Key Morningstar Metrics for Tesla
- Fair Value Estimate: USD 250
- Morningstar Rating: ★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
Tesla‘s TSLA website showed a standard version of its Model Y SUV and Model 3 sedan, the company’s most affordable version of each vehicle. Tesla shares were down 3% at the time of writing Oct. 7.
Why it matters: The new Model Y and Model 3 featured a sub-$40,000 price. This puts these vehicles in the higher end of the affordable SUV and sedan categories. This should help Tesla boost deliveries following the expiration of the US EV tax credit at the end of September.
- The vehicles come with more a basic interior and décor and fewer electronics. This should still incentivize some consumers to pay up for the higher-end versions of each vehicle. It should also allow Tesla to sell the more affordable versions at a profit.
The bottom line: We maintain our $250 fair value estimate for narrow-moat Tesla. Our model assumed a more affordable Model Y was released. While we forecast the US tax credit expiration will weigh on 2026 deliveries, we think these new versions will drive deliveries growth in 2027 and beyond.
- At current prices, we view Tesla shares as significantly overvalued, with the stock trading around 75% above our fair value estimate and in 1-star territory. We think the stock is largely priced for perfection in deliveries growth and the rollout of the robotaxi, which is currently in testing.
- Tesla shares continue to trade largely on market expectations for the success of the company’s autonomous driving software and future robotaxi product. We view robotaxi as successful over the long term but doubt it will be fully rolled out next year, in line with management’s guidance.
