Tesla Motors (Nasdaq: TSLA) is lower early Tuesday as traders price in what valuation the company should get exactly.

Over the last few weeks, speculation has been rampant that Chrysler Group LLC (NYSE: CGC) will commence an IPO before the end of 2013. As of Monday, those rumors have largely been put to rest.

An interesting note would be the valuation of Chrysler Group. Many expected the company to raise $1.5 to $2 billion with its initial offering, valuing the company anywhere from $9 billion to $12 billion. The midpoint of all those valuations would put Chrysler with a valuation of $10 billion or so, which is about flat with Fiat's value.

Notably, Chrysler reported selling 1.65 million light vehicles in 2012 and is largely on pace to best that record in 2013.

Tesla Motors has been valued well over $20 billion earlier this year and is on pace to sell about 25,000 to 35,000 vehicles this year.

There's a slight difference between 1.65 million and 35,000 units. But, let's delve deeper.

Over the summer, Reuters put together a little valuation model of what Tesla will need to do over the next 10 years or so to meet its expected valuation (which was about 14 to 15 percent lower than it is now). To get a market cap of $43 billion by 2022, the company will need annual sales of roughly 540,000 units. The model expects a fleet price range of $35,000 to around $100,000 each with profit margin of 12 percent on average.

While Tesla is expected to be a more mature company by then (drawing a lower multiple) and it is expected to have broad reach of the Supercharger network in multiple countries, speculative traders might wonder how many automakers globally sell 500,000 units each year. Even with the volume, will Tesla need to sell over 1 million units if a lower multiple is slapped on it? What if another financial crisis hits and dents all vehicle sales? What about competition from BMW, Ford (NYSE: F), General Motors (NYSE: GM), Daimler, Nissan, and others? Ten years is a long time to get solid technology into the mainstream.

Isn't $35,000 still a little pricey for mass-market adaptation, even in 10 years?

Heck even CEO Elon Musk agrees that the market has been generous to his company.

While we like Elon Musk and think Tesla has a great thing going, current valuation and expectations simply don't justify where Tesla shares are currently trading. The stock down over 3 percent Tuesday morning.