The bad news keeps coming for Tesla (NASDAQ: TSLA) stock holders. Today (27 May), we learned that the EV firm’s sales across Europe fell 49% in April. So they were basically cut in half year on year, despite the overall EV market growing.
Elsewhere, President Trump’s ‘One Big Beautiful Bill’ has been passed by the US House of Representatives. This isn’t likely to reignite Tesla’s sales. Quite the opposite, it appears.
Yet the share price is up 24% in two months, continuing its remarkable levitating act, and putting the market cap back above $1trn.
Europe sales under pressure
The falling sales in Europe would concern me as a Tesla shareholder. Battery-electric car sales rose by 27.8% across the region last month. So this really should be a growing market for the brand.
It’s hard to tell exactly how much of this is due to CEO Elon Musk’s outspoken political views, or whether it’s all down to fierce competition. Probably a bit of both. Tesla has also updated its Model Y offering recently, so perhaps this change has contributed (temporarily) to the fall.
From what I’m reading, Chinese rival BYD sold more EVs than Tesla in Europe for the first time last month. Again, that would worry me as a shareholder.
April was the fourth month in a row that the company’s sales have fallen in Europe, which takes us back to the start of the year. On 20 December, Musk publicly endorsed Germany’s Alternative für Deutschland (AfD) party, stating that “Only the AfD can save Germany“.
Are falling sales since then just a coincidence? We don’t know. But I imagine that this endorsement alienated quite a few potential Tesla customers across Europe. For one, the AfD is strongly opposed to green energy policies! Tesla is a leading renewable energy company, so the contradiction appears obvious.
A big beautiful headache?
Glancing over the ‘Big Beautiful Bill’, I don’t see this helping Tesla’s sales, assuming it passes through the Senate in its current form (not guaranteed).
The $7,500 federal EV tax credit could be gone by next year, along with tax subsidies for solar and energy storage. A new $250 annual fee on EVs could come in to compensate for lost gasoline tax revenue.
Meanwhile, the sale of zero-emission vehicle credits, which contribute significantly to Tesla’s profits, could be reformed.
Game over?
Now, it’s not all doom and gloom for shareholders. Musk has said he’s back “24/7” at his companies, suggesting some of the political controversy surrounding his work for the government might subside.
Also, the abolition of EV subsidies will likely eliminate unprofitable rivals, strengthening Tesla’s competitive positioning in the US.
More importantly, Tesla robotaxis should be on the streets of Austin, Texas, by the end of June. The network will start with about 10 of them, before expanding to thousands if all goes well.
So it’s not all over for Tesla stock. But the stakes are extremely high because it’s trading at 12 times sales. For it to justify this lofty valuation, strong revenue growth will have to resume again, and robotaxis seem the obvious catalyst for this over the next couple of years.
Investors considering Tesla stock should weigh up the risks, as well as the possible rewards from a successful robotaxi launch.
