Tesla could still fall more than 60% if it's valued as a traditional automaker like Ford or General Motors, CIO says

• Tesla is valued about eight times more than Ford and General Motors, even though it makes far fewer cars.
• Greenwich Capital CIO Vahan Janjigian told CNBC that Tesla would plummet if it's valued like a traditional automaker.

Should Tesla be valued like a traditional automaker, or a tech company?

That question has been at the center of a years-long debate between investors and skeptics of the electric vehicle maker, as bullish investors focus on its EV innovation, self-driving tech, and forays into solar and energy storage as reasons why Tesla deserves a premium valuation to traditional automakers.

But one thing is for sure: if Tesla ever is valued like Ford or General Motors, it has a lot more room to fall, according to Greenwich Wealth Management chief investment officer Vahan Janjigian.

He told CNBC on Wednesday that even after falling more than 60% in 2022, Tesla is still valued at about eight times more than Ford and General Motors — despite selling millions of fewer cars each year.

Both Ford and General Motors have a market cap of about $45 billion, compared to Tesla's valuation of just over $380 billion. In fact, even after Tesla erased more than $700 billion in market value this year due to concerns about Elon Musk's time commitment to the company, it's still worth more than the four biggest auto companies combined.

"Tesla I think is still tremendously overvalued despite its plunge this year... I think Tesla should be selling at a higher multiple than [Ford and General Motors] because it has much better growth prospects and they dominate the EV market. But this multiple is way too high," Janjigian said.

Tesla currently trades at a forward P/E ratio of 21x, compared to 6x and 5x at Ford and General Motors, respectively. The only major auto company that has a higher valuation multiple than Tesla is Ferrari, which has a gross profit margin that's about double Tesla's due to its focus on selling high-priced luxury vehicles.

If Tesla were valued by investors more like its automaker peers — while maintaining a sizable premium due to its fast growth rate and technological innovations — the company could see its value plunge even further, according to Janjigian.

"Tesla is currently selling about 1 million cars per year. That number is going to grow. When I look at Ford, which is selling approximately 5 to 6 million cars per year. I think Tesla will get up there, so therefore under that argument I think it should be worth at least as much as Ford, maybe twice as much as Ford, maybe 3x as much as Ford. But 8x as much as Ford? I think that's too high," Janjigian said.

If Tesla fell to a valuation that was three times as much as Ford, it would be worth $135 billion. That would represent a 65% decline from current levels, and an 89% decline from its peak valuation of more than $1.2 trillion.

"Are they going to be the only car seller in the world? Are they going to put all these other automobile manufacturers out of business? If that's the case then [they should be valued higher]. But Ford is also making EVs. GM is making EVs. Every single manufacturer now is trying to grow their EV business, and they have a lot of years of experience behind them... so I think that they will eventually catch up [to Tesla]," Janjigian said.