Tesla’s Market Paradox: Record Valuation Amidst Declining Core Business

A recent court ruling in Delaware has propelled Elon Musk's net worth to an unprecedented $749 billion, cementing his position as the wealthiest individual in history. This landmark decision comes at a time when Tesla's stock price hovers near all-time highs, yet a stark contradiction defines the current moment: the company's fundamental automotive business is contracting, with vehicle deliveries declining for a second consecutive year.

The Delaware Supreme Court reinstated stock options for CEO Elon Musk valued at $139 billion, which had been annulled earlier in 2024. A lower court had previously rescinded the original 2018 compensation package, labeling it "unfathomable." The higher court's justices overturned that decision, ruling the cancellation was flawed and unfair to Musk.

Initially worth $56 billion at the time of the agreement, the restoration of this package has pushed Musk past the $600 billion wealth threshold—a first for any individual. His fortune now exceeds that of Google co-founder Larry Page by approximately $500 billion.

The Divergence Between Share Price and Sales

As equity value climbs, operational performance tells a different story. Tesla's delivery figures are on a downward trajectory:

• Full Year 2024: The company delivered 1.79 million vehicles, representing a 1% decrease.
• 2025 through Q3: Deliveries have fallen by 6%.
• Q4 2025 Expectations: Approximately 450,000 units are anticipated.
• Full Year 2025 Forecast: Analysts project around 1.67 million vehicles, a 7% year-over-year drop.

The situation appears particularly acute in Europe. November saw sales plunge by 12% in the region. Excluding Norway, where an expiring tax incentive created a temporary surge, the decline exceeded 36%. Tesla's market share in Europe consequently slipped from 2.4% to 1.6%.

Should investors sell immediately? Or is it worth buying Tesla?

Intensifying competition highlights a key challenge. In the European market, BYD's entry-level Dolphin Surf model is priced at $26,900, while the Tesla Model 3 starts at $44,300. Analysts note this significant price gap is unlikely to be closed by Tesla in the short term.

Forthcoming Data to Confirm a Historic Shift

Tesla is scheduled to release its fourth-quarter delivery numbers around January 2. These results will formally seal the company's second straight year of declining sales—a definitive break from the consistent growth narrative established since the Model S launch in 2011.

Despite this trend, Deutsche Bank recently raised its price target on Tesla shares from $470 to $500. The institution cited advancements in the Full Self-Driving (FSD) system as justification, with market experts viewing this technology as a potential catalyst for the planned robotaxi expansions in Austin and San Francisco.

A Valuation Anchored in Future Promises

With a market capitalization of $1.6 trillion, Tesla ranks as the world's seventh most valuable publicly traded company. This valuation is underscored by a price-to-earnings ratio exceeding 330, a metric that reflects not current automotive profitability but rather investor expectations for future ventures like robotaxis and humanoid robots.

The present reality, however, involves timelines yet to be realized. The Cybercab robotaxi is slated for series production in 2026, with the Optimus robot following at the earliest by late 2026. Furthermore, Tesla's FSD technology has not yet received regulatory approval for driverless autonomous operation anywhere in the United States. In contrast, Alphabet's Waymo subsidiary is already completing over 450,000 paid autonomous rides weekly across five U.S. cities.