Sun Feb 09 2025 - 06:00 Tesla’s car sales are lousy, but does anyone care? Elon Musk’s political provocations are putting off European consumers. In Germany, home of Tesla’s only European factory, sales plummeted 59 per cent in January. In Spain, sales are down 75 per cent; in France, 63 per cent; in Sweden, 44 per cent; in Norway, 38 per cent. Questionable financials were all too evident in Tesla’s latest earnings release. Earnings before interest and tax (Ebit), profit margins, auto revenues – all were way short of expectations. This is nothing new: JPMorgan’s Ryan Brinkman notes Tesla missed Ebit in nine of the past 10 quarters by an average of 16.3 per cent. Over that period, earnings estimates for 2025 and 2026 fell 70 and 67 per cent respectively. And yet, the stock is up some 70 per cent over the same period. Does the Revenue owe you a tax refund? Shares also rose following Tesla’s latest results, prompting Morgan Stanley’s Adam Jonas to ask: “4Q Miss on Weak Price/Mix, Outlook Vague: Stock Trades Up (Is This a Car Company?)” Nevertheless, Jonas remains a bull, and he’s not alone. Bloomberg’s Liam Denning notes that a year ago, 37 per cent of analysts rated Tesla a buy. Despite deteriorating financial numbers, the stock has since more than doubled, resulting in its forward price/earnings ratio swelling from 57 to 140. And yet, more analysts – 48 per cent – now rate Tesla a buy. Analysts are following investors’ lead. Why are investors so forgiving? Perhaps, suggests a sceptical Ryan Brinkman, they believe Musk when he talks of Tesla being eventually worth more than the combined value of the world’s five biggest companies, or when he says Tesla’s Optimus robot could generate revenue of more than $10 trillion. Whatever investors are thinking, it’s increasingly difficult to disagree with JPMorgan’s contention that Tesla’s trillion-dollar valuation is “divorced from the fundamentals”. Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone