Neil Patel, The Motley Fool

Sun, Jun 29, 2025, 5:30 AM4 min read

• In the past 15 years, this top EV stock has climbed more than 20,000%.

• Tesla shares have always sold for a premium, which is detached from the reality of the current business.

• Investors considering buying the stock must believe the company will make good on its plans for autonomous driving and robotics.

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Looking back at its history as a public company, Tesla (NASDAQ: TSLA) has generated serious wealth for investors. The auto industry disruptor has seen its shares skyrocket 20,290% since its initial public offering in June 2010 (as of June 25). Had you invested just $5,000 back then, there would be a $1 million balance in your portfolio right now.

No one would argue with that kind of impressive past gain. But will the leading EV stock be a millionaire maker in the future?

Tesla might be the most closely watched business in the world, partly, because of how it disrupted the global car market. Investors also keep tabs on what CEO Elon Musk is doing, as well as his plans for the company (more on this below).

However, investors shouldn't lose sight of what Tesla really is today, which is a challenged company that sells innovative and tech-enhanced EVs. In the first quarter, the business reported $14 billion of automotive revenue, 72% of the total. Total revenue was up just 0.9% in 2024, then it declined 9.2% in Q1 2025.

Operating income in the first quarter tanked 66%, thanks to lower average selling prices, fewer deliveries, and higher expenses.

To be fair, this is an extremely inventive company that's working at the cutting edge of exciting technologies. But someone viewing Tesla with a clear lens would see that this is a struggling business. Its core operations are under pressure, without a doubt.

What valuation should Tesla trade at knowing the reality of the business today? Even with a more reasonable price-to-earnings ratio (P/E) of 50 (compared to its current P/E ratio of 179), which is what luxury automaker Ferrari trades for, the stock has 72% downside. That certainly doesn't give investors any reason to be bullish.

Based on the current market cap of $1 trillion and P/E ratio of 179, Tesla is wildly overvalued. But the story stock has seemingly always traded at a steep valuation, as investors continue to bet on a future that sees the company realizing its potential as a dominant force in autonomous driving and robotics.

The company has finally launched a robotaxi service in Austin, Texas. This was highly anticipated and something that Musk has talked about for years. However, I think it turned out to be a big nothing burger.