Key Morningstar Metrics for Tesla
- Fair Value Estimate: USD 300
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
Tesla Stock Update
Tesla TSLA reported 418,227 deliveries in the fourth quarter of 2025 and 1,636,129 for the year. The company also reported 46.7 gigawatt hours of battery storage deployment. Tesla shares were down around 2% at the time of writing Jan. 2.
Why it matters: Fourth-quarter and full-year deliveries were down 16% and 9%, respectively. Tesla was affected by the expiration of the US electric vehicle tax credit that expired in September. We expect deliveries will continue to fall through the first three quarters of 2026.
- In Europe, deliveries declined due to increased competition. In 2026, deliveries will depend on Tesla’s ability to sell its autonomous driving software, which is currently awaiting regulatory approval. Should Tesla receive approval, we expect deliveries to rise. Otherwise, we see another decline.
- We think much of Tesla’s valuation remains driven by market sentiment around the robotaxi business, where the company continues to progress through testing, including testing its Cybercab vehicle. We think the robotaxi will continue to be the primary driver of the stock in 2026.
The bottom line: We maintain our USD 300 fair value estimate for narrow-moat Tesla. The 2025 deliveries were just below our estimate, but we had expected a decline. We view Tesla shares as overvalued with the stock trading a little less than 50% above our fair value estimate and in 2-star territory.
- We forecast the robotaxi will remain in testing throughout 2026. We see expanded testing, which includes additional cities, the removal of the Tesla employee who is a safety monitor in the vehicle, and Cybercab testing. Yet, we continue to expect full launch to not occur until 2027-28.
