Tesla Downgraded by Wall Street Amid Political Headwinds, Robotaxi Uncertainty

Tesla (TSLA.US) has recently been downgraded to "neutral" by two major Wall Street institutions, highlighting the company's short-term uncertainties and the market's overinflated expectations for its upcoming autonomous ride-hailing service, Robotaxi. This move comes as Tesla faces political headwinds, with the threatening to cancel government contracts with the company, escalating a war of words over spending bills. The downgrades underscore the challenges Tesla is currently navigating, including regulatory scrutiny and market skepticism surrounding its ambitious Robotaxi project.

Analysts from Baird and Argus have withdrawn their bullish ratings on Tesla, citing market instability and the reputational risks associated with the public disputes between Elon Musk and the . Ben Kallo from Baird noted that Musk's political activities pose a significant risk to Tesla's future, adding uncertainty to the company's outlook and raising concerns about potential brand damage. This impact could persist until there is concrete evidence of sustained sales growth.

Bill Selesky from Argus pointed out that recent developments indicate that Tesla's stock price is being driven by non-fundamental events. The expiration of electric vehicle tax credit policies could further weaken market demand for Tesla's new vehicles. While Kallo still considers Tesla a core long-term holding, he acknowledges the presence of numerous short-term uncertainties, including the market's overinflated expectations for Robotaxi and the intensifying competitive landscape.

Kallo expressed that the progress of the Robotaxi business will likely be more challenging than anticipated, with profitability potentially falling short of some investors' overly optimistic estimates. Additionally, Kallo revised the expected delivery volume for the second quarter of 2026 from 404,800 units to 377,000 units, reflecting the impact of the cancellation of electric vehicle tax credit policies.