Tesla's Q4 Sales Collapse Validates DeepValue's Strong Sell Warning

What happened

Tesla just reported its fourth-quarter 2025 electric vehicle sales, capping off the sharpest annual decline in the company's history, as highlighted in a recent news article. This news directly confirms the DeepValue master report's finding that Tesla's deliveries have fallen for two consecutive years, dropping from over 1.8 million in 2023 to 1.63 million in 2025. The decline is driven by intensifying competition, particularly from BYD, which has overtaken Tesla in global BEV volumes and is eroding its market share in critical regions like Europe. Financially, this has led to plateaued revenue around $98 billion and a more than halved net income since 2023, due to aggressive price cuts and margin compression. With Tesla's valuation still extreme at a P/E of 268x, the core business deterioration underscores the report's STRONG SELL stance, as the equity story now hinges on highly uncertain autonomy and AI outcomes.

Implication

The sales decline reinforces that Tesla's automotive segment, comprising 90% of revenue, is structurally weakening, with no near-term recovery in sight from affordable competitors like BYD. Margins will likely continue to compress from price wars and mix shifts, further eroding profitability already down by over half since 2023. Energy storage growth, while profitable, remains too small at 10% of revenue to meaningfully offset automotive declines or justify the current valuation premium. Regulatory scrutiny of Autopilot/FSD and governance risks tied to Elon Musk's political profile add layers of uncertainty that could accelerate brand damage and sales erosion. Given the lack of margin of safety—with DCF implying intrinsic value near $14 per share versus a market price over $400—investors should prepare for potential sharp corrections if autonomy commercialization delays or fundamentals worsen.

Thesis delta

The news does not shift the STRONG SELL thesis but intensifies it by providing fresh, concrete evidence of accelerating sales declines and market share loss to BYD. It underscores that Tesla's path to recovery is increasingly reliant on speculative AI and autonomy breakthroughs, which face significant regulatory and execution hurdles. This reinforces the need for extreme caution, as core business woes are deepening faster than anticipated, further widening the gap between valuation and fundamentals.