<p>-
- Why Tesla is in trouble — aside from CEO Elon Musk's behavior</p>
<p>Pras SubramanianJuly 9, 2025 at 12:35 AM</p>
<p>Tesla (TSLA) bulls are hopping mad at CEO Elon Musk.</p>
<p>In their eyes, if he just devoted more time to the business and less to politics, Tesla would be back on track.</p>
<p>"We believe this is a tipping point in the Tesla story and ultimately the Tesla Board needs to act now and set the ground rules for Musk going forward around his political ambitions and actions," Webush's Dan Ives wrote on Tuesday morning, arguing that Musk's latest political move, starting the "America Party," had gone too far.</p>
<p>But Tesla's troubles, though levered to Musk, may be deeper than Musk's distractions, such as politics, gaming, and colonizing Mars.</p>
<p>Demand is drying up — but why?</p>
<p>A record fourth quarter delivery report in January seemed to indicate all was well with Tesla, but it doesn't tell the full story.</p>
<p>In 2024, Tesla delivered 1.78 million vehicles, resulting in a total below 2023's 1.8 million vehicles delivered. It was Tesla's first-ever year-over-year decline.</p>
<p>Tesla's Q1 report was also weak, and Q2 deliveries were not much better. Tesla delivered 384,122 vehicles globally in Q2 — a 13.5% drop year over year.</p>
<p>Indications of weakness started in Europe, where various auto trade groups reported tumbling sales.</p>
<p>Most recently, Tesla EV registrations (a proxy for sales) in Europe fell 27.9% in May compared to a year ago, per the European Automobile Manufacturers Association. Meanwhile, overall EV registrations in the region, which includes the UK and the European Free Trade Association, rose 25% in May, with overall registrations down 0.6%.</p>
<p>Stateside, Cox Automotive estimates US sales came in at approximately 132,000 units in Q2, down a whopping 19.5% year over year.</p>
<p>Stephanie Valdez Streaty, Cox's director of industry insights, told Yahoo Finance that the downdraft in sales highlighted a "decline sparked by intensifying competition, an aging model lineup, and signs of brand fatigue in the domestic market."</p>
<p>Read more: How to avoid the sticker shock on Tesla car insurance</p>
<p>Meanwhile Tesla's stock is down over 25%.</p>
<p>While the Musk effect and ensuing brand "fatigue" can't be ignored, Tesla's products faced stiff EV competition from GM, Ford, and Hyundai, as well as Volkswagen in Europe.</p>
<p>A refreshed Model Y SUV, the company's top seller, was expected to boost sales but that did not appear to be the case.</p>
<p>A big question is the status of the affordable Tesla EV, which could open up a wide swath of new customers. The so-called Model Q, as Deutsche Bank analyst Edison Yu calls it, can't come soon enough, he said.</p>
<p>"Where is the affordable EV? Tesla's long-promised budget model is still missing, even as consumers now have over 70 electric models to choose from — many of them increasingly attractive and competitively priced," Valdez Streaty said.</p>
<p>The long wait rolls on.</p>
<p>Tesla's cash cow is disappearing (thanks to Trump)</p>
<p>President Trump, right, speaks during a news conference with Elon Musk in the Oval Office of the White House on May 30. (AP Photo/Evan Vucci, File) ()</p>
<p>Wall Street is also growing concerned over the loss of EV tax credits and regulatory credits stemming from Trump's "One Big Beautiful Bill" (BBB).</p>
<p>The loss of the consumer $7,500 tax credit, which expires on Sept. 30, will be a huge blow from a demand point of view for EV makers like Tesla and legacy automakers like GM and Ford.</p>
<p>But the BBB went further and threatened a big moneymaker for Tesla — regulatory credit sales.</p>
<p>The BBB reduced the fines for automakers that did not meet the EPA's CAFE mile-per-gallon targets. Thus, automakers that do not meet the EPA's standards no longer incur fines, eliminating market demand for Tesla's credits.</p>
<p>Read more: How to find the best luxury car insurance</p>
<p>William Blair analyst Jed Dorsheimer wrote, "We estimate that 75% of Tesla's regulatory credit revenue is related to the CAFE standards, which we account for in our model from the third quarter of this year and zero out in 2027," resulting in a big hit to Tesla's profits.</p>
<p>The BBB is basically a double whammy to Tesla's bottom line.</p>
<p>"[The BBB] makes Tesla vehicles more expensive by eliminating the $7,500 federal EV tax credit effective 9/30/25, and reduces the amount of BEV credits that Tesla is able to sell to traditional automakers by repealing the NHTSA's CAFE standards," CFRA analyst Garrett Nelson told Yahoo Finance.</p>
<p>Tesla earned $2.8 billion in revenue from selling credits in 2024, or 16% of the company's total gross profit. Valdez Streaty added that if not for regulatory credit sales in Q1, the company would have posted a loss for the quarter.</p>
<p>Nelson said the regulatory credit business is "a very high-margin revenue stream for Tesla," in contrast to its automotive business. Furthermore, the BBB eliminated tax credits for solar projects, "including the grid-scale projects which have been a major driver of Tesla's deployments growth over the last few years," he said.</p>
<p>A big bet on robotaxis</p>
<p>A driverless Tesla robotaxi, a ride-booking service, moves through traffic on June 22 in Austin, Texas. (AP Photo/Eric Gay) ()</p>
<p>The auto business is typically a high-fixed-cost, low-margin business. It's why Musk has been reshaping Tesla's future to one of AI and "embodied AI," meaning robots and robotaxis.</p>
<p>While deployment of Tesla's Optimus robot is years off, its robotaxi tests are happening now in Austin, Texas.</p>
<p>While the tests seemed to begin smoothly late last month, recent videos of robotaxi rides depicted Tesla vehicles going faster than posted speed limits and committing traffic violations like driving through turn-only lanes and crossing double yellow lines.</p>
<p>Though government regulators said they are watching, further testing and more vehicles added to the test would be good news for Tesla, with Musk touting the potential trillions in value created by AI and self-driving over the sliding fortunes of its core auto business.</p>
<p>Blair's Dorsheimer expects more pressure on Tesla stock and its multiple, but the robotaxi test could be promising. "On the positive we will look for more datapoints on the robotaxi rollout to rebuild investor confidence," he wrote.</p>
<p>"Given its unmatched scale and scope globally we believe Tesla has the opportunity to own the autonomous market and down the road license its technology to other auto players both in the US and around the globe," Wedbush's Ives wrote last week.</p>
<p>Rivals like Alphabet's (GOOG) Waymo — the current leader in robotaxis — are still expanding and offer stiff competition. And Amazon (AMZN) is ramping up efforts with its Zoox division, opening up a new production facility.</p>
<p>Even with robots and self-driving, Cox's Valdez Streaty believes Tesla has a lot on its plate — from scaling its battery production to addressing its product lineup and navigating policy and regulatory scrutiny.</p>
<p>The company, with or without a distracted Musk, will need to be focused.</p>
<p>"Execution — not just innovation — will define the next chapter for Tesla," Valdez Streaty said.</p>
<p>StockStory aims to help individual investors beat the market.</p>
<p>Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.</p>
<p>Click here for the latest stock market news and in-depth analysis, including events that move stocks</p>
<p>Read the latest financial and business news from Yahoo Finance</p>
<a href="https://ift.tt/EbVBe34" class="dirlink-1">Orign Aricle on Source</a>
Source: AOL Money
Source: AsherMag
Full Article on Source: Astro Blog
#LALifestyle #USCelebrities