossible
— Elon Musk (@elonmusk) February 6, 2026
Tesla is not just a car company. With its many projects, including the launch of Robotaxi, the progress of the Optimus robot, and its AI ambitions, it has the potential to continue gaining value at an accelerating rate.
Musk’s comments show his confidence in Tesla’s numerous projects, especially as some begin to mature and some head toward their initial stages.
Elon Musk
Tesla director pay lawsuit sees lawyer fees slashed by $100 million
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
The Delaware Supreme Court has cut more than $100 million from a legal fee award tied to a shareholder lawsuit challenging compensation paid to Tesla directors between 2017 and 2020.
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
Delaware Supreme Court trims legal fees
As noted in a Bloomberg Law report, the case targeted pay granted to Tesla directors, including CEO Elon Musk, Oracle founder Larry Ellison, Kimbal Musk, and Rupert Murdoch. The Delaware Chancery Court had awarded $176 million to the plaintiffs. Tesla’s board must also return stock options and forego years worth of pay.
As per Chief Justice Collins J. Seitz Jr. in an opinion for the Delaware Supreme Court’s full five-member panel, however, the decision of the Delaware Chancery Court to award $176 million to a pension fund’s law firm “erred by including in its financial benefit analysis the intrinsic value” of options being returned by Tesla’s board.
The justices then reduced the fee award from $176 million to $70.9 million. “As we measure it, $71 million reflects a reasonable fee for counsel’s efforts and does not result in a windfall,” Chief Justice Seitz wrote.
Other settlement terms still intact
The Supreme Court upheld the settlement itself, which requires Tesla’s board to return stock and options valued at up to $735 million and to forgo three years of additional compensation worth about $184 million.
Tesla argued during oral arguments that a fee award closer to $70 million would be appropriate. Interestingly enough, back in October, Justice Karen L. Valihura noted that the $176 award was $60 million more than the Delaware judiciary’s budget from the previous year. This was quite interesting as the case was “settled midstream.”
The lawsuit was brought by a pension fund on behalf of Tesla shareholders and focused exclusively on director pay during the 2017–2020 period. The case is separate from other high-profile compensation disputes involving Elon Musk.
Investor's Corner
Tesla (TSLA) Q4 and FY 2025 earnings call: The most important points
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Tesla’s (NASDAQ:TSLA) Q4 and FY 2025 earnings call highlighted improving margins, record energy performance, expanding autonomy efforts, and a sharp acceleration in AI and robotics investments.
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Key takeaways
Tesla reported sequential improvement in automotive gross margins excluding regulatory credits, rising from 15.4% to 17.9%, supported by favorable regional mix effects despite a 16% decline in deliveries. Total gross margin exceeded 20.1%, the highest level in more than two years, even with lower fixed-cost absorption and tariff impacts.
The energy business delivered standout results, with revenue reaching nearly $12.8 billion, up 26.6% year over year. Energy gross profit hit a new quarterly record, driven by strong global demand and high deployments of MegaPack and Powerwall across all regions, as noted in a report from The Motley Fool.
Tesla also stated that paid Full Self-Driving customers have climbed to nearly 1.1 million worldwide, with about 70% having purchased FSD outright. The company has now fully transitioned FSD to a subscription-based sales model, which should create a short-term margin headwind for automotive results.
Free cash flow totaled $1.4 billion for the quarter. Operating expenses rose by $500 million sequentially as well.
Production shifts, robotics, and AI investment
Musk further confirmed that Model S and Model X production is expected to wind down next quarter, and plans are underway to convert Fremont’s S/X line into an Optimus robot factory with a capacity of one million units.
Tesla’s Robotaxi fleet has surpassed 500 vehicles, operating across the Bay Area and Austin, with Musk noting a rapid monthly expansion pace. He also reiterated that CyberCab production is expected to begin in April, following a slow initial S-curve ramp before scaling beyond other vehicle programs.
Looking ahead, Tesla expects its capital expenditures to exceed $20 billion next year, thanks to the company’s operations across its six factories, the expansion of its fleet expansion, and the ramp of its AI compute. Additional investments in AI chips, compute infrastructure, and future in-house semiconductor manufacturing were discussed but are not included in the company’s current CapEx guidance.
More importantly, Tesla ended the year with a larger backlog than in recent years. This is supported by record deliveries in smaller international markets and stronger demand across APAC and EMEA. Energy backlog remains strong globally as well, though Tesla cautioned that margin pressure could emerge from competition, policy uncertainty, and tariffs.
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