Tesla Stock Trends Again, Why TSLA Price Sank Today?

Tesla’s stock is making headlines once more, but not for the right reasons. On Tuesday, July 1, 2025, Tesla (NASDAQ: TSLA) shares took a hit, dropping 7% from a closing price of $323.63 the previous Friday to $300.71. 

This slide erased significant market value and left investors wondering what’s driving the downturn. A mix of a heated public feud between CEO Elon Musk and President Donald Trump, coupled with anticipation for Tesla’s Q2 2025 delivery report, has sent shockwaves through the market. Let’s break it down.

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Musk vs. Trump: A Public Spat Shakes Investor Confidence

The latest drop in Tesla’s stock price comes amid a fiery clash between Elon Musk and President Donald Trump. 

Their once-chummy relationship has soured, largely over disagreements about Trump’s “One Big Beautiful Bill Act,” a massive tax-and-spending package now headed for a final vote in the House. 

Musk has been vocal on X, slamming the bill for ballooning the U.S. deficit and raising the debt ceiling. According to the Congressional Budget Office, the bill could add $3 trillion to the national debt over the next decade.

Read Also: Elon Musk vs Donald Trump: Inside the Growing Rift Between Two Power Players

Q2 Delivery Expectations: A Looming Disappointment?

Adding fuel to the fire, Tesla’s stock dip comes just ahead of its Q2 2025 delivery report. Wall Street analysts are bracing for a lackluster performance, projecting deliveries of around 387,000 vehicles, a 13% drop from the 444,000 delivered in Q2 2024. Prediction market Kalshi is even more pessimistic, forecasting just 364,000 deliveries.

This decline reflects broader challenges for Tesla’s core EV business. Sales are slumping in key markets like Europe, where Tesla saw a 50% year-over-year drop in April and another double-digit decline in May. 

In China, sales fell about 20% over the same period. Increased competition from lower-cost EV makers like BYD and a consumer backlash tied to Musk’s political stances haven’t helped.

Tesla’s Bright Spots: Robotaxis and Beyond

Despite the gloom, Tesla has some wins to celebrate. In late June 2025, the company rolled out a limited robotaxi service in Austin, Texas, marking a milestone in its push toward autonomous driving. 

Musk hyped the achievement, boasting about Tesla’s first “driverless delivery” of a car to a customer. This initially boosted the stock, with shares climbing before the recent feud reignited.

Energy Division: A Hidden Gem?

Tesla’s Energy division, which sells solar and battery storage systems, is another potential growth area. 

However, the Trump bill’s proposed cuts to renewable energy development, estimated to reduce capacity by over 350 gigawatts by 2035, could put pressure on this segment. Still, Tesla’s ability to innovate in clean energy keeps it a player to watch.

Read Also: Elon Musk Leaves Trump Over Tariff Dispute

The Bigger Picture: Market and Valuation Concerns

Tesla’s troubles didn’t just hurt its own stock, they dragged down the broader tech market. 

On Tuesday, the Nasdaq Composite fell 0.8%, and the S&P 500 dipped 0.1%, partly due to Tesla’s sell-off. Investors, already jittery after Monday’s record highs, were quick to take profits when the Musk-Trump drama escalated.

The Senate’s passage of Trump’s bill, which excludes provisions to limit state-level AI regulations, added another layer of uncertainty. 

This could impact Tesla’s autonomous driving ambitions, as varying state laws might complicate its robotaxi rollout.

Is Tesla’s Valuation Justified?

Tesla’s stock is trading at a lofty 10 times this year’s expected sales and 161 times expected earnings, a premium that assumes big wins in autonomy and EV dominance. Yet, with vehicle sales declining and regulatory risks mounting, some analysts question whether the stock is overvalued. 

JPMorgan’s Ryan Brinkman noted that Tesla’s consensus earnings estimates for 2025–2027 have plummeted by 70–77%, signaling weaker fundamentals.

Read Also: Elon Musk Still Influences Cryptocurrency—Here’s How and Why It Matters

Should You Buy Tesla Stock Now?

Tesla’s stock is down 13% over the past month and 26% year-to-date in 2025, reflecting a tough road ahead. The Musk-Trump feud raises real concerns about regulatory backlash and lost subsidies, which could hurt Tesla’s bottom line. 

The company’s core EV business is struggling, and quality issues, like eight Cybertruck recalls in 15 months for problems ranging from software bugs to sticking accelerators, aren’t helping

Reasons for Optimism

On the flip side, Tesla’s robotaxi launch and energy division offer long-term potential. If Musk can navigate regulatory challenges and scale autonomous driving, Tesla could reclaim its growth narrative. 

Some analysts, like Wedbush’s Dan Ives, remain bullish, maintaining an outperform rating and a $500 price target. 

They argue that Musk and Trump need each other, Trump for AI leadership, Musk for regulatory support, suggesting the feud might cool off.

Conclusion

Tesla’s stock is in a rough patch, driven by the Musk-Trump feud and looming Q2 delivery disappointment. The public fallout has raised fears of regulatory and financial headwinds, while slumping EV sales and a sky-high valuation add to the uncertainty. 

Yet, Tesla’s robotaxi ambitions and energy division provide glimmers of hope for long-term investors. For now, the stock remains a risky bet, those considering jumping in should weigh the potential rewards against the very real challenges. 

FAQ

Why did Tesla stock drop 7% on July 1, 2025?

The drop was triggered by Elon Musk’s public clash with Trump and weak Q2 delivery expectations, shaking investor confidence.

What are Tesla’s projected Q2 2025 vehicle deliveries?

Wall Street expects around 387,000 units, a 13% drop YoY. Kalshi predicts an even steeper decline to 364,000.

How are Tesla’s global EV sales trending?

Sales are slumping, Europe dropped 50% in April, China down 20%, driven by competition and political backlash.

What’s the impact of Trump’s new bill on Tesla’s energy division?

The bill threatens to cut over 350 GW of renewable capacity by 2035, which could slow Tesla Energy’s growth.

Is Tesla’s valuation still justified at current levels?

With a 161x P/E and falling earnings estimates, some analysts say the valuation is stretched unless autonomy pays off big.

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