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Tesla will be most profitable player in EV space, VW second, says UBS

(Credit: Tesla)

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Tesla (NASDAQ: TSLA) and Volkswagen are forecasted to be the most profitable players in the electric vehicle space for the next few years, according to UBS analysts headed by skeptic Patrick Hummel. UBS released a note to investors on Wednesday that indicated American electric car company Tesla and German automaker Volkswagen are sitting in the best position moving forward, and it comes down to software.

Profitability seems to be where Tesla really separates itself from Volkswagen in terms of UBS projections, which see the two car manufacturers holding a substantial lead by 2025. Estimates show that Tesla will sell 2.3 million electric vehicles in 2025, with Volkswagen selling just 300,000 more at 2.6 million. However, Tesla’s operating profit will be nearly three times that of Volkswagen’s as UBS also forecasts $20 billion in annual profits for the California-based electric car company headed by Elon Musk. Volkswagen could make $7 billion that year.

With its plan to go fully electric by 2035, General Motors sits in third, with 800,000 EVs sold in 2025, giving the company a projected profit of $2 billion, UBS told investors, according to MarketWatch.

According to Hummel, of Tesla’s projected $20 billion profits in 2025, 45% will come from its in-house software alone. We estimate that $9 billion of the $20 billion OP is directly related to the monetization of Tesla’s software capabilities (mainly full self-driving),” the note to investors said. Tesla’s substantial lead in the sector doesn’t come down to production or range ratings. Its software, which is vastly more robust than any other car company in existence, is where Tesla sets itself apart from everyone else. Over the Air updates are one of the company’s most distinct advantages, allowing owners to upgrade their vehicles on what seems like a weekly basis, all through an internet connection. Additionally, it can expand performance ratings, range capabilities, and self-driving software, another sector where Tesla is currently dominating.

Volkswagen has plenty of potential as well, and its ID. series of vehicles could be the German company’s way into a highly competitive EV market. “VW should be well ahead of all other legacy OEMs, thanks to scale, but with a much smaller upside from software vs. Tesla.”

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Tesla FSD Beta’s public rollout gets an expected release date

What is perhaps Tesla’s biggest advantage, according to the UBS note, is its distinct focus on electric cars only. While OEMs like Volkswagen have continued to maintain that they are “all-in” on electrification, only Tesla remains in the shortlist of companies who are producing mass-market EVs without any time or money being funneled into combustion engine projects. Like Volvo and GM, many companies have lined up specific dates of when the final ICE vehicle will roll off of their production lines, but the longer they wait, the more of an advantage Tesla seems to gain.

“All large global OEMs including VW have accelerated software/digitization investments, but it remains to be seen if their strategies succeed. Tech companies and EV pure-plays are potentially in a better position to be the leading innovators,” the note said.

Time will only tell if the OEM’s strategy to not fully commit to EVs will pay off. Ultimately, Tesla sits in the proverbial driver’s seat until another car company can prove its worth in the sector, and it may not happen until a company fully commits to electrification.

Hummel raised his price target on Tesla stock from $325 to $730 while holding a Neutral rating.

Disclosure: Joey Klender is a TSLA Shareholder.

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Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Investor's Corner

SpaceX reveals how its 1 Million AI satellite network will work and prevent space collisions

SpaceX reveals plans for one million Starmind AI satellites and calls out operators hiding maneuvers.

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Concept rendering of SpaceX Starmind constellation via Grok
Concept rendering of SpaceX Starmind constellation via Grok

SpaceX has put the largest satellite count it has ever published into writing, and it says that plan only works if every other operator in orbit starts sharing what it knows.

In a new Space Safety page highlighted Tuesday morning by Sawyer Merritt on X, SpaceX said it “plans to operate up to 100,000 Starlink satellites and up to 1 million Starmind AI satellites to meet the growing demand for broadband and supercompute.” Starlink has a little over 11,000 satellites in orbit today, so the target alone implies roughly a ninefold expansion of the broadband network.

Starmind is SpaceX’s orbital AI compute constellation. Elon Musk confirmed the Starmind name in June after an xAI trademark filing surfaced, and in August SpaceX said it was working with Nvidia on the compute payload. The FCC accepted the filing for up to one million satellites back in February.

FCC accepts SpaceX filing for 1 million orbital data center plan

SpaceX also released a new render of what a full Starmind constellation could look like. Alongside it, SpaceX VP Michael Nicolls explained why the satellites will not operate on their own. “We need to operate clusters of satellites in tight formation to get enough coherent compute to run AI models efficiently,” Nicolls said. “A cluster will be 10-ish satellites connected with 10 terabits or so of bandwidth between them, and interconnected to the broader constellation.”

That is the most specific detail SpaceX has given on how Starmind will be built. Instead of a million independent servers, the network would work as tightly packed groups of about 10 satellites acting as one compute unit, with Starlink’s laser links carrying results back to Earth.

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Packing satellites that close together, at that scale, makes collision avoidance the central problem, and most of the Space Safety page is aimed at other operators. SpaceX said Starlink encountered collision risks with about 650 unique maneuvering third party satellites in 2026, and only about half of them shared data. Over six months, Starlink recorded roughly 164,000 more collision risks where the closest approach came within four hours of an unannounced maneuver.

Some operators keep maneuver plans private over proprietary concerns, while others cannot get government permission to share them. SpaceX called those policies “counterproductive,” saying they “largely only serve to create preventable collision risk between satellites.” Starlink is also offering a free ephemeris sharing and screening platform that returns risk results within a minute, backed by its Stargaze network of 30,000 optical sensors.

The push comes as the Starmind application draws opposition from astronomers and environmental groups. In a September filing with the FCC, SpaceX said each Starmind satellite could weigh up to 4,000 kg, nearly seven times the mass of a Starlink V2 Mini. Musk has brushed off crowding concerns before, telling viewers in June that “space is enormous” and that SpaceX already knows how to run very large constellations safely.

SpaceX’s Starmind page says its Gigasat factory in Bastrop, Texas, is designed to produce AI satellites at scale, with deployment of thousands of units starting as soon as late 2027.

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Investor's Corner

Tesla deliveries best Wall Street guesses alongside second-best energy quarter

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Credit: Tesla Europe & Middle East | X

Tesla (NASDAQ: TSLA) reported strong delivery figures that beat Wall Street guesses, and they were revealed alongside the company’s second-best quarter in terms of energy deployments ever.

Tesla announced this morning that it delivered 486,532 cars in Q3, while producing 464,391, exceeding analyst consensus, which sat around 462,000 units.

Meanwhile, Tesla reported 13.7 GWh of energy storage deployed for the quarter. That’s the second-best quarter Tesla has ever reported on that side of things.

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Vehicle Deliveries

Deliveries were strong, and it was another quarter when Tesla had the opportunity to outshine the Wall Street pundits who are quick to criticize and slow to give credit. Tesla saw a slight decrease in deliveries compared to Q3 2025, but Tesla still had the $7,500 EV Tax Credit to use to help incentivize consumers to pick an EV.

A small decrease of 2.1 percent is pretty telling because it shows Tesla does not need massive federal credits to convince consumers to purchase its vehicles.

It was also the company’s third-best performance all-time in terms of deliveries, trailing that of Q3 2025 with 497,099 deliveries and Q4 2024, when the company handed over 495,570 cars.

We reported several days ago that Tesla Showrooms across the United States were completely bare of inventory or unclaimed units. Many locations also removed Demo Drive units, which had been bought by customers looking to take delivery sooner.

Tesla showrooms picked clean ahead of Q3 end as demand looks strong

Energy Generation

Tesla’s Energy Generation performance in Q3 was also very strong, as the company deployed 13.7 GWh of energy storage over the past three months. The only quarter when Tesla reported stronger energy deployment figures was Q4 2025, when 14.2 GWh of energy storage was deployed.

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Tesla’s Q3 performance in energy generation has continued to grow each quarter, with the company increasing its deployments by ten-fold since Q3 2021, when just 1.3 GWh was deployed.

It is also nearly double what it was in Q3 2024, when the company reported 6.9 GWh. This is one of Tesla’s quickest-growing divisions, and it flies under the radar with fans and analysts, as many are focused on self-driving or the vehicles themselves.

Tesla Stock

Shares rose 5.07 percent to $372.06 at just after 10 a.m. on the East Coast. This is a rarity for Tesla after a strong delivery report, as positive news usually brings the stock down. Many quarters with extremely robust delivery reports have not been as kind to the Teslanaires of the world.

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Elon Musk

Elon Musk and Trump are closer than ever, and Tesla could be the big winner

Elon Musk sat beside Trump as AI leaders signed a voluntary White House safety accord.

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Elon Musk had the seat right next to President Donald Trump on Tuesday as the White House hosted the leaders of America’s biggest artificial intelligence companies for a lunch that ended with a voluntary industry accord on AI safety.

A seating chart Trump posted on Truth Social placed Musk at the president’s left in the East Room, with Nvidia CEO Jensen Huang on his right, according to an Associated Press reporter. Anthropic CEO Dario Amodei, OpenAI President Greg Brockman, Meta’s Mark Zuckerberg, Google’s Sundar Pichai, Microsoft’s Satya Nadella and Amazon founder Jeff Bezos also attended, along with Vice President JD Vance and House Speaker Mike Johnson.

After the lunch, Trump told reporters outside the West Wing that the executives had signed “The White House Accord on Superintelligence: A Joint Commitment on Frontier SI Responsibilities.” Johnson described it as a voluntary statement of principles built on “robust internal controls and layers of internal and external review,” while Zuckerberg said company boards would independently review reports from outside auditors. Trump called the document “morally binding,” said he would name a new AI czar within days, and signed an executive order formally renaming artificial intelligence “super intelligence,” CNBC reported.

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Musk was not in the room for Tesla alone. Since SpaceX absorbed xAI, he runs the company behind Grok and one of the largest AI training operations anywhere. On September 25, he said another 220,000 Nvidia GB300 chips would come online at Colossus 2 within a week, with more expected in November and December.

SpaceX confirms third massive compute deal at Colossus data center

 

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Musk also used the trip to restate his energy ambitions. “SpaceX is aiming together with Tesla to do 200 gigawatts of solar production per year,” he said at an event in Washington. It is the same combined target he laid out that feeds directly into Terafab, the Tesla and SpaceX chip venture that will need enormous amounts of power.

The showing between Musk and Trump has come a long way, since the two had the very public split in mid 2025 after Musk opposed the “Big Beautiful Bill” and left DOGE. They reconciled at Charlie Kirk’s memorial that September, and Trump later called their relationship “good”. Since then, Musk has joined Trump’s China delegation in May and attended last week’s White House state dinner for Chinese President Xi Jinping.

For Tesla, that access to government official could pay dividends. As Teslarati noted in January, federal autonomy rules, NHTSA oversight and a single national standard for driverless vehicles all run through an administration Musk can more easily reach directly as Tesla works to scale Robotaxi and Cybercab beyond Texas.

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