Tesla: A Trillion-Dollar Fugazi? TSLA Valuation vs BYD

Before we get to the Tesla valuation question, a quick definition. According to the Collins English Dictionary, fugazi is an adjective meaning “damaged beyond repair” or “fake, not genuine.”

Second, we are not suggesting Tesla is a Ponzi scheme. The company is real, and so are its products. What is fugazi about it? Its valuation. In fact, the TSLA Valuation stands out even among high-growth tech stocks, due to its extraordinary multiples. Tesla stock trades at roughly 174 times expected 2027 earnings, while its closest competitor, BYD, trades at about 12. Allow us to explain.

Is Tesla a Car Company or a Tech Company

Tesla was incorporated in 2003 and has been publicly traded since 2010. Every listed company is assigned an industry classification, and Tesla’s has been Automobile Manufacturers since its IPO. Mr. Elon Musk may believe Tesla should be considered a technology company, but the official classification has not changed.

One day it may. For now, Tesla is primarily an automobile manufacturer — and one that produces exclusively battery electric vehicles (BEVs).

Why BYD Is the Right Comparison for Tesla

So what is a good comparable for that line of business? BYD Co. Ltd. (BYDDY), Tesla’s most direct competitor today.

Tesla is trying to become more than an electric car maker, but as of 2026 about 70% of its revenue still comes from automotive sales. That share was as high as 80% in 2023. Tesla remains, first and foremost, a BEV producer, and this is key to understanding the TSLA Valuation in comparison to BYD.

BYD sells both BEVs and plug-in hybrids (PHEVs). According to its latest annual financial data, around 81% of its revenue comes from automobiles and related products, including batteries and other energy-related activities. The business mixes differ somewhat, but BYD is a reasonable comparable.

The two are also the global BEV leaders: BYD holds approximately 14% of global sales and Tesla around 12%, based on recent 2026 estimates.

Tesla Valuation vs BYD: Earnings per Share and Forward P/E

Now to the Tesla valuation itself. Using financial data from Seeking Alpha, we compare annual Basic EPS for both companies, along with analysts’ expectations for 2026 and 2027. Additionally, it is important to note that the TSLA Valuation is a frequent subject of debate among analysts worldwide.

Basic EPS and share prices in USD; 2026 and 2027 are analyst estimates. Source: Seeking Alpha.

Tesla’s Earnings Have Fallen 75% Since 2023

In 2021, Tesla’s Basic EPS was $1.87 and BYD’s was $0.06. Tesla’s earnings peaked in 2023 at $4.73 per share; BYD’s peaked in 2024 at $0.63.

Both companies have become less profitable since, but the decline has been far steeper at Tesla. Its EPS fell by about 75% between 2023 and 2025.

Even the 2027 projection of $2.16 per share is less than half of Tesla’s 2023 peak. BYD, meanwhile, is expected to reach record earnings of $0.77 per share in 2027.

Tesla Valuation: A P/E Ratio 14.6 Times BYD’s

EPS needs a reference point: the share price. With TSLA at $376.50 and BYD at $9.16, the 2027 forward P/E ratios come to roughly 174 for Tesla and 11.9 for BYD. Overall, this stark difference in TSLA Valuation compared to its rival is unprecedented in the automotive sector.

In other words, Tesla trades at a forward earnings multiple about 14.6 times BYD’s.

Tesla investors, of course, expect substantial future profits from autonomous driving, robotics, AI and other businesses. The question is whether those expectations can justify such an extraordinary premium.

Is Tesla Stock Overvalued

We would argue that the Tesla valuation sits at levels usually reserved for brand-new, exceptionally fast-growing companies.

Tesla is not brand-new, and it is certainly not growing exceptionally fast.

What is concerning is that profitability has dropped significantly since 2023, and analysts do not expect a recovery anywhere close to those levels any time soon.

Could a SpaceX Deal Change the Picture

The recent talk of SpaceX (SPCX) paying a premium to acquire TSLA is just that — talk. Any such deal would depend on both companies’ relative valuations and the terms offered to shareholders.

With SPCX trading around $140, against an IPO price of $135, it is hard to believe SPCX shareholders would be thrilled to pay a substantial premium for TSLA. It could still happen: Mr. Musk has considerable influence over both companies.

But even if a deal materializes, it would not change the fundamental Tesla valuation argument. Furthermore, the TSLA Valuation debate would persist regardless of ownership structure.

The Tesla valuation is priced on businesses that do not yet show up in its earnings. Until robotaxis, robots or AI start producing profits on the scale the share price implies, investors are paying a technology-company multiple for a car company whose earnings are shrinking. That, in our view, is the fugazi.

Disclaimer