Slowing sales, profit threats, and political backlash hit hard
Tesla is facing one of its most precarious moments in years, as financial pressures mount and CEO Elon Musk’s political involvement adds a new layer of risk. While Musk’s recent public feud with President Trump has drawn headlines, the company’s declining financial outlook and eroding demand for its vehicles are raising far more serious concerns among investors and analysts.
Tesla shares fell 6.8% Monday and barely rebounded on Tuesday, reflecting market unease over Musk’s plans to launch a new political party. Musk’s shift from staunch Trump supporter to vocal critic, triggered by a dispute over tax and spending policy, has fueled concerns that his political activity is diverting attention from Tesla’s core challenges.
Analyst Dan Ives of Wedbush, a longtime Tesla bull, warned that the company is at a “tipping point,” urging the board to set boundaries on Musk’s political ventures. “Tesla needs Musk focused on AI, autonomy and robotaxis — not building a political party,” Ives said, though he maintained his $500 price target for now.
Profitability at risk without regulatory credits
Adding to Tesla’s woes is the recent elimination of EV tax credits and emissions-related penalties under Trump’s new legislation. Analysts at William Blair downgraded the stock and cut earnings forecasts, warning that the loss of emissions credit sales — which added $10.6 billion to Tesla’s results since 2019 — could drag the company back into the red.
Without those credits, Tesla would not have posted a positive net income until 2021 and would have reported a loss in Q1 2025. Tesla declined to comment, but Musk’s response to Ives’ critique — a blunt “Shut up, Dan” — suggests little appetite for internal restraint.
Robotaxi rollout stumbles, rivals gain ground
Musk continues to tout Tesla’s future in autonomous vehicles and AI, yet progress has been slow. The company’s robotaxi service is limited to Austin and still requires a human monitor in the car. In contrast, Google’s Waymo already operates in four cities and plans to expand to Miami and Washington, DC in 2026.
Recent Tesla robotaxi incidents, including vehicles driving on the wrong side of the road or bumping into parked cars, have raised concerns about the tech’s readiness. Musk has not committed to a public rollout date or removal of human oversight.
Sales decline and brand damage pile on
Tesla’s global sales dropped 13% in both Q1 and Q2, even as EV demand continues to rise. Competitive pressure from Chinese manufacturer BYD and other Western automakers is eating into Tesla’s market share, and the upcoming expiration of the $7,500 EV tax credit may accelerate the slide.
The brand also faces growing consumer backlash tied to Musk’s political posture. Protests outside Tesla stores and social media campaigns have compounded the damage, making the company vulnerable to disapproval from both sides of the political divide.
