TLDR
- Tesla shares dropped nearly 4% after reports of a week-long production halt for Cybertruck and Model Y at Austin facility starting June 30
- Wells Fargo warns Q2 deliveries could fall 21% year-over-year, expecting 343,000 deliveries versus street consensus
- Regulatory credit revenue faces threat as Senate vote ends California’s air pollution regulation authority
- Wells Fargo forecasts Tesla’s first negative free cash flow since 2018 at $1.9 billion burn
- Robotaxi pilot launch scheduled for June 22 in Austin faces safety protests and analyst concerns
Tesla stock took a hit Tuesday as production concerns and bearish analyst warnings created a perfect storm for the electric vehicle maker.
The selloff began after Business Insider reported Tesla would halt Cybertruck and Model Y production at its Austin facility for one week starting June 30. The pause is for maintenance on production lines.
$TSLA 🇺🇸 Tesla plans to pause production on Cybertruck and Model Y lines for a week at GigaAustin to perform maintenance work on the production lines 👀
The purpose is to ramp up production 🔥
Production will resume the following week 🔥
Src: Business Insider pic.twitter.com/Qv4HQOQYkG
— TCMesla (@TCMesla) June 17, 2025
This marks the third such shutdown at the Austin plant in the past year. Tesla has not responded to requests for comment about the production stoppage.
The timing comes as Tesla prepares to launch its robotaxi pilot program in Austin on June 22. The service will use Model Y vehicles equipped with new Full Self-Driving technology.
CEO Elon Musk posted a video clip of a Model Y robotaxi on Austin roads June 10, building anticipation for the launch.
Production Challenges Mount
Wells Fargo analyst Colin Langan delivered harsh criticism of Tesla’s fundamental business metrics. The bank expects second quarter deliveries to drop 21% compared to last year.
Langan’s estimate of 343,000 deliveries sits 17% below street consensus. He pointed to weak Model Y performance with inventory building and ongoing promotions.
The analyst noted there’s no update on Tesla’s affordable model, which was expected to drive second-half volume growth. Order pricing remains stable but financing promotions and inventory discounts continue.
Tesla shares fell 4% in afternoon trading, underperforming the broader market. The stock has declined nearly 22% this year despite gaining 68% over the past 12 months.
Cash Flow Concerns Emerge
Langan’s analysis raised red flags about Tesla’s free cash flow outlook for 2025. A combination of factors could push the company into negative territory for the first time since 2018.
The Senate recently voted to end California’s authority to regulate air pollution. This decision threatens Tesla’s regulatory credit revenue stream.
Wells Fargo estimates the regulatory change could cut full-year earnings before interest and taxes by 16%. Automakers will no longer need to purchase zero-emission vehicle credits from Tesla to offset emissions.
California has filed a lawsuit against the federal government seeking to reinstate the regulation. The outcome remains uncertain.
Lower deliveries, reduced EV credits, pricing pressure, tariffs, and steady capital expenditures create headwinds. Wells Fargo forecasts $1.9 billion in free cash flow burn.
The Austin robotaxi testing also concerns Langan. He describes the program as limited in range, low speed, and heavily supervised.
Langan warns of risks from ramping up too quickly, noting any accident would create a major setback. Public safety groups have protested the upcoming launch.
The Dawn Project demonstrated safety concerns Thursday using a Model Y with current FSD software. In their test, the vehicle drove past a stopped school bus and struck a child-sized mannequin.
Tesla’s current Autopilot and FSD systems have been involved in hundreds of collisions, including dozens of fatalities according to federal data.
Wells Fargo maintains its Underweight rating and $120 price target. The firm has held this bearish stance since March 2024, missing Tesla’s rally following the presidential election.
Some analysts remain optimistic about Tesla’s autonomous vehicle prospects. They view FSD and robotaxi services as potential trillion-dollar value drivers.
Langan calculates Tesla currently trades at 172 times 2025 earnings forecasts, reflecting rich valuation expectations. The production halt report and delivery warnings add pressure to an already stretched stock price.
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