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Investors also love Elon Musk.
What makes Tesla, the world’s leading automaker by market cap, so valuable? The obvious answer would be that it sells hundreds of thousands of cars every quarter, for which it can command a tidy premium because of how much the Tesla name is worth. When it rolls out something new — no matter how odd-looking — Tesla fans are willing to put up money for the right to order a vehicle years later. As many of the world’s biggest economies try to transition away from internal combustion, Tesla is as well positioned as anyone to benefit immensely.
But according to one of its biggest boosters on Wall Street, Tesla’s core business of selling electric cars only contributes so much.
“Global EV momentum is stalling,” wrote Morgan Stanley analyst Adam Jonas, a longtime Tesla booster, in a research report released Monday. “The market is over-supplied vs. demand. We anticipate Tesla’s 2024 outlook to be cautious on volume and profitability.” He marked down his estimate for Tesla’s 2024 sales to 2.08 million units, compared to his previous estimate of 2.25 million, with profitability falling thanks to the aggressive price cuts the company instituted last year in a bid to juice sales. Then came the thing that really hurt: Jonas also adjusted his price target for Tesla shares down from $380 to $345 — a figure well north of the $212 the shares closed at on Friday, but still a noticeable cut. Tesla shares traded down 1.5% through Monday afternoon.
For any other car company that exclusively sold EVs, this kind of price target shrinkage would be a serious problem. But Jonas doesn’t see Tesla as a car company. Or, at least, not
just as a car company.
Of the $345 Jonas thinks a Tesla share is worth, only $75 comes from selling electric vehicles. The rest is largely from businesses that either don’t exist for the company, or else don’t generate meaningful revenue compared to selling cars.
Let’s break this down: In its most recent quarter, Tesla had around $23 billion of total revenues, $19.5 billion of which came from selling cars; $1.5 billion came from its energy business, with the remaining $2 billion coming from “services and other revenue,” which include Tesla’s Supercharging network.
To Jonas, however, Tesla “is both an auto stock + an energy, AI/robotics company,” he wrote, adding that “we believe investors should not ignore the continued developments of Tesla’s other bets.” These include things like turning its cars into something more like software subscriptions, which incur recurring revenues (as Tesla already does with its Full Self Driving software) and a robotaxi network that does not yet exist, but which Jonas projects will have 230,000 vehicles by 2030. There are also projects like the Optimus humanoid robot, which Jonas didn’t put a valuation on but thinks that investors should factor in when considering whether to buy or sell Tesla shares.
To get a sense of the gargantuan scale Jonas tends to operate on, last year he wrote that Dojo, the supercomputer Tesla developed for its automated driving system, could add $500 billion of value to Tesla, even though “it is difficult to explicitly validate the many claims Tesla has made about Dojo's cost and performance.” He was confident, however, that “Tesla has a chance of bringing forth a competitive customized solution given the company’s innovation track record and capabilities.”
The idea that Tesla can be more than an electric car company — one that sprouts innovative and profitable businesses, whether from robotics or artificial intelligence — stems almost entirely from the fact that Elon Musk runs it. Musk himself is well aware of this. Last week he wrote on X, “I am uncomfortable growing Tesla to be a leader in A.I. & robotics without having ~25% voting control,” which would be about double the voting power he has now. (That voting power, of course, was substantially diluted thanks to selling billions of dollars of Tesla shares to fund his takeover of now-X, then-Twitter.)
While it’s unlikely that Musk would be able to break off the robots and AI initiatives that literally power Tesla, the threat is enough to spook investors given Musk’s obvious willingness to pursue major projects outside of Tesla (e.g. SpaceX) — and the high valuation those projects can get from investors — not to mention the amount of time and energy Musk spends on them.
You can see the implicit value investors place on Tesla’s (and Musks’s) ability to spin up new businesses not just in Tesla’s high stock price and overall valuation — around $650 billion, compared to $270 billion for Toyota and $50 billion for GM, both of which sell many, many more cars— but also in how investors value Tesla’s earnings.
Tesla’s price-to-earnings ratio, which is essentially the stock price divided by the earnings per share, is around 60, comparable to Amazon or the enterprise software company Workday, companies investors buy for their future growth or profit potential derived from selling software on a subscription basis. Plus, there’s a market mania for anything AI related, as one can see with Nvidia, which makes the chips used by many companies with AI products (including Tesla) and has gained several hundred billion dollars in market capitalization in the last year. One can also see this with Microsoft, whose OpenAI stake only gets more valuable, company drama notwithstanding.
Stolid GM, by contrast, trades at four times earnings, while Toyota is around 10.
While some of this difference can be attributed to the higher prices Tesla is able to charge for its vehicles, that can only account for so much — Tesla’s best-selling cars are its lower-end vehicles, and again, it’s been aggressively cutting prices. And while luxury automakers have higher valuations than mass market car companies, Tesla still trades higher than luxury automakers including Porsche, Ferrari, and BMW.
Jonas said in his note that his high valuation for the company “is highly dependent upon Tesla accruing value as an AI enabler,” and that “any change of organizational or legal structure that impedes Tesla’s ability to participate in the development of AI could be detrimental.”
And Jonas isn’t the only analyst who sees a substantial portion of Tesla’s value being made up of something beyond its current electric vehicle business. “A key to our bullish thesis that all AI initiatives be kept within Tesla,” Wedbush Securities analyst Dan Ives wrote in a note last week. “If Musk ultimately went down the path to create his own company (separate from Tesla) for his next generation AI projects this would clearly be a big negative for the Tesla story.”
Even if Tesla reports a disappointing outlook for its electric vehicles business with its fourth quarter earnings on Wednesday, expect analysts and investors to be interested in what Tesla isn’t doing yet but could be doing in the future — as long as Musk is still there.
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Dozens of people are reporting problems claiming the subsidy — and it’s not even Trump’s fault.
Eric Walker, of Zanesville, Ohio, bought a Ford F-150 Lightning in March of last year. Ironically, Walker designs and manufactures bearings for internal combustion engines for a living. But he drives 70 miles to and from his job, and he was thrilled not to have to pay for gas anymore. “I love it so much. I honestly don’t think I could ever go back to a non-EV,” he told me. “It’s just more fun, more punchy.”
But although he’s saving on gas, Walker recently learned he’d made a major, expensive mistake at the dealership when he bought the truck. The F-150 Lightning qualified for a federal tax credit of $7,500 in 2024. Walker was income-eligible and planned to claim it when he filed his taxes. But his dealership never reported the sale to the Internal Revenue Service, and at the time, Walker had no idea this was required. When he went to submit his tax return recently, it was rejected. Now, it may be too late.
Walker is not alone. Dozens of users on Reddit have been sharing near-identical stories as tax season has gotten underway — and it’s only early February. It is unclear exactly how many EV buyers are affected. What we do know is that it will be up to the Trump administration’s Treasury Department to decide whether any of them will get the refund they were counting on — the same administration that wants to kill the tax credit altogether.
The problem dates back to a change in the process for claiming the tax credit. For the 2023 tax year, dealers had until January 15, 2024 to report eligible EV sales to the IRS. For 2024, however, the IRS introduced a new, digital reporting system and new deadlines. Starting in January 2024, if a customer bought an eligible vehicle and wanted to claim the tax credit, dealerships were required to file a report within three days of the time of sale to the IRS through a web portal called Energy Credits Online.
This change coincided with another: Buyers now had the option to transfer the credit to their dealership instead of claiming it themselves. The dealer could then take the value of the credit off the price of the car and get reimbursed by the IRS. This was voluntary on the dealerships’ part, and many opted in. By October, more than 300,000 EV sales had used this transfer option, according to the Treasury Department. But apparently there were also many dealers who didn’t want to bother with it. And at least some of them never bothered to learn about the online portal at all.
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Charlie Gerk, an engineer living in the suburbs of Minneapolis, bought a Chrysler Pacifica plug-in electric hybrid in February after his wife had twins. Unlike Walker, Gerk knew all about the workings of the tax credit, and he wanted to get his discount up front. But the dealership he was working with — a smaller, family-run business — had not gotten set up to do it. “He’s like, ‘We sell six EVs a year, we’re not going to take the time to sign up for that program,’” Gerk recalled the salesman saying. Gerk decided to claim the tax credit himself, and the dealership even gave him a few hundred bucks off the car since he’d have to wait a year to see the refund. He then emailed the dealership instructions from the IRS for reporting the sale through the online portal, and the dealership assured him it would submit the information. It sent Gerk a copy of form 15400, an IRS “Clean Vehicle Seller Report,” for him to keep for his records — except that the form was dated 2023. When Gerk inquired about it, the finance manager told him it was just because it was still so early in the year, and that they would make sure it got filed appropriately online.
Fast forward to one year later, and Gerk came across a post in the Pacifica Reddit forum from someone whose claim was rejected by the IRS because their dealer failed to report the sale. “I logged into my online dashboard for the IRS, and sure enough, the vehicle’s not there,” Gerk told me. “If it was filed appropriately, it would have shown on my online dashboard that I had an EV clean vehicle credit for 2024, and it’s not there.”
Gerk spoke to his dealership, which said it would look into the situation. He forwarded me an email exchange between the IRS and his dealership in which a representative from the IRS’ Clean Vehicle Team said it was probably too late to fix. “The open period for any unsubmitted time of sale reports is closed,” the staffer wrote. “We are expecting some Energy Credit Online (ECO) updates so contact us via secure messaging in the Spring for additional information.”
Some users on Reddit who, like Gerk, were aware of the reporting requirements when they bought their EVs, have shared stories about visiting more than a dozen dealerships before finding one that was registered with ECO and willing to file the paperwork. Others who didn't know about the rules have recalled inquiring about the tax credit at their dealership and being told they could simply claim it on their taxes. They only found out when they tried to submit their tax paperwork on TurboTax or another e-filing system and received an error message informing them that their vehicle is not registered in the IRS database.
Some blame the dealerships for misleading them and are wondering if they have grounds to sue. Others blame the IRS for not adequately informing customers or dealers about the rules.
“My frustration lies with the fact the IRS would even allow this to be an option,” Gerk told me. “If you’re going to allow the credit to be taken by me, I have to be dependent on my dealer doing the right thing?” (Gerk asked that we not share the name of his dealership.)
I spoke with a former Treasury staffer who worked on the program, who told me that the agency went to great lengths to educate dealerships about the new online portal and filing requirements, including hosting webinars that reached more than 10,000 dealerships and a presentation at the National Automobile Dealership Association’s annual convention in Las Vegas. The agency put up pages of fact sheets, checklists, and other materials for dealers and consumers on the IRS website, they said. But the IRS doesn’t have a marketing budget, and also relied heavily on NADA, the Dealership Association, for help getting the word out.
NADA did not respond to multiple emails and phone calls asking for comment. I also contacted several of the dealerships who sold EVs to buyers who are now having their tax credit claims rejected, none of which got back to me.
Many of the affected buyers are trying to get their dealerships to contact the IRS and see if they can retroactively report the sales, as Gerk did. Some are having more luck than others. When Walker contacted his dealership in Cleveland, Ohio, to see if there was anything it could do to help him, it still seemed to have no idea what he was talking about. Walker forwarded me a response from his dealership asking him if he had spoken to his accountant. “My sales desk is pretty insistent on that this is something your accountant would handle,” it said. (Walker did not want to disclose the name of his dealership as he is still trying to work with them on a solution.)
I reached out to the Treasury Department with a list of questions, including whether this issue was on its radar and what consumers who find themselves in this situation should do. The agency confirmed receipt of the request, but had not gotten back to me by press time. We will update this story if they do. There are reports on Reddit of EV buyers having a similar issue claiming the tax credit in 2024 for purchases made in 2023. Some filed their taxes without the EV credit and then submitted appeals to the IRS after the fact, with seemingly some success.
Buyers stuck in this situation have few other places to turn. Some Reddit users have posted about reaching out to their representatives, who offered to contact the IRS on their behalf. One challenge, as noted by the former Treasury staffer I spoke with, is that unlike the dealers, who have NADA, there is no consumer advocacy group for electric vehicle buyers who can engage with lawmakers and the Treasury and request a solution.
“I don’t necessarily need the money,” Walker told me. “It was just gonna go towards some more student loans — I’m just trying to pay down all of my debt as soon as possible. So I didn’t need it. But it would have been certainly something nice to have.”
For now, at least, the math simply doesn’t work. Enter the EREV.
American EVs are caught in a size conundrum.
Over the past three decades, U.S. drivers decided they want tall, roomy crossovers and pickup trucks rather than coupes and sedans. These popular big vehicles looked like the obvious place to electrify as the car companies made their uneasy first moves away from combustion. But hefty vehicles and batteries don’t mix: It takes much, much larger batteries to push long, heavy, aerodynamically unfriendly SUVs and trucks down the road, which can make the prices of the EV versions spiral out of control.
Now, as the car industry confronts a confusing new era under Trump, signals of change are afoot. Although a typical EV that uses only a rechargeable battery for its power makes sense for smaller, more efficient cars with lower energy demands, that might not be the way the industry tries to electrify its biggest models anymore.
The predicament at Ford is particularly telling. The Detroit giant was an early EV adopter compared to its rivals, rolling out the Mustang Mach-E at the end of 2020 and the Ford F-150 Lightning, an electrified version of the best-selling vehicle in America, in 2022. These vehicles sell: Mustang Mach-E was the No. 3 EV in the United States in 2024, trailing only Tesla’s big two. The Lightning pickup came in No. 6.
Yet Ford is in an EV crisis. The 33,510 Lightning trucks it sold last year amount to less than 5% of the 730,000-plus tally for the ordinary F-150. With those sales stacked up against enormous costs needed to invest in EV and battery manufacturing, the brand’s EV division has been losing billions of dollars per year. Amid this struggle, Ford continues to shift its EV plans and hasn’t introduced a new EV to the market in three years. During this time, rival GM has begun to crank out Blazer and Equinox EVs, and now says its EV group is profitable, at least on a heavily qualified basis.
As CEO Jim Farley admitted during an earnings call on Wednesday, Ford simply can’t make the math work out when it comes to big EVs. The F-150 Lightning starts at $63,000 thanks in large part to the enormous battery it requires. Even then, the base version gets just 230 miles of range — a figure that, like with all EVs, drops quickly in extreme weather, when going uphill, or when towing. Combine those technical problems and high prices with the cultural resistance to EVs among many pickup drivers and the result is the continually rough state of the EV truck market.
It sounds like Ford no longer believes pure electric is the answer for its biggest vehicles. Instead, Farley announced a plan to pivot to extended-range electric vehicle (or EREV) versions of its pickup trucks and large SUVs later in the decade.
EREVs are having a moment. These vehicles use a large battery to power the electric motors that push the wheels, just like an EV does. They also carry an onboard gas engine that acts as a generator, recharging the battery when it gets low and greatly increasing the vehicle’s range between refueling stops. EREVs are big in China. They got a burst of hype in America when Ram promised its upcoming Ramcharger EREV pickup truck would achieve nearly 700 miles of combined range. Scout Motors, the brand behind the boxy International Scout icon of the 1960s and 70s, is returning to the U.S. under Volkswagen ownership and finding a groundswell of enthusiasm for its promised EREV SUV.
The EREV setup makes a lot of sense for heavy-duty rides. Ramcharger, for example, will come with a 92 kilowatt-hour battery that can charge via plug and should deliver around 145 miles of electric range. The size of the pickup truck means it can also accommodate a V6 engine and a gas tank large enough to stretch the Ramcharger’s overall range to 690 miles. It is, effectively, a plug-in hybrid on steroids, with a battery big enough to accomplish nearly any daily driving on electricity and enough backup gasoline to tow anything and go anywhere.
Using that trusty V6 to generate electricity isn’t nearly as energy-efficient as charging and discharging a battery. But as a backup that kicks in only after 100-plus miles of electric driving, it’s certainly a better climate option than a gas-only pickup or a traditional hybrid. The setup is also ideally suited for what drivers of heavy duty vehicles need (or, at least, what they think they need): efficient local driving with no range anxiety. And it’s similar enough to the comfortable plug-and-go paradigm that an extended-range EV should seem less alien to the pickup owner.
Ford’s big pivot looks like a sign of the times. The brand still plans to build EVs at the smaller end of its range; its skunkwords experimental team is hard at work on Ford’s long-running attempt to build an electric vehicle in the $30,000 range. If Ford could make EVs at a price at least reasonably competitive with entry-level combustion cars, then many buyers might go electric for pure pragmatic terms, seeing the EV as a better economic bet in the long run. Electric-only makes sense here.
But at the big end, that’s not the case. As Bloombergreports on Ford’s EV trouble, most buyers in the U.S. show “no willingness to pay a premium” for an electric vehicle over a gas one or a hybrid. Facing the prospect of the $7,500 EV tax credit disappearing under Trump, plus the specter of tariffs driving up auto production costs, and the task of selling Americans an expensive electric-only pickup truck or giant SUV goes from fraught to extremely difficult.
As much as the industry has coalesced around the pure EV as the best way to green the car industry, this sort of bifurcation — EV for smaller vehicles, EREV for big ones — could be the best way forward. Especially if the Ramcharger or EREV Ford F-150 is what it takes to convince a quorum of pickup truck drivers to ditch their gas-only trucks.
Current conditions: People in Sydney, Australia, were told to stay inside after an intense rainstorm caused major flooding • Temperatures today will be between 25 and 40 degrees Fahrenheit below average across the northern Rockies and High Plains • It’s drizzly in Paris, where world leaders are gathering to discuss artificial intelligence policy.
Well, today was supposed to be the deadline for new and improved climate plans to be submitted by countries committed to the Paris Agreement. These plans – known as nationally determined contributions – outline emissions targets through 2030 and explain how countries plan to reach those targets. Everyone has known about the looming deadline for two years, yet Carbon Briefreports that just 10 of the 195 members of the Paris Agreement have submitted their NDCs. “Countries missing the deadline represent 83% of global emissions and nearly 80% of the world’s economy,” according to Carbon Brief. Last week UN climate chief Simon Stiell struck a lenient tone, saying the plans need to be in by September “at the latest,” which would be ahead of COP30 in November. The U.S. submitted its new NDC well ahead of the deadline, but this was before President Trump took office, and has more or less been disregarded.
Many of the country’s largest pension funds are falling short of their obligations to protect members’ investments by failing to address climate change risks in their proxy voting. That’s according to new analysis from the Sierra Club, which analyzed 32 of the largest and most influential state and local pension systems in the U.S. Collectively, these funds have more than $3.8 trillion in assets under management. Proxy voting is when pensions vote on behalf of shareholders at companies’ annual meetings, weighing in on various corporate policies and initiatives. In the case of climate change, this might be things like nudging a company to disclose greenhouse gas emissions, or better yet, reduce emissions by creating transition plans.
This report looked at funds’ recent proxy voting records and voting guidelines, which pension staff use to guide their voting decisions. The funds were then graded from A (“industry leaders”) to F (“industry laggards”). Just one fund, the Massachusetts Pension Reserves Investment Management (MassPRIM), received an “A” grade; the majority received either “D” or “F” grades. Others didn’t disclose their voting records at all. “To ensure they can meet their obligations to protect retirees’ hard-earned money for decades to come, pensions must strengthen their proxy voting strategies to hold corporate polluters accountable and support climate progress,” said Allie Lindstrom, a senior strategist with the Sierra Club.
Football fans in Los Angeles watching last night’s Super Bowl may have seen an ad warning about the growing climate crisis. The regional spot was made by Science Moms, a nonpartisan group of climate scientists who are also mothers. The “By the Time” ad shows a montage of young girls growing into adults, and warns that climate change is rapidly altering the world today’s children will inherit. “Our window to act on climate change is like watching them grow up,” the voiceover says. “We blink, and we miss it.” It also encourages viewers to donate to LA wildfire victims. A Science Moms spokesperson toldADWEEK they expected some 11 million people to see the ad, and that focus group testing showed a 25% increase in support for climate action among viewers. The New York Timesincluded the ad in its lineup of best Super Bowl commercials, saying it was “a little clunky and sanctimonious in its execution but unimpeachable in its sentiments.”
General Motors will reportedly stop selling the gas-powered Chevy Blazer in North America after this year because the company wants its plant in Ramos Arizpe, Mexico, to produce only electric vehicles. The move, first reported by GM Authority, means “GM will no longer offer an internal combustion two-row midsize crossover in North America.” If you have your heart set on a Blazer, you can always get the electric version.
In case you missed it: Airbus has delayed its big plan to unveil a hydrogen-powered aircraft by 2035, citing the challenges of “developing a hydrogen ecosystem — including infrastructure, production, distribution and regulatory frameworks.” The company has been trying to develop a short-range hydrogen plane since 2020, and has touted hydrogen as key to helping curb the aviation industry’s emissions. It didn’t give an updated timeline for the project.
“If Michael Pollan’s basic dietary guidance is ‘eat food, not too much, mostly plants,’ then the Burgum-Wright energy policy might be, ‘produce energy, as much as you can, mostly fossil fuels.’”
–Heatmap’s Matthew Zeitlin on the new era of Trump’s energy czars