The Dark Side of Holding Tesla

What the bulls won't tell you: Elon risk, competition crushing margins, FSD promises unfulfilled, and why TSLA at $350 should be a trap.

📅 Updated Feb 8, 2026

Uncomfortable Truths

  • Elon Risk: CEO owns 5 companies, tweets tanking stock reputation, political controversies alienating customers
  • Competition: BYD selling 3M+ EVs/year at 50% Tesla's price—margin compression inevitable
  • FSD Delays: "Robotaxis in 2020" became "maybe 2027"—credibility damaged
  • Valuation: Trading at 60x P/E for 15% growth—requires perfect execution to justify
  • Reality: Still a great company—but maybe not a great stock at current prices

Risk #1: The Elon Factor (Bigger Than You Think)

Let's address the elephant in the boardroom: Elon Musk is both Tesla's greatest asset—and its biggest liability.

Problem 1: Divided Attention

Elon currently runs:

  • Tesla (EVs, energy)
  • SpaceX (rockets, Starlink)
  • X/Twitter (social media disaster)
  • xAI (competing with OpenAI)
  • Neuralink (brain chips)

Anyone claiming a human can run 5 companies "effectively" is delusional. Tesla gets maybe 30% of Elon's time—and it shows.

Problem 2: Reputation Damage

In 2020, Tesla owners were "cool early adopters." In 2026? Many feel embarrassed.

Why? Elon's Twitter antics:

  • Political controversies alienating liberal buyers (Tesla's core demographic)
  • Erratic tweets causing stock volatility
  • "Funding secured" fraud settlement—$20M fine, stepped down as chairman
  • Public feuds with regulators, journalists, competitors

Brand perception matters. When owning a Tesla becomes a political statement people avoid, sales suffer.

Problem 3: Board Weakness

Tesla's board is filled with Elon's friends and allies. No real checks on his power. When the CEO can do whatever he wants, shareholders lose.

The $56 Billion Comp Package Disaster

In 2024, a court voided Elon's $56 billion compensation package. Elon threatened to "leave Tesla" if not re-approved.

This is shareholder hostage-taking. "Pay me or I'll tank the company." Not the behavior of someone committed to long-term value creation.

Contrarian Take

Forget the EV narrative. Tesla's real value isn't in cars—it's in the energy business Wall Street ignores. Their battery and solar division will outgrow automotive by 2028.

Risk #2: Competition is No Longer a Joke

In 2020, Tesla had no real competition. In 2026? The wolves are at the door.

BYD: The China Beast

  • Sold 3.2 million EVs in 2025 vs Tesla's 1.8M
  • Average price: $25,000 vs Tesla's $50,000+
  • Expanding globally: Europe, Asia, South America
  • Vertically integrated (makes own batteries)—margins improving

Legacy Auto Waking Up

  • Ford F-150 Lightning: Best-selling electric truck
  • GM Ultium platform: 20+ EV models by 2027
  • Hyundai/Kia: Winning on design + affordability
  • Mercedes EQ, BMW i-series: Stealing luxury buyers

The Margin Crisis

Tesla's gross margins collapsed from 29% (2022) to 18% (2025). Why?

  • Price cuts to compete with BYD
  • Lower ASPs (average selling prices)
  • Incentives and discounts just to move inventory

Tesla went from "premium brand" to "discount EV maker." Once margins compress, they rarely recover.

Risk #3: The FSD / Robotaxi Mirage

Tesla bulls justify the $1.1T valuation by saying "it's not a car company—it's an AI/robotics company!"

Elon's promises:

  • 2016: "Full Self-Driving in 2 years"
  • 2019: "1 million robotaxis by 2020"
  • 2022: "FSD will be solved this year"
  • 2024: "Robotaxi reveal in August" (delayed to October, nothing happened)
  • 2026: "Unsupervised FSD coming soonâ„¢"

Reality check:

  • FSD Beta still requires driver supervision (not "full" self-driving)
  • Accident rates with FSD are higher than human drivers per some studies
  • Regulatory approval? Nowhere close. NHTSA investigating crashes.
  • Waymo (Google) actually has driverless robotaxis operating TODAY in SF and Phoenix

If Tesla is "worth" $1.1T because of robotaxis that don't exist, what happens when reality sets in?

The $15K FSD Scam?

Tesla charges $15,000 for "Full Self-Driving" that isn't full and doesn't self-drive.

Customers who paid $10K in 2019 were promised "robotaxi earnings by 2020." Five years later... still waiting.

This is borderline fraud. And it damages trust.

Risk #4: Valuation Demands Perfection

At $350/share, Tesla is valued at:

  • $1.1 trillion market cap
  • 60x P/E ratio
  • 7.5x price/sales

For comparison:

  • Ford: 6x P/E, 0.3x P/S
  • GM: 5x P/E, 0.25x P/S
  • BYD: 28x P/E (half of Tesla)

Bulls say: "Tesla isn't a car company!" Fine. Let's compare to tech:

  • Nvidia: 45x P/E, growing 40%/year
  • Microsoft: 35x P/E, growing 15%/year
  • Tesla: 60x P/E, growing 10-15%/year (?!)

You're paying tech multiples for automotive growth. That's a recipe for disappointment.

What's Priced In?

For Tesla to justify $350/share, it needs:

  • 5M+ vehicles sold annually by 2030 (vs 1.8M today)
  • $500B+ revenue
  • 30%+ net margins (impossible in auto)
  • Robotaxi revenue ($50B+/year)
  • Energy business 10x'ing

If any of these fail to materialize, the stock is overvalued by 50%+.

So Should You Sell Tesla?

The Honest Take

Tesla is still a great company—best EVs, strong brand, innovation leader.

But it expect to be a mediocre stock at $350. Here's the framework:

Hold/Buy Tesla If:

  • You believe robotaxis will launch by 2027-2028
  • You can stomach 50% drawdowns
  • You trust Elon long-term (despite the chaos)
  • You're in for 5+ years

Sell/Trim Tesla If:

  • It's >25% of your portfolio (concentration risk)
  • You need the money within 3 years
  • You've lost faith in Elon or FSD narrative
  • You want safer tech exposure (buy Nvidia/Microsoft instead)

My Take: Trim to 10-15% position. Keep upside exposure, but derisk.