Tesla Inc. (TSLA) Stock: Shares Drop as ZEV Credit Threat Emerges Before Robotaxi Launch

TLDR

Table of Contents

Tesla stock fell 2.6% Friday to $310.87 as investors worried about potential loss of zero-emission vehicle credit sales
President Trump signed legislation eliminating California’s ability to regulate air emissions, threatening Tesla’s ZEV credit revenue worth hundreds of millions quarterly
Tesla plans to launch AI-trained robotaxi service in Austin on June 22, with test vehicles already spotted on city streets
JP Morgan analyst recommended selling Tesla shares and buying auto-supplier stocks Aptiv and BorgWarner instead
Tesla faces lawsuits from French owners over Musk’s political stances, while European sales have declined following controversial comments

Tesla stock declined 2.6% to $310.87 in Friday trading as investors processed new concerns about the company’s revenue streams. The drop came despite the stock being up more than 8% for the week heading into Friday’s session.

President Trump signed Congressional legislation Thursday that eliminates California’s authority to regulate its own air emissions. This move directly threatens Tesla’s zero-emission vehicle credit sales, which generate hundreds of millions of dollars each quarter for the electric vehicle maker.

California Air Resources Board Chair Liane Randolph called the action “unconstitutional, illegal, and foolish” in an emailed statement. The state plans to challenge the legislation through available legal remedies.

The credit sales have been a reliable revenue source for Tesla. Investors now face uncertainty about potential losses from this income stream.

While the ZEV credit issue creates near-term concerns, Tesla continues preparing for its robotaxi launch. CEO Elon Musk announced the AI-trained autonomous ride-hailing service will begin in Austin, Texas on June 22.

A Tesla robotaxi was recently spotted on Austin streets in a video posted on social media. The 10-second clip showed the vehicle making a left turn with no visible driver, though someone appeared in the passenger seat.

🚨 BREAKING: Another Tesla Robotaxi spotted on public roads in Austin, TX with no one in the driver’s seat 👀🔥
This is not a test anymore… it’s happening $TSLA pic.twitter.com/fd0GhNkOaI
— Muskonomy (@muskonomy) June 11, 2025

Analyst Sentiment Remains Mixed

Investment firms have issued varying opinions on Tesla’s prospects. Piper Sandler analyst Alexander Potter maintained an overweight rating with a $400 price target, expecting continued upward momentum.

Potter warned that high-profile robotaxi accidents could trigger “violent downside” for the stock. The analyst sees potential risks alongside the robotaxi opportunity.

Wells Fargo noted weaker delivery trends in recent data. Global deliveries in May were down 23% year-over-year, with second-quarter deliveries trending 21% lower.

The investment firm maintains an underweight rating with a $120 price target. This represents a stark contrast to more bullish analyst views.

JP Morgan analyst Ryan Brinkman took a different approach entirely. He recommended selling Tesla shares and buying auto-supplier companies Aptiv and BorgWarner instead.

Legal Challenges Mount in Europe

Tesla faces additional pressure from European markets and legal challenges. Ten French Tesla owners filed a lawsuit seeking to void their vehicle leases over Musk’s political positions.

The Paris Commercial Court case seeks repayment of original ownership costs plus damages. The owners say they don’t want association with Musk’s recent political stances.

Tesla European sales have dropped following Musk’s appearance at a far-right German political rally in January. His comments about Germany moving on from its Nazi past sparked boycott calls.

The company’s stock has declined about 19% year-to-date but remains up 91% from the same period in 2024. Tesla earned approximately $4 per share in 2022, with earnings declining in subsequent years.

Wall Street expects a potential turnaround beginning in 2026 according to FactSet data. The robotaxi launch could play a key role in that recovery timeline.

Musk has been working to repair his relationship with Trump following their public dispute. The Tesla CEO deleted controversial social media posts and reportedly called the president directly.

The ZEV credit legislation signing had been anticipated by investors, with Tesla stock remaining relatively stable during the California-Trump conflict buildup.

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