Tesla's Stock Could Drop Over 13% Due to Trump's Potential EV Tax Credit Cuts, FSD Concerns, and Delivery Challenges
Sunday, Jan 26, 2025 9:33 pm ET
5min read As the electric vehicle (EV) market continues to evolve, Tesla Inc. (TSLA) faces a potential storm of challenges that could lead to a significant drop in its stock price. According to Gary Black, Managing Partner of The Future Fund LLC, Tesla's stock could plummet over 13% due to a combination of factors, including President-elect Donald Trump's potential cuts to EV tax credits, concerns surrounding Full Self-Driving (FSD) technology, and delivery growth uncertainties.
Firstly, the potential elimination of the $7,500 federal EV tax credit under the Trump administration poses a significant threat to Tesla's U.S. sales. As Black points out, Tesla's U.S. sales represent around 30-35% of its global volume, making it more reliant on the tax credit than traditional automakers. If the tax credit is removed, Tesla's U.S. sales could suffer, leading to a decline in deliveries and, consequently, a drop in the company's stock price.
Secondly, concerns surrounding Tesla's Full Self-Driving (FSD) technology have been mounting. Despite the company's ambitious promises, the timeline for achieving unsupervised self-driving capabilities has been pushed back repeatedly. The recent revelation that Tesla is now using both nodes on the HW3 computer, indicating a lack of compute redundancy required for level 4-5 autonomy, has raised further doubts about the company's ability to deliver on its self-driving promises. If Tesla fails to address these concerns and meet the expectations of its customers, it could lead to a decline in demand for its vehicles and a subsequent drop in the stock price.
Lastly, the diverging forecasts for Tesla's 2025 delivery growth have sparked debate among analysts and investors. While Wall Street projects a 16% year-over-year growth, independent analysts like Troy Teslike anticipate a 1% decline. The uncertainty surrounding Tesla's delivery growth prospects could lead to a decrease in investor confidence, potentially driving down the company's stock price.
To mitigate these risks, Tesla could explore several strategies, such as diversifying its product portfolio, investing in autonomous driving technology, expanding its global presence, and lobbying for policy changes. However, the potential impact of these strategies on Tesla's stock price remains uncertain, as the company faces an increasingly competitive EV market and a challenging regulatory environment.
In conclusion, Tesla's stock could drop over 13% due to President-elect Donald Trump's potential EV tax credit cuts, concerns surrounding Full Self-Driving technology, and delivery growth uncertainties. As the company navigates these challenges, investors should closely monitor Tesla's progress and consider the potential impact of these factors on the company's stock price.
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