Tesla(US:TSLA) The Motley Fool·2025-07-28 08:27Core Business Struggles - Tesla's core business is facing significant challenges, with 74% of its total revenue still reliant on its electric vehicle (EV) sales, which are declining rapidly [2][5] - In the first half of 2025, Tesla delivered 720,803 EVs, marking a 13% decline year-over-year, contributing to a total revenue drop of 9% in Q1 and 12% in Q2 [5][6] Competition and Market Share - Increased competition is a major factor in Tesla's declining sales, with a notable 60% drop in sales in Germany in June, despite overall EV sales in the country growing by 8.6% [6][8] - Affordability issues are impacting consumer choices, as competitors like BYD offer lower-priced models, with BYD's Dolphin Surf EV priced around $26,000 compared to Tesla's Model 3 starting at $40,000 [7][8] Future Product Platforms - Tesla is investing in future product platforms, including the Cybercab robotaxi and the Optimus humanoid robot, but these are not expected to generate significant revenue in the near term [3][10] - The Cybercab is set to enter mass production next year, with Musk aiming for widespread deployment to generate continuous revenue [10][11] Financial Performance and Valuation - Tesla's earnings per share (EPS) fell by 18% year-over-year in Q2, following a 71% drop in Q1, resulting in a trailing-12-month EPS of $1.67 and a P/E ratio of 180.7 [14][16] - The current valuation makes Tesla significantly more expensive than the Nasdaq-100 technology index and Nvidia, suggesting a potential stock price decline of 70% to align its P/E ratio with these benchmarks [15][16] Long-term Opportunities - Some analysts believe in the long-term potential of Tesla's robotaxi business, estimating it could represent a trillion-dollar opportunity if successful [17] - The Optimus humanoid robot is also seen as a future revenue generator, with Musk projecting production of 1 million units annually in five years, potentially delivering $10 trillion in revenue over the long term [18][19]