The Zacks Analyst Blog Tesla, General Motors and Ford

Core Viewpoint - Tesla shareholders have shown significant confidence in CEO Elon Musk by approving a controversial pay package worth approximately $1 trillion, which is entirely performance-based and tied to ambitious market cap and operational goals [2][3][4] Group 1: Pay Package and Performance Goals - Musk's pay package is one of the largest ever conceived, structured across 12 tranches linked to aggressive targets [3] - To unlock the full payout, Tesla's adjusted EBITDA must increase 25 times to $400 billion by 2035, and the market value must reach $8.5 trillion, up from over $1.5 trillion currently [4] - Additional targets include selling 20 million vehicles, achieving 10 million active Full Self-Driving subscriptions, operating 1 million robotaxis, and delivering 1 million humanoid robots by 2035 [4][5] Group 2: Current Business Challenges - Tesla's core electric vehicle (EV) business is facing challenges, with a 13% year-over-year sales decline in both Q1 and Q2 of 2025, following its first-ever annual delivery decline in 2024 [7] - The sales downturn is particularly pronounced in Europe, and Tesla's automotive margins are under pressure due to price cuts, high costs, and tariffs [7][10] - The brand's appeal has diminished, and the EV market is not as robust as it once was, prompting Musk to focus on future technologies like robotaxis and humanoid robots [8][10] Group 3: Future Prospects and Competition - Tesla's future growth is heavily reliant on advancements in artificial intelligence, autonomous vehicles, and robotics, with a vision of creating an ecosystem of self-driving cars and AI-powered robots [5][8] - Current projects, such as robotaxi prototypes and humanoid robots, are still in early stages, with prototypes requiring safety drivers and no orders being taken for humanoid robots yet [9] - Competitors like Waymo are leading in the driverless technology race, and other robotics companies are advancing in automation, presenting significant challenges for Tesla [9] Group 4: Stock Performance and Valuation - Tesla shares have increased approximately 10% year-to-date, underperforming compared to General Motors and Ford, which have seen increases of 32% and 29%, respectively [11] - Tesla's forward price-to-sales ratio stands at 13.93, significantly higher than the industry average, while General Motors and Ford have ratios of 0.35 and 0.32, respectively [11]