Michael Burry says Tesla is “ridiculously overvalued.” Here’s what that really means for AI, autonomous vehicles, and the future of green technology in 2025.
Most investors still underestimate how violently markets swing at technological inflection points. Tesla is sitting right on one of those hinges again — and that’s exactly why “Big Short” investor Michael Burry keeps calling the stock “ridiculously overvalued.”
This matters because Tesla isn’t just a car company anymore. It’s become a proxy for three massive green technology bets at once:
- AI-powered autonomous driving
- Scalable electric vehicle platforms
- Software- and data-driven clean energy
If you run a business in the climate, mobility, or energy space — or you’re trying to understand where green technology is really heading — you can’t ignore this debate.
In this article, I’ll break down what Burry’s criticism actually gets right, where it misses the point, and how to think about AI, autonomous vehicles, and green tech valuations without getting burned.
Tesla, Burry, and the Real Question Behind “Ridiculously Overvalued”
Michael Burry became famous for shorting the U.S. housing market before the 2008 crash. When he says Tesla is “ridiculously overvalued,” people listen. But the real question isn’t whether Tesla is expensive — it clearly is by traditional metrics. The question is: what exactly is the market pricing in?
Tesla’s current valuation bakes in at least three big assumptions:
- Full Self-Driving (FSD) actually works at a true “eyes off, mind off” level. Not driver assistance — real autonomy where you can text, sleep, or work while the car drives.
- Regulators approve that autonomy at scale, so Tesla can deploy autonomous vehicles in many regions, not just limited pilots.
- New, software-like business models emerge on top — robotaxis, fleet services, usage-based subscriptions — with fat margins.
If Tesla delivers that stack, today’s valuation suddenly looks less insane. If it doesn’t, Burry’s thesis will age very well.
Here’s the thing about green technology right now: AI is compressing timelines, but physical reality and regulation still move slowly. The tension between those two speeds is exactly where investors get hurt or get rich.
Why Full Self-Driving Is the Inflection Point the Market Cares About
Full Self-Driving is the single biggest swing factor in Tesla’s value because it transforms Tesla from a premium EV maker into an AI-powered mobility platform.
Today, Tesla’s revenue still looks mostly like a car company: you sell a vehicle, you book revenue, you move on. But the Full Self-Driving story is different:
- Tesla gathers real-world driving data from millions of cars.
- That data trains AI models for perception, planning, and control.
- Software updates push new capabilities to the fleet regularly.
If Tesla gets to a point where regulators accept its FSD as truly autonomous:
- A single Tesla could operate as a robotaxi, earning revenue 10–16 hours per day instead of sitting idle 90% of the time.
- Owners could optionally let Tesla operate their vehicles in a shared network, splitting revenue.
- Tesla could charge ongoing software, service, and fleet management fees, which are much higher-margin than metal and batteries.
This is why people talk about Tesla more like a software and AI company than an automaker. And it’s why Burry’s argument — that Tesla is overvalued on current fundamentals — is both true and incomplete.
Tesla’s current numbers don’t justify its valuation. The assumed future business model is what the market is paying for.
The risk is obvious: if FSD stays stuck in an advanced-driver-assistance limbo (better Autopilot, but not autonomy), then the upside that justifies today’s price never arrives.
What Burry Gets Right About Risk, Bubbles, and Hype
You don’t have to agree with Burry’s Tesla short to recognize what he’s correctly diagnosing: AI and green technology are in a hype-heavy phase.
Here’s where his skepticism is on solid ground:
1. Traditional metrics still matter eventually
Price-to-earnings, cash flow, and unit economics might not matter in the short term, but they eventually correct valuations. Tesla’s valuation implies:
- Massive future margins from software and mobility services
- Sustained global dominance in EVs and autonomy
If either leg fails, the multiple compresses. Fast.
2. Autonomy is not just a software problem
AI models are improving quickly, but full autonomy isn’t just about perception accuracy. It’s also about:
- Edge cases in complex urban environments
- Hardware reliability and redundancy
- Legal liability frameworks
- City-level and national regulation
This isn’t an app you can ship, patch, and move on. Mistakes are measured in lives, not churn.
3. Retail investors often overestimate timeframes
Most retail investors dramatically underestimate how long it takes for:
- Regulatory approvals to catch up
- Infrastructure (charging, communications, smart city systems) to mature
- Legacy fleets to turn over and reach meaningful penetration
Burry’s point, translated into plain language: even if Tesla is basically right about the future of AI mobility, the stock can still be ahead of itself for years.
Where the Bears Miss the Point: AI + Green Tech Is Reshaping the Entire Stack
Despite all that, writing off Tesla — or AI-driven green technology more broadly — as a bubble is lazy thinking.
AI is now at the core of how green technology scales:
- Autonomous driving reduces accidents and optimizes energy use.
- Smart charging schedules flatten grid demand and use more renewables.
- Fleet routing cuts wasted miles, emissions, and costs.
Whether Tesla ultimately dominates or not, the direction of travel is obvious: transport is becoming a software-defined, data-driven system.
EVs as nodes in an intelligent energy network
Most people still treat EVs as “cars that don’t burn gas.” That’s a 2015 mindset.
In reality, EVs are becoming mobile energy assets:
- They charge when renewable energy is abundant and cheap.
- They can respond to real-time grid conditions via AI.
- In some setups, they can even feed energy back into buildings or the grid.
Tesla’s role in this green technology ecosystem isn’t just selling cars. It’s:
- Operating large distributed batteries (both vehicles and stationary storage)
- Coordinating energy flows using predictive AI
- Potentially monetizing that coordination with utilities and fleets
Even if you think Tesla is overvalued as a stock, it’s hard to argue it hasn’t pushed the entire clean transport market forward.
How to Evaluate “Overvalued” Green Tech Without Getting Lost in the Hype
Here’s a practical framework I use when I look at companies like Tesla, especially in the context of green technology and AI.
1. Separate the core business from the story business
For Tesla, you can think of it as:
- Core business: EV manufacturing, battery production, energy storage, charging infrastructure.
- Story business: Full Self-Driving, robotaxis, AI-driven mobility services, and grid-scale optimization.
Questions to ask:
- Is the core business profitable or clearly on that path?
- Does the story business depend on regulatory miracles, or just time and iteration?
- If the story business never materializes, is the company still attractive?
2. Check alignment with structural green tech trends
Regardless of quarterly noise, some trends are locked in:
- Governments are tightening emissions standards.
- Cities are getting serious about air quality and congestion.
- Corporates are under pressure to decarbonize fleets and logistics.
Companies that build practical tools for this transition — smart charging, fleet management, predictive maintenance, grid-aware routing — are riding genuine demand, not just vibes.
Tesla clearly benefits from these trends, but it’s not alone. For your own strategy, the better question is:
How can my company plug into this same shift toward AI-driven clean transport and energy, without needing Tesla-like valuations to succeed?
3. Focus on unit-level sustainability and profitability
A healthy green technology business today should be able to show:
- Lower lifetime emissions vs. legacy alternatives
- Clear cost advantages over time (fuel, maintenance, downtime)
- Pathways to recurring or software-like revenue
Tesla’s unit economics on vehicles are increasingly solid; the open question is the profitability of autonomy and mobility services at scale. When you evaluate your own roadmap, borrow the discipline behind Burry’s skepticism, not just the pessimism.
What This Means for Green Tech Builders and Investors in 2025
We’re heading into 2026 with three clear realities:
- AI is now baked into every serious green technology roadmap. Whether it’s route optimization, smart energy management, or predictive maintenance, AI is no longer optional.
- Autonomous and connected mobility will reshape urban systems, even if the timeline is slower than Tesla bulls expect.
- Valuations will get more volatile, because markets are trying to price both physical assets and AI upside at the same time.
If you’re building in this space, here’s how to respond:
- Anchor your strategy in real problems. Think congestion, emissions, energy costs, compliance — not just “AI for mobility.”
- Design for integration. Your solution should plug into vehicles, chargers, buildings, or grid systems that exist today.
- Measure both climate impact and ROI. The best green tech tools reduce emissions and make financial sense without subsidies.
Tesla’s valuation debate is noisy, but the underlying signal is clear: markets are desperate to back credible platforms that connect AI, transport, and clean energy. If you can show a grounded, data-backed path there — especially in B2B or infrastructure — you don’t need Tesla-level hype to win.
Where Do You Go From Here?
Burry might be right that Tesla is “ridiculously overvalued” on a 12–24 month earnings view. He could also be completely wrong about its long-term role in AI-powered green technology. Both can be true at different time horizons.
For serious operators and investors in green tech, the better move is to use the Tesla debate as a lens, not a distraction:
- Learn from Tesla’s integration of AI, hardware, and software.
- Respect Burry’s focus on cash flow, execution risk, and timelines.
- Build solutions that work even if the hype cycle turns.
The companies that win this decade won’t just make cleaner products. They’ll use AI to make energy, mobility, and infrastructure smarter, more efficient, and more profitable.
If you’re working on that kind of solution — especially in clean transport, smart energy, or AI for sustainability — now’s the right moment to pressure-test your roadmap, your data strategy, and your business model against these realities.
Because the real inflection point isn’t just Tesla’s stock price. It’s whether your organization is ready to operate in a world where green technology and AI are no longer optional — they’re the core of how you compete.