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Tesla’s AI Valuation Runs Into Weak Car Sales and Margin Pressure

The market prices Tesla for a robotics future despite mounting evidence of near-term automotive weakness.

Overview

  • October registrations slumped sharply, with Europe down 48.5%, China off 35.8%, and U.S. sales lower by 24% according to industry data.
  • Q3 set a delivery record and lifted revenue, but net income fell to $1.62 billion and operating margin slid to 5.8% from 10.8% a year earlier.
  • Analysts attribute a likely Q4 demand drop to the pull-forward created by the $7,500 U.S. federal EV tax credit that expired on Sept. 30.
  • Tesla trades at roughly 260 times projected 2025 earnings as investors bet on autonomy and humanoid robots despite limited commercial revenue so far.
  • Energy storage remains a bright spot with revenue up about 44% in Q3, while autonomy efforts show modest progress with small supervised test fleets and Cybercab mass production only reported as scheduled for 2026.