A More Profitable Tesla Is Still a Pricey Ride
Surprise lift in automotive margins reverses damage from Robotaxi fallout, but valuation is now far above even AI stars
3 min
Elon Musk thinks of Tesla as an AI company. He’d be seriously bummed if it were valued like one.
Tesla’s third-quarter results gave the EV maker’s stock price a strong boost on Thursday, recovering the ground lost following the company’s disappointing Robotaxi event earlier this month. The reaction wasn’t entirely unwarranted: Tesla managed to surprise Wall Street by reversing the steady decline its automotive gross margins have suffered over the past two years. Strong growth in sales and gross profits in the company’s energy generation and storage segment also helped. Tesla’s total operating profit came in at $2.7 billion for the quarter—37% above Wall Street’s consensus forecast, according to FactSet.
Still, Tesla’s overall growth is far below normal, or at least what has long been the company’s version of normal. Total automotive revenue rising 2% year over year in the third quarter comes after two consecutive quarters of declines. That is also a fraction of the 45% growth Tesla’s core business averaged on a quarterly basis from 2020 through 2023. The world’s largest EV maker can’t escape the gravity of a global auto-sales slowdown .
And even the profit boost might not be built to last. “Sustaining these margins in Q4, however, will be challenging, given the current economic environment,” said Tesla Chief Financial Officer Vaibhav Taneja on the company’s conference call on Wednesday.
Analysts boosted their profit targets anyway. The consensus projection for Tesla’s per-share earnings over the next four quarters rose more than 5% following the company’s report. But even that doesn’t cover Tesla’s chunky valuation; Thursday’s jump of nearly 22% puts the stock price at around 83 times forward earnings. That is more than twice the multiple that megacap tech giants such as Apple , Microsoft and Amazon .com fetch. If Tesla were valued on par with Nvidia , whose chips Tesla is snapping up to power its ambitions in AI, autonomous driving and robotics, the stock price—and a good chunk of Musk’s net worth—would be be half its current level.
Hence, Tesla needs much, much more to go right than just a recovery in the global EV market. But its biggest ambitions are distant and by no means slam dunks. Musk reiterated his plan to have Robotaxis begin production in 2026 . The ultimate fate of that business, though, lies in the company’s ability to clear the necessary regulatory hurdles for self-driving cars in states like California—not to mention catching up to rivals such as Waymo that are already on the road.
“While compute capacity growth is a positive indicator that will support accelerated learning cycles, we remain cautious on Tesla’s system performance vs. peers given lack of driver-out regulatory approvals and limited detail on miles between engagement,” wrote Colin Rusch of Oppenheimer on Thursday.
The humanoid robot called Optimus is even more of a long shot—not that Musk qualifies it as such. “So I think it has a good chance of being the most valuable product ever made,” Musk said on Wednesday’s call.
Even some of Tesla’s near-term targets look ambitious. After scrapping its Model 2 project earlier this year, the company reiterated a plan to launch a “more affordable” car in the first half of next year, though details on that vehicle remain sparse. And Musk projected vehicle-sales growth of 20% to 30% next year—a sharp jump from the 13% pace analysts were projecting, according to FactSet.
“We struggle to handicap the unit growth, given the uncertain timing of volume production, a limited sense of how different the offerings will be relative to the current Model 3 and Y, and true delivered price,” wrote Toni Sacconaghi of Bernstein.
Tesla has to get an awful lot of rubber to meet the road.
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The Federal Budget may have softened some of its proposed tax reforms, but it has exposed a bigger issue: too many families are relying on wealth structures that no longer reflect the realities of modern life.
3 min
For many Australians, the 2026 Federal Budget initially felt like a direct challenge to the way wealth is created, held and transferred between generations.
The headlines were immediate: changes to capital gains tax, reforms to discretionary trusts, restrictions on negative gearing and increased scrutiny of investment structures. Unsurprisingly, affluent families, business owners and investors began asking the same question:
Is the way we hold our wealth still fit for purpose?
In recent days, the government has announced several significant amendments following industry consultation and public feedback, including exempting testamentary trusts from the proposed 30 per cent minimum tax and expanding capital gains tax concessions for small businesses.
The backdown is welcome. But it also highlights something much bigger.
This Budget has accelerated a conversation that many Australian families have been postponing for years.
The conversation is not really about tax. It is about wealth stewardship.
For decades, Australians have built wealth through businesses, property, investments and careful long-term planning. Yet many families have not revisited the legal structures surrounding those assets in years, sometimes decades.
We often see clients who have spent years building significant wealth, only to discover their legal arrangements no longer reflect their current circumstances.
Their children are now adults. They may own multiple properties.
They may have sold a business, entered a second marriage, become grandparents or accumulated digital assets that did not exist when their original estate plans were prepared.
The trust that distributes income may need to be reconsidered. The bucket company may no longer be so attractive.
The Budget has simply exposed a reality that already existed: wealth structures cannot remain static while life continues to evolve.
Importantly, trusts themselves are not the issue.
Trusts are legitimate planning tools that provide flexibility, protection and continuity. When used appropriately, they allow families to adapt to changing circumstances over time.
And neither is tax the issue, really. Getting the fundamentals right is more important for long-term, sustainable wealth than a few favourable tax treatments around the edges.
The real issue is complacency.
Too often, families create structures and assume the job is done. It isn’t.
Estate planning is no longer a document you sign once and file away in a drawer. It is an ongoing process that should evolve alongside your life.
We are also seeing a broader shift in how Australians define wealth itself. It is no longer just the family home and an investment portfolio.
Modern wealth includes businesses, digital assets, cryptocurrency, intellectual property, frequent flyer points and increasingly complex family arrangements.
At the same time, Australians are living longer than ever before, meaning wealth may need to support multiple generations simultaneously. This creates new responsibilities and new risks.
How do you help your children enter the property market without exposing family wealth to relationship breakdowns?
How do you structure wealth so that it remains a source of opportunity rather than future conflict?
These are the questions families should be asking now.
The recent debate surrounding testamentary trusts also serves as an important reminder that policy decisions can have unintended consequences for vulnerable Australians. It is encouraging that the government has listened to feedback and clarified its position.
But the lesson remains: the wealth landscape is changing.
Increasingly, governments, regulators and tax authorities are paying closer attention to how wealth is held and transferred. That means families cannot afford to adopt a “set-and-forget” approach to their structures.
The families who will be best placed for the future are not necessarily those with the greatest wealth.
They are the families with the greatest clarity. Clarity around ownership, succession and governance. And clarity around how wealth will transition from one generation to the next.
Ultimately, preserving wealth is not about avoiding change.
It is about preparing for it.
Because the greatest risk is not change itself.
It is losing the ability to respond to it.
Anthony Hunt is Co-Founder of Wealth Lawyers and former COO of Westpac Private Bank. He advises business owners, investors and affluent Australian families on wealth protection, succession planning and intergenerational wealth transfer
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