\n Shares of Tesla closed Monday down 6.8%, as investors were concerned about the implication of Musk\u2019s latest political moves, despite his promises to re-focus on the company.\n <\/p>\n
\n \u201cVery simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors\/shareholders want him to take during this crucial period for the Tesla story,\u201d wrote Dan Ives, an analyst at Wedbush Securities who\u2019s known for being optimistic about the company.\n <\/p>\n
\n Ives put out a follow-up note Tuesday saying that the Tesla board should set ground rules to limit Musk\u2019s political activities because the company is at a \u201ctipping point\u201d for its future.\n <\/p>\n
\n \u201cTesla is heading into one of the most important stages of its growth cycle with the autonomous and robotics future now on the doorstep and cannot have Musk spending more and more time creating a political party which will require countless time, energy, and political capital,\u201d he wrote.\n <\/p>\n
\n Still, Ives maintained his buy recommendation and $500 price target for the stock in his note. But analysts at William Blair cut their recommendation on the stock to \u201cmarket perform\u201d or neutral, and also cut their earnings forecast for the company.\n <\/p>\n
\n Because even without the political stink, the Tesla\u2019s financial outlook is suddenly looking notably worse.\n <\/p>\n
\n Tesla did not respond to requests for comment.\n <\/p>\n
\n Blair\u2019s note pointed out that Trump\u2019s bill not only removed the $7,500 tax credit<\/a> for electric vehicle (EV) buyers, but also eliminated the financial penalties for automakers that fail to meet federal emissions targets. Emissions fines have historically forced automakers who still build primarily gasoline powered cars and trucks to buy \u201cregulatory credits\u201d from EV companies.\n <\/p>\n \n Removing those fines eliminates \u201cmarket demand for Tesla\u2019s credits,\u201d said the note from William Blair analysts Jed Dorsheimer and Mark Shooter. The sale of those federal and state credits added $10.6 billion to Tesla\u2019s bottom line since 2019 and often enabled the company to post a profit.\n <\/p>\n \n Without the revenue from those regulatory credits, the company would not have reported a positive annual net income until 2021, and it would have been back in the red again in the first quarter of this year, when its net income plunged 71% compared to a year earlier on sharply lower sales around the globe.\n <\/p>\n \n Musk has largely downplayed all the recent bad news, saying the company\u2019s future rests on <\/strong>robots, artificial intelligence and self-driving taxis.\n <\/p>\n \n But the company\u2019s taxi service is very limited to date, launching only in Austin, Texas, for a select group of customers \u2013 mostly Tesla fans \u2013 and with a Tesla employee riding in the front passenger seat to monitor the car\u2019s performance. That puts Tesla behind the robotaxi service already offered in Austin and three other cities \u2013 San Francisco, Los Angeles and Phoenix \u2013 by Waymo, the self-driving car unit of Google parent Alphabet.\n <\/p>\n \n And Tesla\u2019s rollout has had its shares of problems, including a video showing a robotaxi traveling on the wrong side of the road<\/a> for about half of a block and another video<\/a> of a robotaxi slowly turning its front wheels into a parked car.\n <\/p>\n \n While Musk has promised his robotaxi service will be expanding soon across many other cities, he has not given any further details. He also hasn\u2019t said when the Austin service will be expanded to the general public, nor when the company\u2019s human monitors sitting in the front passenger seat will no longer be needed.\n <\/p>\n \n Meanwhile, Waymo has definitive plans to expand its service to Miami and Washington, DC, next year in partnership with Uber<\/a>.\n <\/p>\n \n \u201cWe expect that investors are growing tired of the distraction at a point when the business needs Musk\u2019s attention the most and only see downside from his dip back into politics,\u201d said the William Blair note. \u201cWe would prefer this effort to be channeled towards the robotaxi rollout at this critical juncture.\u201d\n <\/p>\n Drop in demand likely to continue<\/p>\n \n Then there\u2019s the problem of Tesla\u2019s sales. Or rather, the lack thereof.\n <\/p>\n \n Global sales were down a record 13% in each of the first two quarters of this year, compared to a year earlier, even though demand for EVs overall continues to climb, a further sign of Tesla\u2019s declining market share.\n <\/p>\n \n Part of the lost EV market share is due to increased competition, both from Western automakers rolling out their own EV offerings, and Chinese automakers that have made a massive push into the market. Chinese automaker BYD<\/a> is poised to surpass Tesla in global annual EV sales this year for the first time, even though Tesla is a still a major player in China, and BYDs are not sold in the US.\n <\/p>\n \n Demand is likely to weaken further come October 1, when the $7,500 tax credit for electric car buyers expires. When a previous version of the tax credit was phased out for Teslas in 2019, the company had to cut the price of the car<\/a> <\/strong>by about half the value of the lost credit.\n <\/p>\n \n But Tesla has also faced missteps of Musk\u2019s own doing. There has been backlash against Musk\u2019s political activity, which has had a significant impact on Tesla sales. That is likely to continue even as he moves to distance himself from Trump.\n <\/p>\n \n In the early months of this year, hundreds of protests<\/a> were held outside Tesla showrooms in the United States, Canada and Europe. Worries about self-inflicted brand damage started the company\u2019s shares on their downward slide.\n <\/p>\n![\"A](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/07\/gettyimages-2219832726.jpg\")
<\/p>\n![\"BYD](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/07\/gettyimages-2211814076.jpg\")
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