Tesla (TSLA) remains one of the market’s most popular and closely watched stocks. Despite recent volatility, it’s still up more than 60% over the past year.
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But is Tesla truly the best EV-focused auto-sector investment right now? The industry extends well beyond original equipment manufacturers (OEMs) like Tesla. To get a fuller picture, it’s worth comparing and contrasting the stock with other high-growth names such as Carvana (CVNA) and the often-overlooked Lithia Motors (LAD), to see which offers the most compelling opportunity in today’s auto market.
Tesla (NASDAQ:TSLA)
Tesla’s (TSLA) immense popularity is easy to understand: an outspoken, high-profile CEO and the promise of transformative technologies like autonomous driving and robotics keep investors captivated by its long-term potential.
The challenge, however, lies in its valuation. At over 200x 2025 earnings estimates, Tesla trades at a multiple nearly nine times higher than the already expensive S&P 500 (SPX). While priced as a hypergrowth stock, Tesla’s recent results tell a different story. In Q2, automotive revenue fell 16%, marking a second consecutive quarter of declines, while EPS slipped to $0.33, down from $0.40 a year earlier. That’s far from the performance expected from a company with such lofty expectations.
Beyond the numbers, headwinds are mounting. Elon Musk’s foray into politics risks alienating consumers across the U.S., adding unnecessary volatility to the brand. Meanwhile, the passage of President Trump’s “big beautiful bill” eliminates the $7,500 EV credit—something CFO Vaibhav Taneja has already flagged as a potential overhang for sales.
While Tesla bulls highlight future opportunities in humanoid robots and self-driving technology, today’s fundamentals paint a different picture. The stock is priced for perfection, but revenues are contracting. Given this disconnect, I see Tesla as a stock to avoid for now, with limited upside reflected in both the average analyst price target and a consensus Hold rating.
What is the Prediction for Tesla Stock in 2025?
Turning to Wall Street, TSLA earns a Hold consensus rating based on 13 Buys, 15 Holds, and eight Sell ratings assigned in the past three months. The average TSLA stock price target of $305.37 implies ~12% downside potential over the coming twelve months.
Carvana (NYSE:CVNA)
While not an automaker, Carvana (CVNA) has become a standout in the auto sector. Unlike Tesla, the e-commerce-driven used car platform is actually delivering rapid growth right now.
In Q2, Carvana posted stellar results: revenue surged 42%, EPS jumped more than ninefold from $0.14 to $1.28, and vehicle sales climbed 41% YoY to 143,280 units. Simply put, the company is firing on all cylinders, outpacing Tesla’s recent performance by a wide margin. Valuation also looks comparatively modest—Carvana trades at about 67x 2025 earnings, just one-third of Tesla’s multiple.
That said, the stock remains expensive at roughly 3x the S&P 500’s forward P/E of 22x. With shares already up more than 60% in the past six months, much of the easy upside may already be priced in. I like Carvana’s growth trajectory, but at current levels, caution is warranted.
Is CVNA Stock a Good Buy?
CVNA earns a Moderate Buy consensus rating based on 13 Buys, six Holds, and zero Sell ratings assigned in the past three months. The average CVNA stock price target of $414.94 implies almost 14% upside potential over the next twelve months.
Lithia Motors (NYSE:LAD)
Lithia Motors (LAD) doesn’t have the name recognition of Tesla or Carvana, but it deserves more attention. In Q2, the company—owner of 449 dealerships across the U.S., Canada, and the U.K.—delivered 25% year-over-year revenue growth to a record $9.6 billion, while diluted EPS climbed 30% to $9.87.
This performance is consistent with Lithia’s track record, as the company has grown earnings at a 16% CAGR over the past decade. And growth prospects remain robust. Beyond its physical dealerships, Lithia is expanding digitally through its Driveway platform, while its long-running acquisition strategy continues to build scale. Despite these gains, Lithia estimates it holds just 1.1% U.S. market share, with a long-term goal of reaching 5%.
Valuation is where Lithia stands out most: at just 9.3x 2025 earnings, it’s by far the cheapest stock among peers—despite its strong history of growth.
Shareholder returns also add appeal. Lithia is the only dividend payer in this comparison, with a modest 0.66% yield but an impressive 14 consecutive years of dividend growth. With a payout ratio of just 6.4%, there’s ample room for further increases. On top of that, buybacks remain a priority: through Q2, Lithia repurchased 3% of shares outstanding at an average price of $316, slightly below today’s levels. With $569 million still authorized against an $8.4 billion market cap, repurchases should remain a meaningful, accretive driver of value.
Is LAD Stock a Buy?
LAD earns a Strong Buy consensus rating based on eight Buys, two Holds, and zero Sell ratings assigned in the past three months. The average LAD stock price target of $367.50 implies more than 10% upside potential over the next 12 months.
Lithia Motors Emerges as the True Value Play in Autos
So, which of these three is the most attractive EV-sector stock today? Tesla continues to be priced like a hypergrowth company. Yet, its fundamentals tell another story—revenue has declined for two straight quarters, and looming headwinds such as the loss of EV tax credits and Elon Musk’s polarizing political presence only add to the uncertainty.
Carvana, by contrast, is delivering genuine top and bottom-line growth. But with shares up sharply and trading at a steep multiple, much of the easy upside appears to already be priced in.
That leaves Lithia Motors as the clear winner. While far less flashy than Tesla or Carvana, Lithia combines consistent earnings and revenue growth with an attractive valuation. The stock trades at less than 1/20th of Tesla’s multiple, roughly 1/7th of Carvana’s, and at a deep discount to the broader S&P 500. Add in a growing dividend and opportunistic share buybacks at today’s depressed levels, and Lithia looks like a true under-the-radar gem—arguably the most compelling stock in the auto sector right now.