Tesla, Inc. (TSLA): A Bull Case Theory

We came across a bullish thesis on Tesla, Inc. (TSLA) on Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on TSLA. Tesla, Inc. (TSLA)'s share was trading at $259.51 as of Aprikl 24^th. TSLA’s trailing and forward P/E were 148.29 and 107.53 respectively according to Yahoo Finance.

Tesla's Q1 2025 results reflect a company in transition, prioritizing long-term strategic positioning over near-term financial performance. While deliveries and net income dipped due to temporary production halts for factory upgrades, Tesla’s underlying momentum continues in areas that matter most—autonomy, efficiency, and cost reduction. The company’s vertically integrated model remains its most significant edge. With millions of vehicles on the road feeding data back into Tesla’s AI systems, the feedback loop strengthens, accelerating the march toward full autonomy. Despite economic headwinds, Tesla vehicles—particularly the Model Y—continue to lead in sales across key markets like California, and global test drive interest hit a record in Q1, reinforcing that consumer demand remains strong when adjusted for macro conditions.

Management remains laser-focused on affordability as the gateway to scale. The planned release of cheaper models, combined with breakthrough manufacturing techniques such as the “unboxing” method, aims to radically shorten production times and cut costs. Tesla Shanghai can currently produce a car every 33 seconds, but this new process could reduce that to just five seconds. This innovation is a key enabler in Tesla’s quest to become the leader in “Physical AI,” a term denoting the real-world deployment of AI through hardware like autonomous vehicles.

While companies like Waymo are often touted as competitors, Tesla's cost structure and production scale set it apart. Waymo retrofits autonomy onto third-party vehicles at far greater cost, while Tesla’s fully integrated stack allows it to iterate faster and cheaper. Elon Musk emphasized that Tesla vehicles cost just a quarter of a Waymo car, highlighting the efficiency and scale advantages embedded in Tesla’s business model.

Tesla’s efficiency metric—cash from operations divided by CapEx—has plateaued recently but remains stable despite inflation and geopolitical disruptions. This signals that the company is holding ground operationally while preparing for another leap forward. Once cheaper models begin their ramp, this efficiency is expected to flow through to the income and cash flow statements, potentially triggering a significant revaluation. In parallel, Tesla’s energy division continues to grow, though tariff challenges remain. To mitigate these, the company is localizing LFP battery production in the U.S. and diversifying its supply chain beyond China.

Ultimately, the long-term upside for Tesla shareholders hinges on the company’s ability to scale autonomy profitably. Lower margins coupled with increasing free cash flow suggest Tesla’s moat is deepening, making it harder for rivals to catch up. Investors with a long view may find the current share price a compelling entry, as Tesla positions itself to dominate the era of autonomous, AI-powered mobility.

Tesla, Inc. (TSLA) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 126 hedge fund portfolios held TSLA at the end of the fourth quarter which was 99 in the previous quarter. While we acknowledge the risk and potential of TSLA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.