Tesla. Sales Slump as the White House War of Words Rages.

President Trump purchased a Tesla on the White House lawn on March 11, 2025.

Tesla. Sales Slump as the White House War of Words Rages.
 
I want to start off this blog by acknowledging the massive feat achieved by Tesla, under the aegis of Elon Musk, to disrupt the ICE* industry and make electric vehicles de rigueur. It was an impressive feat. However, today, the competition for EVs has erupted into a price war, while the Bromance breakup between Mr. Musk and The President has descended into a war of words and threats. These stress factors are showing up in sales.
 
*Internal Combustion Engine.
 
Tesla, as a trillion-dollar company with exciting projects in development, should have a bright future for decades to come. However, the real question is, “Should Tesla be valued at more than twice the combined market caps of Toyota, General Motors, and Ford Motor Company combined?” To answer that, we must look beyond the headlines and our own biases and dive into the details.
 
Here are the topics we’ll cover in this blog.
 
Deliveries are Down
Intense EV Competition and Price Wars
Regulatory Credits (and that White House War of Words)
Revenue and Net Income Down
Weakening Economy
Expensive Price
 
And here is more information on each point.
 
Deliveries are Down
Tesla issued a 2Q 2025 deliveries report on July 2, 2025. Tesla delivered 14% more vehicles in the second quarter than they did in the first quarter of 2025. However, year over year, deliveries are down. The company delivered 384,122 vehicles in the 2nd quarter of 2025, compared to 443,956 vehicles in the same quarter in 2024 – a decline of -13.5%. This could result in a drop of up to $1 billion in quarterly revenue from the 2nd quarter of 2024, due to the intense price wars that EV makers are engaged in, requiring almost all EV automakers to reduce prices to compete.
 
It should also be noted that the company is building up inventory, producing 26,122 more vehicles in the 2nd quarter than the company sold. In the 1st quarter, Tesla produced 25,934 more vehicles than the company sold.  
 
Intense EV Competition and Price Wars
BYD is the top selling electric vehicle maker in the world, even though Tesla still has one of the most popular cars in the world. The Tesla Model Y has been the #1 bestselling car since Q1 2023. However, according to JATO Dynamics, the Toyota RAV4 beat the Y by a margin of just 0.16% in 2Q 2025 to become the best-selling vehicle.
 

 

When we look at a stock report card of the fastest growing automakers, many are Chinese-based. This has a lot to do with China being the largest electric vehicle market by far. Of more than 17 million EVs sold globally in 2024, 11 million were purchased in China. Tesla is very popular in China. However, there are many options to choose from that are much more affordable. Tesla has had to lower prices to compete.
 

 
Many European countries and the U.S. have kept Chinese EVs out of their markets with very high tariffs. However, BYD and other Chinese EVs are available for purchase in Mexico, South America, Africa and Asia.
 
If you are interested in an updated auto stock report card email [email protected].
 
Regulatory Credits (and that White House War of Words)
Tesla’s regulatory credits were $595 million in the first quarter of 2025. Without the credits, Tesla’s earnings results would have reflected a net loss instead of net income of $409 million.
 
It’s interesting to think that the DOGE department that Elon Musk set up might in fact go after some of these regulatory credits now. That was a threat posted by the President on Truth Social on July 1, 2025.

Revenue and Net Income Down
Tesla did a company-wide factory renovation in the first quarter of 2025. So, it is possible that the second quarter net income can be a little more robust than the weak 1Q net income of just $409 million. That still could put the range somewhere between $500 million and perhaps $1 billion. The full year revenue could be down by more than half compared to the $7.3 billion net income in 2024, and even more depressed than the $15 billion in net income that Tesla enjoyed in 2023.
 
Weakening Economy
There are more than a few headwinds for the auto industry. The U.S. economy is expected to grow by 1.4% GDP growth in 2025, compared to 2.8% in 2024.
 
Student loan delinquencies began being reported in May of this year. Since then, we’ve seen a spike in 90-day+ delinquencies to 7.74%. This will result in lower credit scores and higher interest rates for anyone wanting to purchase a vehicle.
 
Tariffs on steel will increase the costs of automakers and reduce profit margins, unless they are able to raise their prices. There are additional tariffs for foreign made vehicles. This is one area where Tesla’s build-local motto is in the company’s favor. Tesla builds cars for the U.S. market in the U.S., for Europe in Germany, and for China in China.

Automakers struggle when unemployment rises or consumers have difficulty borrowing due to low credit scores or high interest rates. While interest rates are not egregiously high on a historical basis, many Americans have gotten accustomed to almost zero since the Great Recession. With inflation so high, the restrictive rates could negatively impact all auto purchases. It’s important to remember that General Motors and Chrysler both had to go through bankruptcy debt restructuring in the financial crisis of 2008 and the Great Recession. We’ve already seen an auto parts manufacturer go belly-up – Marelli (on June 11, 2025).
 
Expensive Price
Tesla is one of the most expensive stocks on Wall Street. The company is worth over $1 trillion, with a price/earnings ratio of 166. Yes, Tesla has some exciting projects and products in development. However, should a company that might earn less than $6 billion in net income in 2025 be valued at over a trillion dollars? General Motors and Ford Motor Company had $6 billion in net income in 2024, with current market values of just $51 billion and $47 billion, respectively.
 
It can take years for robotaxis to be embraced and rolled out in a meaningful expansion. It’s questionable whether we’re all going have our own Optimus robot before the next recession. There have been a lot of reports of safety incidents from the Tesla robotaxi launch in Austin, and engineers have raised concerns about the use of cameras only (Tesla FSD) versus LiDAR and cameras (what Waymo uses). (Click to read my blog on that.)
 
Pricing companies out years from now, when there are so many risks in the marketplace, is walking quite a tight rope. Tesla’s share price is volatile, plunging as low as $182/share in July of 2024, hitting a high of $488.54 in December of 2024 and then plunging again to $222/share in early April of 2025. Prices are back to $315/share. However, with the public and White House backlash aimed at the CEO, and the daily headlines those skirmishes generate, volatility will likely continue. That’s quite a rollercoaster. Even sophisticated traders and hedge funds might find it difficult to be on the right side of that trade.
 
Bottom Line
I would never bet against Elon Musk because he has proven himself to be one of the most productive CEOs ever. When the company is on the ropes, he finds ways to bounce back and soar above the competition. Disrupting an industry that’s been around for a century is a tall order, and it is very impressive what Tesla has achieved.
 
However, in a slowing economy, people tend to buy fewer cars. In price wars, companies must lower prices to compete. The current Administration is not friendly to clean energy companies and has threatened to take away subsidies and credits. Those are number of headwinds for a company priced for what people hope will be the value years from now.
 
Anyone who bought Tesla stock early in the game, or even at this year’s low, has enjoyed gains. However, in addition to the auto industry challenges, we’re long overdue for a recession. A correction or bear market could come as quite a shock for newer traders who haven’t experienced a time when the markets didn’t bounce back quickly.


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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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