The market is betting on Tesla being "Apple for EVs", with a combination of first-mover advantage and innovative secret sauce. Apple similarly had competitors but an Apple bull in 2008 is a very happy man today.
I was narrowly responding to the parent comment's misunderstanding of what valuation is: specifically, the fact that it includes more than simply the current state of the business, incorporating future success as well.
"Tesla's market prices relies on super optimistic assumptions" is a sound complaint. "Tesla is a midsized car company" is a nonsensical one.
I think OP would not be the confused one in 6 months time.
Stock market only cares about the future when people care about the future. AKA when there is optimism in the air.
The 2015-2022 wave of optimism was quite frankly uncalled for and overextended given the reality at the base level. Especially what happened 2020-2022.
Apologies, but this doesn't make any sense. The OP referred to the current size of Tesla ("mid-size car company"), with no reference to future cash flows, which is what the majority of most stock prices are made up of.
Looking at where tesla will be in six months _is_ looking at the future, which is the exact opposite of what I was remarking on. If the complaint had been "Tesla is overvalued due to irratuonal exuberance that its future revenues are unlikely to deliver on", I wouldn't really have any disagreement.
Because the market doesn't, and shouldn't, value things solely based on a snapshot of current business, as opposed to a projection of future business, based only partially on the current snapshot. A phrasing that gets at the market's thinking looks more like "A car company that effectively created the electric car market, right before the entire industry started making credible commitments to switch primarily over to EVs, all while being the most successful company at getting some degree of automated driving into consumer hands and awareness". Your phrasing implies "pre-Cruise GM, but with less sales"; it's no wonder why you're confused.
Note that I'm not claiming that Tesla is appropriately valued right now, and as someone who works in AV, I think their approach to self-driving is misleading and irresponsible. But it sounds like the bulk of your confusion comes from a significant misunderstanding of what the stock market _is_.