If cars are not selling, how can there be an AI dream? Is Tesla's valuation, supported solely by faith, reaching the "liquidation moment"?

According to the Zhitong Finance APP, senior analyst Gytis Zizys from Seeking Alpha recently released a research report stating that even if Musk promotes Tesla's (TSLA.US) Dojo artificial intelligence supercomputer system, fully autonomous driving, Robotaxi, and humanoid robot applications with grand market prospects, Tesla is essentially still an electric vehicle manufacturer, with car sales contributing up to 75% of its revenue. The performance contribution from a series of "future-oriented businesses" such as AI supercomputer-driven FSD and Robotaxi is very small, and the revenue prospects are extremely vague. Zizys' valuation calculations show that even with the most optimistic DCF assumptions for clearer business paths like FSD and Robotaxi, Tesla's stock price expectations are still far below the current trading price of about $310.

The analyst emphasized in the study that the value created by Tesla's automotive business will provide enormous financial support for future projects driven by Tesla's incredibly powerful AI supercomputer system, such as FSD, Tesla Robotaxi, and new ultra-large-scale energy storage. From the perspective of AI spending by leading cloud computing companies in the U.S., the funding required for a powerful AI supercomputer system is enormous, which also means that if the automotive business continues to be weak, the "Tesla believers" among Tesla investors will significantly discount the "future faith value stream discounting" regarding Tesla's future and Musk himself.

Analyst expectations compiled by Bloomberg Intelligence show that Wall Street analysts generally expect the four major tech giants—Google, Microsoft, Meta (Facebook's parent company), and Amazon—to collectively spend over $350 billion this year on expanding or building new data centers centered around AI computing infrastructure, which implies a year-on-year growth of only 50% based on strong growth in 2024, with expectations to exceed $450 billion by 2026.

In Zizys' view, Tesla believers seem to ignore the past, viewing Musk's grand goals as the true future, even though the value created by AI supercomputer-driven FSD and Robotaxi businesses to date accounts for less than 10% of Tesla's revenue.

The future growth hopes for Tesla, which are also businesses with clearer expected paths—FSD, Robotaxi, and ultra-large-scale energy storage—are not including the "Optimus humanoid robot" because Zizys believes the visibility of this future-oriented business is too vague and the costs are high. Additionally, Musk's long history of making overly exaggerated promises and under-delivering has made all bullish forecasts somewhat unreliable.

Senior analyst Zizys from Seeking Alpha stated that even if businesses like FSD, which have very limited revenue, adopt the most optimistic DCF assumptions and Musk's optimistic guidance, Tesla's intrinsic value is only $233 per share, making the stock still too expensive for Wall Street investors at the current price level The so-called "Tesla-style believers" mainly refer to their obsession with the grand narrative logic of this technology company. That is, Tesla believers have a long-term recognition and bullish obsession with Tesla's energy storage systems, humanoid robots, FSD (Full Self-Driving), and the prospects of Robotaxi, far exceeding their rational attention and judgment on traditional valuation metrics.

Recently, Tesla's performance has been extremely weak: in the second quarter of fiscal year 2025, sales fell by 12% year-on-year, with both sales and profits below Wall Street expectations, and profit margins compressed for several consecutive quarters; the automotive business, as the core segment, saw revenue shrink from $19.9 billion in the same period last year to $16.7 billion.

In addition, Tesla's second-quarter delivery volume not only saw a nearly 10% year-on-year decline in its largest market, the United States, but also faced significant erosion of market share in Europe, which is crucial for Tesla's performance growth. Due to intensified competition in the European electric vehicle market and Musk's diminished personal influence from interfering in European politics, Tesla's market share in Europe is being significantly eroded, with sales continuing to decline sharply since the beginning of this year. For example, in the UK, its market share has plummeted to less than 1%.

Tesla - still a pure electric vehicle manufacturer in the current and medium term

Tesla's performance continues to rely on its vehicle sales. The company is making great efforts to break free from the single positioning of "just a car manufacturer," but it is difficult to escape this broad classification, as the actual progress of various "bullish narrative" projects has repeatedly been delayed compared to expectations. Loyal investors—namely Tesla believers—view Musk's commitments and grand goals as established facts, while ignoring his consistent over-promising and repeated failures to deliver. Even under a relatively optimistic DCF valuation framework, the company's valuation remains too high.

In the second quarter of fiscal year 2025, sales fell by 12% year-on-year, with the worst performance in Europe, which had the greatest impact on the company's lackluster revenue performance. The European market share has been declining throughout the year, with no signs of any fundamental turnaround; other electric vehicle manufacturers are eating into Tesla's market share.

Gross margin has significantly dropped to 17.2%, down 71 basis points year-on-year, due to declining sales and price cuts. Vehicle deliveries in the second quarter unexpectedly decreased by 13% year-on-year, with Model 3/Y deliveries down 12% and other luxury models down 52%. The decline in average selling price, increased discounts, and rising incentives further eroded profit margins.

The Berlin Gigafactory's capacity is only being utilized at a low level, limiting the dilution of fixed costs and putting pressure on profit margins. The Trump administration's support for clean energy has significantly cooled, leading to a year-on-year drop of over 50% in sales of regulatory credit categories, exacerbating revenue weakness.

Overall operational performance continues to be weak, with European softness potentially bringing more downside risks; new competitors from China are continuously capturing market share. As more competitors, including established European automakers like Volkswagen, Renault, and even Ferrari, launch pure EVs, regulatory credits will eventually tend to run out Therefore, in the view of Zizys, a senior analyst at Seeking Alpha, without cars, there would be no Tesla. The reality that no one wants to believe is that Tesla is primarily and most importantly still an automobile manufacturer. If the automotive business (which accounted for about 75% of total revenue last quarter) continues to struggle, the company will be unable to provide the necessary core cash flow and capital support for Tesla's future projects such as AI supercomputing systems, autonomous driving, Optimus humanoid robots, and energy storage.

Due to Musk's damaged political image since boosting Trump back into the presidency, sales have particularly declined in the European market. Many Tesla owners are reluctant to be associated with Musk's values. Although the stock price still enjoys a huge premium, this premium is not based on clear revenue expectations and business growth plans, but rather stems mainly from the fervent followers and so-called Tesla believers who firmly believe that Tesla will eventually become something far beyond a "pure car company."

Other businesses are more of a significant challenge than a major opportunity

Zizys stated in the research report that Tesla-style believers often provide the most optimistic expectations regarding the revenue potential of these promising business ventures.

FSD Subscription: Stubborn bulls of Tesla claim that if only 10%-20% of new car owners subscribe to the $99/month plan, it could generate an annual increase of $550 million to $1.5 billion. The company has not disclosed details, making it difficult to calculate precisely, but an annual increase of $550 million to $1.5 billion seems trivial compared to Tesla's automotive business.

Robotaxi: The pilot program is underway in Austin, and ARK Invest and other optimists predict that by 2029, it could drive an increase in Tesla's enterprise value of over $1 trillion, with expectations for nationwide deployment by 2027. However, so far, Robotaxi is still in its earliest stages and is in a cash burn period. More importantly, the Tesla FSD unsupervised version, which is crucial for Robotaxi, is still only undergoing early testing in limited areas of the United States.

Gigantic energy storage systems: 2024 is expected to be a huge growth year for this segment, with a projected year-on-year growth of 67% to $10 billion, having previously planned to deploy 1,500 GWh by 2030 (which implies a 90% annual compound growth rate). Based on the current progress of only 40 GWh in half a year, if it maintains a growth rate of 50%-70%, it can only reach 340-630 GWh by 2030, still far below Musk's target.

A detailed inventory of "Over-Promiser" Musk's "Excessive Commitments" record

The original timeline for Cybertruck mass production was set for 2021, but the current status and delays show initial production at the end of 2023, with multiple recalls and some features canceled.

The original timeline for FSD fully autonomous large-scale subscription promotion was set for 2018-2020, but the current status and delays indicate that by 2025, it will still require driver supervision and will only be in testing areas.

The original timeline for Robotaxi to achieve federal regulation and nationwide operation was pushed back from the earliest 2020 to 2024, and now there is no precise expected timeline for nationwide operation. The current status and delays of Robotaxi show that it is only in the Austin pilot program, with the latest claim of covering half of the U.S. population by the end of the year Zizys, a senior analyst at SeekingAlpha, emphasized that many loyal investors predicting explosive profit growth for Tesla's Robotaxi, artificial intelligence, FSD, humanoid robots, or energy storage businesses rely on the best expectations Musk has thrown out over the past seven years, rather than Tesla's historical execution. Given Musk's consistently poor execution performance, his comments on growth potential do not appear ideal on the surface.

Zizys stated that even if all of Tesla's businesses, including FSD and future-oriented businesses like Robotaxi, are evaluated under the "most optimistic scenario" provided by Musk or Tesla bulls like Ark, Tesla's stock price is still significantly overvalued. Using a discount rate of WACC 10.8% and a terminal growth rate of 2.5%, Zizys derived that Tesla's actual value based on the DCF model is only $233 per share