Tesla’s Valuation Faces a Reality Check as Core Business Weakens

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As 2025 draws to a close, Tesla’s operational performance is showing significant strain. The electric vehicle pioneer is grappling with a combination of declining deliveries, escalating costs, and diminishing contributions from high-margin regulatory credits, all of which are pressuring its core automotive operations. Yet, the company’s stock valuation remains elevated, buoyed by investor faith in its long-term ambitions for autonomous robotaxis, artificial intelligence, and robotics. This growing divergence between present fundamentals and future promise raises a critical question for the market.

Beyond the headline delivery numbers, Tesla’s financial margins are facing a concerted assault. Several concurrent factors are eroding profitability:

• Compressed Gross Margins: Read more...