Tesla’s stock defied gravity for years, but is Elon Musk’s EV party over?

Tesla stock plunges over 15%, raising concerns about overvaluation and reliance on future robotaxi and robot production.

Tesla’s stock has dropped by nearly half in three months. Even so, investors are still debating whether Elon Musk's electric-vehicle maker remains overpriced.

The company's market capitalisation has dropped 45% since hitting an all-time high of $1.5 trillion on December 17, erasing most of the gains the stock made after CEO Musk helped finance the election of U.S. President Donald Trump.

And yet Tesla continues to fetch a valuation far above those of the world’s biggest automotive and technology firms, judging by standard financial metrics. That’s because most investors and analysts have bought Mr. Musk’s pitch that the world’s most-valuable automaker isn’t really a car company at all, but rather an artificial-intelligence pioneer that will soon unleash a revolution in robotaxis and humanoid robots.

Tesla’s electric-vehicle business accounts for almost all of its revenue but less than a quarter of its stock-market value, according to a Reuters review of more than a dozen analyses by banks and investment firms. The bulk of its worth rests on hopes for autonomous vehicles Tesla hasn't yet delivered, despite Mr. Musk's promises in every year since 2016 that driverless Teslas would arrive no later than the following year.

The stock’s decline since December stems from falling vehicle sales and profits; protests of Mr. Musk’s political activity, including his mass firings of U.S. government workers as a senior Trump advisor; and investor worries that politics is distracting the world’s richest man from tending to his cash cow. Still, Tesla’s market capitalisation remains up about $65 billion since the election — an amount higher than the entire value of General Motors.

After this article was published on Monday, Tesla shares fell by more than 15%, slicing off more than $125 billion in market value, after UBS cut its forecast for the automaker's first-quarter deliveries. The decline came in tandem with a broader market selloff on worries about tariffs and recession fears, with the Nasdaq losing 4% and the S&P 500 dropping 2.7%.

Tesla’s total worth of $845 billion as of Friday's close still tops the next nine most-valuable major automakers combined, which collectively sold about 44 million cars last year, compared to Tesla’s 1.8 million.