Tesla Inc

Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, and energy storage solutions, while developing advanced real-world AI technologies. Shares rose after the company continued to beat quarterly expectations, with first-quarter results delivering substantial outperformance across most key metrics. Beneath the headline numbers, Tesla's autonomy flywheel continued to build: Full Self-Driving (FSD) penetration is deepening, the active subscriber base is growing, and regulatory approvals in an increasing number of countries are validating the technology and broadening the addressable market. Production of the Cybercab, Tesla's first purpose-built robotaxi platform, is scaling and should drive meaningful cost reductions as the service expands.

Tesla continued to make progress on what we believe are the initiatives that matter most over the long term. The company achieved record Q2 deliveries, exited the quarter with its largest order backlog since 2023, and management noted that production is increasingly constrained by supply rather than demand. Perhaps most notably, Full Self-Driving (FSD) is becoming a primary driver of customer demand. Our investment thesis remains unchanged since we first became owners a little over a year ago. We continue to believe the market is largely focused on the visible costs of Tesla’s current investment cycle, while placing less value on the interconnected ecosystem the company is building beneath the surface.

Tesla is a manufacturer of electric vehicles with a declining market share—although it appears to have stabilized between 10% and 15% of the global EV market—and that barely represents around 2% of the total vehicles sold in the world. Despite this, the market is willing to value it with the multiples of an explosively growing technology company. The investment community buys into Musk's vision of the company's future, which is underscored by the belief that it will grow its automotive revenue by 40 or 50 percent for the next 10 years.

We believe this combination of strong and more recurring revenue growth with well-positioned balance sheets and attractive valuations offers multiple avenues for potential returns for investors. As a result, we continue to view the portfolio as compelling, with a favorable risk/reward profile. Tesla, Inc. is part of this narrative, contributing positively to our performance with a return of 12.93% this quarter. We are encouraged by the company's growth prospects and competitive advantages in the market.

We believe artificial intelligence is beginning to proliferate from the digital world into the physical world across transportation, manufacturing, energy, and healthcare. These are markets that we estimate could represent, in aggregate, an addressable opportunity many multiples the size of the digital AI market. We view the portfolio as attractively valued, supported by robust underlying business fundamentals and strong prospects for compounded earnings growth.

Tesla remains our largest position and we continue to believe it sits at the center of enormous, multi-decade shifts. We simply prefer to own them in sizes we chose on purpose. The market spent the first half of 2026 convinced that AI would hollow out the software industry. We spent it buying the software businesses we think are strong enough to feed on the very trend that was supposed to kill them.

Tesla, Inc. designs, manufactures, and sells fully electric vehicles (EVs), solar products, and energy storage solutions, while developing advanced real-world AI technologies. Operationally, Tesla delivered strong quarterly results amid a challenging EV environment. Automotive gross margins improved sequentially and beat expectations, the energy storage business maintained robust momentum with best-in-class margins, and battery cell production ramped. Management anticipates meaningful robotaxi expansion in 2026 and continues to finalize the Optimus Gen 3 design and build out large-scale manufacturing capacity for humanoid robots. These initiatives underscore Tesla’s pivot toward becoming a leader in physical AI.

Tesla provides an even more striking example—not just of volatility, but of how disproportionate long-term outcomes can be relative to the experience along the way. Since its IPO in 2010, the stock has delivered a cumulative return of approximately 22,000%, or about 41% annually. There were multiple periods along the way where the stock declined sharply—on numerous occasions by more than 50%, and once by over 70%—often accompanied by shifting narratives around the business. Yet, for investors who remained focused on the long-term trajectory, the outcome has been extraordinary. Our view remains unchanged as we allow the long-term economics of the business to play out.

We wrote a new investment memo on Tesla (TSLA). Tesla is the first mover and remains one of the leading players in battery-electric vehicles (BEVs) globally, the 2nd-largest (13% share in 3Q25) after China’s BYD (16% share), riding the multi-decade secular shift from internal combustion engine (ICE) to battery-electric vehicles (BEVs). Tesla should not be viewed solely as a traditional (BEV) automaker or an energy (solar/storage) company. It is bringing AI into the physical world through its autonomous FSD driving, Cybertaxi robotaxis, and Optimus humanoid robots, riding numerous sizable brand-new tailwinds that it is creating and leading.

Tesla remains our largest single holding, representing approximately 13% of the portfolio as of this writing. Our conviction in Tesla is not a function of its near-term automotive results, which remain subject to meaningful cyclical and competitive pressures. It is a function of what we believe Tesla is actually building: an AI and robotics company that happens to currently generate most of its revenue from selling cars. The energy business, the Full Self-Driving platform, and the emerging Optimus humanoid robot program represent option value that, in our view, the market continues to dramatically underprice. We are long-term holders.