Investor's Corner
Tesla shares (TSLA) recover despite China’s new import tariffs
After showing recovery on Tuesday, Tesla shares (NASDAQ:TSLA) tumbled during pre-market trading on Wednesday amid China’s imposition of new tariffs over US-made products, including electric vehicles like Tesla. Before the opening bell on Tuesday, $TSLA shares were trading down 5.38% at $253.13. The company’s stocks began rebounding later during the day, however, bouncing back from its pre-market dive, up 1.55% and trading at $271.82 per share as of writing.
China’s announcement of its tariffs on US goods comes on the heels of the Trump’s administration’s plans to impose duties on $50 billion worth of Chinese products, including industrial, transport, and medical materials. According to a Reuters report, China Foreign Ministry spokesman Geng Shuang claimed that China had been open to resolving the trade dispute through negotiations, but the US had not been responsive so far.
“The best opportunities for resolving the issues through dialogue and negotiations have been repeatedly missed by the U.S. side,” Shuang said.
It only took China 11 hours to respond to Washington’s tariffs in kind, releasing a list of duties on key American imports. Among these are US-made products such as Tesla’s electric cars, Ford’s vehicles from its Lincoln brand, General Dynamics Corp’s Gulfstream jets, and Brown-Forman Corp’s Jack Daniels’ whiskey.
While the two countries’ tariffs on crucial imports appear alarming, Julian Evans-Pritchard, senior China economist at Capital Economics, said that it would not be surprising if negotiations between America and China would happen soon. According to the economist, it is worth noting that only announcements of the tariffs have been made so far. Neither country has called for enforcement of the duties yet.
“The assumption was China would not respond too aggressively and avoid escalating tensions. China’s response is a surprise for some people. It’s more of a game of brinkmanship, making it clear what the cost would be, in the hopes that both sides can come to agreement and none of these tariffs will come into force,” Evans-Pritchard said.
China’s tariffs, if ever they do get enforced, would likely affect Tesla’s operations in the country. Tesla, after all, is currently in intense competition with local electric car makers in China. As we noted in a previous report, Elon Musk brought up the issue of import taxes that American cars face on the country. Tesla is also engaged in negotiation with officials from Shanghai for the construction of a facility speculated to be the Model Y’s future factory.
J.P. Morgan analyst Ryan Brinkman reiterated his Underweight rating on Tesla’s stocks, citing the ongoing production difficulties that the company is facing with the Model 3. Brinkman also lowered his estimates and stock price target to $185 from $190. RBC Capital analyst Joseph Spak kept his Neutral rating on $TSLA, though he dropped his stock price target from $380 to $305, according to a MarketWatch report.
While Tesla’s shares took a dive during pre-market trading, IHS Markit Managing Director for Asia Pacific James Chao noted in a statement to Bloomberg that Tesla’s woes are relatively minor. Chao further stated the current challenges that Tesla’s shares are facing are manageable, especially since Elon Musk seems to work best when he is driven into a corner.
“(Elon Musk) is really at the edge here. I think this is the environment that works best in, under a lot of pressure. With the tweet on April Fools, you can see that he thrives in the moment. I think that you can see that he is performing, to a certain extent, 2,020 vehicles in the last week of April, was far beyond what analysts, in general, were looking for.
“The overall story just for Tesla is still intact, which is, while large automakers produce vehicles in every single segment of the market, including segments of the market where they can’t make money; Tesla focuses on one segment — this electric vehicle market — which is highly valued. And I think that story still continues despite short-term cycles.”
As we noted in a previous report, Tesla’s first quarter production and delivery report listed a 40% increase in production from Q4 2017. Tesla was also able to manufacture 2,020 Model 3 during the last week of March. Delivery figures were also strong, with the company delivering 29,980 vehicles in total during the first three months of the year. Among this number, 8.180 were Model 3.
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.
Will Tesla join the fold? Predicting a triple merger with SpaceX and xAI
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.
SpaceX officially acquires xAI, merging rockets with AI expertise
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.
Tesla exec: Preparations underway but no firm timeline yet for FSD rollout in China
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