Unbeknownst to many, Tesla is dealing with more significant issues. In addition to the widely reported dispute between CEO Elon Musk and former President Donald Trump, the company’s financial situation is getting worse. The crucial problems Tesla faces in its core business have been overshadowed by Musk’s recent political ventures, including his new political party.
The recent 6.8% decline in Tesla’s stock was a reflection of growing investor apprehension over Musk’s political involvement. Many are wondering how the growing hostility between Musk and Trump will affect Tesla’s future, despite Musk’s pledge to return his attention to the business. Wedbush Securities analyst Dan Ives is among the analysts who contend that Musk’s political diversion is precisely what Tesla needs at this moment. With robotics and autonomous driving on the horizon, the company is at a pivotal point in its development. However, given Musk’s apparent lack of focus, investors are concerned that the business may pass up these chances.
Additionally, Tesla’s financial outlook has gotten worse. Sales of regulatory credits to other automakers have been a major source of income for the company, particularly in order to meet emissions regulations. Tesla’s credit sales could plummet, though, as a new tax bill signed by Trump eliminates these monetary fines for noncompliant automakers. In actuality, Tesla’s earnings have been much lower in the absence of these credits, and there are worries that it may soon experience losses once more.
A major component of Tesla’s future expansion strategy, the robotaxi service, has experienced delays and setbacks, compounding the company’s issues. Tesla’s robotaxi service is still limited, and its performance has been far from perfect, despite Musk’s continued optimism about the role of robots and AI in the company’s future. Tesla is falling further behind in the competition as rival services, such as Waymo’s, are already entering new cities.
Additionally, Tesla’s sales have been struggling, falling 13% globally in the first two quarters of this year. Even though the demand for electric vehicles is rising, this decline is still occurring. Tesla’s market share is being eroded by increased competition, particularly from Chinese automakers like BYD. Additionally, the $7,500 tax credit for buyers of electric vehicles is about to expire, which is predicted to further reduce demand.
Protests outside Tesla showrooms worldwide have resulted from Musk’s political involvement and the fallout that followed, further harming the company’s reputation. Tesla may have once hoped that support from Trump’s base would help it make up for lost sales to detractors, but Musk now faces the risk of offending both political parties. Whether Tesla can overcome these growing obstacles will probably depend on his capacity to strike a balance between his personal and professional interests.