Tesla (NASDAQ: TSLA) is one of the first ‘Magnificent Seven’ stocks to report second-quarter earnings, due 23 July. With its volatile stock price down 18% so far in 2025, expectations are mixed.
Steve Jobs was said to see the world through a ‘reality distortion field.’ It’s what allegedly enabled him to set apparently unachievable goals for Apple… and so often achieve them.
If anyone today shares anything similar, it has to be Tesla CEO Elon Musk. Could an electric vehicle maker otherwise have reached a price-to-earnings (P/E) ratio above 400 by the end of 2024?
Eye off the ball?
That same ambition also lies partly behind the Tesla stock decline. Since a 52-week high in December, when Musk and Donald Trump were best buddies, we’ve seen a 32% fall — based on the price at the time of writing (21 July). And that’s after a partial recovery from a low point in April 2025.
That Tesla forward P/E is down to 220 now. By contrast, Chinese EV maker BYD is on a multiple of only 19.
Musk’s public fall-out with Trump has added to fears he might be losing interest in Tesla. How can even he keep his focus on the company while devoting so much effort to politics? Not to mention his other distractions, like SpaceX.
So that’s the first thing I’ll be wanting in that Q2 report — evidence that Elon Musk is getting back to his real job.
More than EV sales
Tesla pins much of its future on its artifical intelligence (AI) technology. And that includes the Tesla Robotaxi, finally rolled out for its much-delayed first public trials in Austin, Texas, in June.
To many, the low-key event was disappointing. Only a handful of vehicles were rolled out, and each had a human on board for safety. Even then, a few cases of apparently erractic driving were seen.
The forthcoming earnings update offers what Barclays analyst Dan Levy calls “an opportunity for Tesla’s robotaxi narrative to shine“. I think we need to see realistically ambitious expansion plans, as the company already lags some way behind Alphabet‘s Waymo.
But, sales…
While the future is ambitious, the present is something more mundane. Tesla’s disappointing sales performance really does matter.
In the quarter, the company only delivered 384,122 vehicles globally — at a time when EV sales are growing. In fact, BYD sales of pure battery electric vehicles overtook Tesla in the European Union for the first time in April. Globally, BYD sold 382,600 ‘New Energy’ vehicles in June alone — though that does include hybrids.
I want to see a strategy for turning the sales decline around. And I’m not convinced the new venture into India will do the trick — not with Indian import tariffs pushing the Model Y price up to $70,000.
Write-off?
Am I writing off Tesla stock as a bad job? No. If it can turn that Texas trial into the $75bn annual robotaxi revenue it hopes for by 2030, those considering buying today could do very well. And 2025 could turn out to be a pivot time.
But in my evaluation of the chances, I can’t do better than toss a coin. So I’m not considering an investment now, but I’m watching keenly.
