To The Moon

Tesla Low Estimates = Big Upside? Any Surprise to Expect?

Tesla is no stranger to polarisation. Over the past decade, it’s bounced between being the market’s poster child for innovation and the embodiment of speculative excess. But here in 2025, something feels different. For the first time in years, consensus estimates for Tesla’s growth, margins, and delivery numbers are—by historical standards—muted. Analysts, once starry-eyed, now approach Tesla’s quarterly forecasts with almost conservative restraint. But does this reset in expectations actually set the stage for a classic upside surprise? Is the street underestimating the company’s ability to defy gravity once more?

Why Are Estimates So Low?

First, let’s explore why analyst estimates have landed on the cautious side. After years of breakneck growth, Tesla’s core EV business has hit some real-world speed bumps. The global EV market, once forecast to explode in a straight line, is showing signs of plateauing in some key regions. Subsidy rollbacks in Europe, stiffer competition in China, and growing consumer price sensitivity have cooled demand for expensive, tech-laden cars. At the same time, macroeconomic headwinds—higher interest rates, sticky inflation, and sluggish wage growth—have taken the shine off big-ticket discretionary purchases. Put simply, analysts are reacting to the environment: Tesla’s margins are being squeezed, its revenue growth is slowing, and its global dominance doesn’t look as unassailable as it did two years ago.

On top of that, the “Tesla as tech” narrative has lost a bit of steam. The market now recognises that while Tesla is a leader in battery innovation and autonomous driving, it is also—at its core—a car company. Auto margins are cyclical, capex-intensive, and vulnerable to commodity swings. And with every major automaker ramping up EV production, the moat doesn’t feel quite as wide. Even believers in the Tesla story have grown wary, remembering the boom-bust cycles that have defined the auto industry for a century.

But Is Wall Street Underestimating Musk—Again?

Here’s where things get interesting. Tesla has a well-earned reputation for defying expectations, especially when sentiment turns bearish. Historically, “lowball” quarters have set up some of Tesla’s most spectacular rallies. Why? Because CEO Elon Musk thrives on the grand reveal, and the company has developed a knack for pulling last-minute rabbits out of its hat: end-of-quarter delivery sprints, surprise regulatory credits, and sudden product announcements have all jolted bears awake in the past.

This time, several possible upside levers are quietly lurking in the background:

1. Full Self-Driving (FSD) Monetisation

Tesla’s FSD software has always been controversial—long on promise, short on delivery. But in 2025, the company has begun rolling out meaningful updates. If regulatory approval inches closer or adoption rates spike, the high-margin nature of FSD could surprise analysts who have priced in little to no software revenue. If Musk can finally demonstrate scalable, safe autonomy—even in limited geographies—it would transform Tesla’s revenue mix and profit profile almost overnight.

2. Energy and Storage Growth

While most headlines focus on cars, Tesla’s energy generation and storage business has quietly become a profit engine. With utility-scale battery deployments growing and the Powerwall finding new markets, this segment could outperform. Wall Street’s models tend to treat Tesla Energy as an afterthought, but a blowout quarter here could shift sentiment quickly—especially if management hints at further vertical integration or big-ticket contracts.

3. Global Expansion and Localisation

Tesla continues to ramp up production capacity outside the US, with Giga Berlin, Shanghai, and Mexico all expanding. Localised manufacturing cuts shipping costs and sidesteps tariffs, potentially improving margins in regions where competition is fierce. If any of these facilities achieves a new production milestone, it could translate into a better-than-expected delivery number.

4. The Wildcard: New Product Announcements

Elon Musk remains the king of the curveball. Whether it’s updates on the long-delayed Cybertruck, hints about an affordable “Model 2,” or even a fresh foray into robotics and AI, the market is always ready for a surprise. Given how low expectations have sunk, even small positive news could trigger outsized market reactions.

Risk Factors—Why Estimates May Be Right

Of course, the bearish case shouldn’t be dismissed. For every surprise on the upside, Tesla has delivered just as many disappointments. The company’s high profile makes it a magnet for regulatory scrutiny, and any setbacks in FSD deployment or safety recalls could spook investors. On the cost side, lithium prices remain volatile, and supply chain issues—while improved—still linger globally. If Tesla misses on deliveries or has to discount cars heavily to move inventory, the low expectations could quickly become self-fulfilling.

There’s also the China question. Tesla’s dominance there is being challenged by local EV champions like BYD, NIO, and XPeng. The Chinese market is notoriously cutthroat, and price wars have already eroded margins industry-wide. If China underperforms, it will have a noticeable impact on Tesla’s quarterly numbers.

And finally, there’s the Musk effect. The CEO’s erratic communication and attention-juggling between multiple ventures (SpaceX, X, Neuralink, etc.) occasionally spook even the most loyal Tesla investors. Markets love a visionary, but they hate uncertainty. Any perception that Musk’s focus is drifting can add volatility.

Valuation: Where’s the Floor and Ceiling?

Tesla is still trading at a premium to both legacy automakers and most high-growth tech firms. That premium is based on a combination of factors: expectations for dominant long-term market share, margin expansion via software and energy, and optionality in emerging sectors like robotics. If Tesla delivers even modest upside against the low bar set by current estimates, the stock could re-rate sharply higher as sentiment turns. But if the company fails to beat, or worse—delivers a negative surprise—there is room for a sharp correction as well.

It’s this “options-like” return profile that keeps both bulls and bears engaged. At $X per share (insert current trading price here), you’re not just betting on cars. You’re betting on regulatory breakthroughs, battery innovations, and the next headline-grabbing announcement from Musk. You’re buying volatility—both good and bad.

What Kind of Surprise Should We Really Expect?

Based on Tesla’s history and Musk’s penchant for drama, the most likely surprise is not in a blowout on vehicle deliveries—those are more predictable and trackable—but rather in “side business” performance or regulatory progress on autonomy. For example, a new FSD pilot in a major US city, a strategic partnership with an energy utility, or a software subscription milestone could all jolt analysts’ models. In the absence of a macro shock, even a moderately positive quarter could act as a catalyst if expectations are this low.

On the other hand, investors should watch for “sandbagging.” Tesla sometimes leans into pessimism, only to shatter the narrative later. But if management telegraphs caution and the results come in merely “less bad,” there may not be enough to drive a true breakout rally.

How Should Investors Play It?

For investors, this is both an opportunity and a test of discipline. If you’re already holding Tesla, low expectations can act as a cushion—bad news is partially priced in, and any upside is amplified. For those on the sidelines, it’s a classic event-driven setup: enter before earnings if you have conviction in Musk’s ability to deliver, or wait for the print and buy into any overdone dip if the long-term thesis remains intact.

The most prudent strategy may be to scale into positions, hedge with options, or balance your exposure with other names in the EV or AI space. The key is to avoid binary bets—Tesla will likely remain volatile as narrative and reality continue to spar.

Conclusion: Classic Tesla Setup

In summary, Tesla finds itself at a crossroads. With analyst estimates reset to more realistic (and arguably conservative) levels, the setup for an upside surprise is as strong as it’s been in years. But unlike past cycles, the bar for outperformance is now lower—and the risk of disappointment, while real, may not carry the same catastrophic implications as when expectations were sky-high.

Musk and Tesla have always thrived in the gap between skepticism and possibility. If history is any guide, the very fact that so many have written off Tesla’s “magic” may be the prelude to its next big act. But whether this act delivers a genuine surprise or just another chapter in the Tesla volatility saga is, as always, impossible to predict with certainty.

One thing is clear: in a market that’s often driven by expectation as much as execution, Tesla remains the ultimate wild card. For those willing to embrace the swings, low estimates don’t spell doom—they signal a moment to watch closely. If the company seizes its moment, the upside could be bigger than most are prepared for. But as always, risk and reward remain inextricably linked. The only guarantee? The Tesla story is never boring.