Lakewood Capital’s short position in Tesla Motors Inc (NASDAQ:TSLA) was one of its two biggest losing positions in 2013. However, the fund’s fourth quarter letter, which was obtained by ValueWalk, shows that it remains convinced that it’s right about Tesla.

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Lakewood sees “considerable downside” to Tesla

In the letter, Lakewood said it lost 286 basis points on Tesla Motors Inc (NASDAQ:TSLA). The firm said because of its “fully-diluted market capitalization back to a remarkable $25 billion,” they see “considerable downside” in the automaker’s stock.

Interestingly enough, another Elon Musk stock—SolarCity Corp (NASDAQ:SCTY)—was the firm’s other big losing position in 2013.

Lakewood frustrated by Tesla

Tesla Motors Inc (NASDAQ:TSLA) gained significantly on Monday because China extended its subsidy program for electric vehicles, and it was a similar story throughout 2013. The automaker’s shares have continued to defy those who decide to short it, but Lakewood Capital stands firm in its view on Tesla.

The automaker was the fund’s only loser in the third quarter, and it lost more than 50 basis points then. Lakewood called Tesla one of its “most frustrating and costly shorts of all time.”

Since Lakewood’s last letter…

In the time between Lakewood’s third and fourth quarter letters, Tesla Motors Inc (NASDAQ:TSLA) has sustained three additional fires—two more in accidents and one garage fire. Nonetheless, the automaker has come back from those setbacks, and its shares continue to defy gravity, so to speak.

Lakewood discussed that first fire, saying it didn’t see one incident as “permanently” impairing consumer demand, and the other fires haven’t been enough to do so either. This has particularly been because the numbers still show that drivers are less likely to have a fire in a Tesla vehicle and the automaker was vigilant and proactive in its dealing regarding the garage fire.

Why Lakewood sees Tesla as a short

In Lakewood’s third quarter letter, it provided more details on why it believes Tesla Motors Inc (NASDAQ:TSLA) should be a short position. At that time, the firm noted that Tesla’s fully-diluted market capitalization was three-quarters the value ascribed to BMW’s auto business. Tesla’s shares are even higher than that now after it hit a new record high yesterday. The stock continues to flirt with $200 a share, although investors just can’t seem to find it within themselves to push it over that amount.

Lakewood went further by putting Tesla Motors Inc (NASDAQ:TSLA)’s valuation into perspective. BMW produces 100 times more vehicles than Tesla and at least three times “even the most bullish long-term Tesla production estimates.” In addition, BMW has invested $33 billion in net capital to expand, compared to $600 million for Tesla. Also BMW sees about $9 billion in annual operating profits from its auto business, which is already double Morgan Stanley’s estimate for Tesla in 2027.

Lakewood should have listened to Musk

The firm admitted last time around that it should have listened when Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk said there was a “tsunami of hurt coming for the short.” However, even Musk said in August that he thought their share price was too high and that it was less crazy to short his company’s stock then. Nonetheless, Lakewood is still waiting to see returns on its short of Tesla.