Is Tesla, Inc. overvalued or undervalued?

As of 7 July 2025, Tesla, Inc. has moved from an expensive to a very expensive valuation grade. The company is overvalued based on its elevated valuation ratios, including a P/E ratio of 135, an EV to EBITDA of 72.73, and a Price to Book Value of 12.72. In comparison, General Motors Co. has a significantly lower P/E ratio of 10.85 and an EV to EBITDA of 5.45, highlighting Tesla's premium valuation relative to its peers.
Despite its overvaluation, Tesla has outperformed the S&P 500 in the short term, with a 1-year return of 83.47% compared to the S&P 500's 17.14%. However, over the longer term, Tesla's 3-year return of 37.42% trails the S&P 500's 70.41%, suggesting that while it has had strong recent performance, its high valuation may not be sustainable in the face of broader market trends.