BMW reported profits of €8.7bn for the year 2017. [1] Tesla stockholders must be very, very optimistic about its future performance when they value Tesla more than an already established, immensely profitable player. [1] https://phys.org/news/2018-03-bmw-net-profit-bn-euros.html
Volkswagen is an $85B auto maker and the second most valuable. Tesla is already a $60B auto maker. If Tesla becomes the next Volkswagen in 10 years, they will have gained 42% returns over 10 years or about 3.6% annual returns. Given the high risk that Tesla won't become the next Volkswagen, it seems over-priced.
Even Toyota, at $192B, seems like it would be lackluster returns if Tesla reaches their heights in a decade. That would be a 12.4% annualized return. Now, that's a very good return, but is is likely that Tesla will become the next Toyota? Why not the Next Volkswagen at $85B or Ford at $28B or GM at $51B or Mazda at $7B? Those are all successful auto makers with good profits.
Worse, are cars really the future? More and more people are migrating to cities and looking toward public transit. Even if cars become green, they're still congestion in a world whose urban population is increasing a lot where congestion and parking are becoming larger problems.
Even if cars are the future, will people own them? If self-driving cars become a reality, demand for vehicles could fall by 90%. Most cars are idle most of the time. If I can just get a self-driving taxi everywhere I need to go, it would be a fraction of the price of owning a vehicle since I would be sharing vehicles with many people. That would lower the demand for vehicles a lot. Even if Tesla became 100% of the auto industry, if that industry is a tiny fraction of the size today, it would really hurt Tesla's finances.
Really, I think there are two ways Tesla could hold up to its expectations. 1) Being more than a car company. Tesla might become big in other industries like solar power in addition to being a car company. They'd probably need more than just solar as an add-on, but there are markets out there. 2) Tesla's vertical integration works really well and beats out competitors. One thing to note about this: the vertical integration also exposes them to a lot of risk. When you have several outside companies creating the same component for you, if one doesn't deliver, you don't have to push back projects - you just buy from a different supplier. While you pay a mark-up, you also get different companies and teams working on the same problem to drive down price and drive up quality. It's certainly possible that Tesla will do excellently with their in-house components and keep that going for decades and it could provide them a strong price advantage against competitors.