It depends what you do with such bikes. My son at 5 y.o. rode green trails in a bike park with a woom bike (not a balance bike), and I have seen other dads bring kids with balance bikes to bike parks.
If that is your objective you are ok to spend a few hundred dollars on a kid bike if that gives you the hope you will be saving a lot more than that from the dentist.
This said, a dad like me whose passion are expensive bikes, is very likely to be willing to spend a few hundreds on a kids bike, especially if you have more than one kid and you plan to pass the bike to the other son when the elder one outgrows it.
There is a significant jump in quality between a bike-shaped object at Walmart and a name-brand kid’s bike at your local bicycle shop. There is also a significant jump in price.
Tesla has no reputation in the cycling industry, at least not regarding their bikes, but by the looks of it the fork and wheels are made of composite plastic. Not great.
So no, I would not consider $225 "completely insane".
Disclaimer: I have no ties with, financial interest in, or own any products of Tesla.