There is a familiar pattern when new electric vehicles enter the market: rave reviewsawards from environmental groups, and highly publicized waiting lists.

But Tesla has taken the hype to a whole new level. “Battery Day” was last Tuesday, September 22, and thanks to the uncanny marketing prowess of its founder, Elon Musk, the company has built up serious excitement about its innovation pipeline. The legions of investors who have bet against Tesla’s stock, citing its continued lack of profitability, have been sorely disappointed. A $1,000 investment when the company went public in 2010 would be worth more than $100,000 today.

What has made Tesla the most valuable car company in the world, and does the future of transportation truly lie in EVs, as Tesla’s stock price seems to indicate? While Tesla deserves plaudits for its engineering and marketing triumphs, physics and economics offer plenty of reasons to tap the brakes on the EV hype.

It is easy to forget that prior to completing its Gigafactory in Nevada, Tesla was not a battery company. It bought almost all of its batteries from Panasonic. Its core innovations are its electric drivetrain, the unique engineering of its battery packs, and the way in which it designs its striking vehicles around those components. By shedding the clunker image of EVs—and securing massive government subsidies for its factories and its products—Tesla has thrived long after its critics thought it would be gone.

Now a mature company, Tesla is investing in its batteries and moving toward the cutting edge of that field. The Model 3 and other new Tesla cars are starting to incorporate many “second generation” lithium-ion innovations, including more energy dense materials and new battery designs. As is usual with battery manufacturing, these innovations have been more than 10 years in the making and will take another few years to become dominant in the EV marketplace.

Slow adoption time of new battery technology is the biggest obstacle to the dreams of an all-electric transportation system. The promised innovations that will bring battery costs down enough to make EVs cost-competitive with gasoline vehicles, such as the solid-state battery being developed by Volkswagen’s battery partner QuantumScape, are still several years from hitting the market and several more years from reaching broad adoption.

And it is not as if gasoline engines are not improving either. The total fuel efficiency of the U.S. light-duty vehicle fleet has improved by 20% in the past decade and is forecast to continue improving. Hybrids will also become more competitive as battery costs fall.

These challenges are part of the reason why, 17 years after Tesla was founded, it has still only captured a little more than 1% of the U.S. new vehicle market. That is not a small feat, but it is also not worthy of the company’s current valuation.

Despite these challenges, policymakers around the world are pressing for markets to speed up EV adoption. Nowhere is that sentiment more prevalent than in Austin, Texas, the future site of Tesla’s newest factory. The city’s Office of Sustainability, following the dictates of its Climate Equity Plan to reach net-zero emissions by 2050, predicts that Austin will need 460,000 EVs on its roads by 2030. That is more than half of the total vehicles expected to be in the city by that time and up from about 10,000 EVs today.

There is an increasing cognitive dissonance between the goal of achieving net-zero emissions by 2050 and the actual pace of battery and EV development. Simply put, there is no Moore’s Law for batteries. Billions of dollars and decades of experience have not sped up the rate of improvement of battery technologies, which is consistently a few percent a year. We need to recognize that while EVs will certainly have a role in the future of transportation, physics and economics—not public policy—will ultimately determine their rate of adoption.

It may not be wise to bet against Tesla’s stock, but it is certainly wise to bet that these policies are going to slam into the brick wall of reality very soon.