TLDR
- Tesla stock fell 3.8% Wednesday despite positive robotaxi launch reaction, closing at $327.55
- European sales dropped 28% year-over-year in May with only 13,863 cars sold
- Wall Street expects Q2 vehicle deliveries of 390,000, down from 444,000 in Q2 2024
- Stock trades at 10x revenue with forward P/E of 178 vs S&P 500’s 21x
- Earnings estimates for 2025-2027 have fallen 77%, 70%, and 71% respectively since October 2022
Tesla stock dropped 3.8% Wednesday as weak European sales data overshadowed the weekend’s robotaxi launch in Austin. The electric vehicle maker closed at $327.55 despite earlier gains from its autonomous driving debut.
The company sold just 13,863 cars in Europe during May. This represents a 28% decline from the same month last year.
Overall EV sales in Europe actually rose 25% during the same period. Tesla’s market share continues to shrink as competitors gain ground.
Through the first five months of 2025, Tesla has sold about 75,000 vehicles in Europe. That’s down 37% year-over-year while regional EV sales climbed 27%.
Several factors explain Tesla’s sales struggles. CEO Elon Musk’s political activities have alienated some left-leaning buyers.
The company’s product lineup has also grown stale. Competitors have launched newer models while Tesla’s vehicles age.
Delivery Estimates Plummet
Wall Street now expects second-quarter deliveries of roughly 390,000 vehicles. This compares to 444,000 deliveries in the same quarter last year.
The estimate has fallen dramatically from 502,000 vehicles projected at the start of 2025. Weak demand has forced analysts to slash their forecasts.
Tesla stock has still gained 27% since reporting a 13% first-quarter delivery decline on April 2. Investors appear focused on AI and robotaxi potential rather than car sales.
The Austin robotaxi launch generated mixed reactions from analysts. Wedbush’s Dan Ives took two 15-minute rides and called the experience “comfortable, safe, and personalized.”
That's a wrap! In the last 36 hours, I've taken a total of 20 @Tesla Robotaxi rides and traveled 92 miles. No interventions, no critical safety issues. All my rides were smooth and comfortable.
Thank you, Tesla, for letting me be a part of this experience—and congrats to the… pic.twitter.com/VNpSUVMuz6
— Sawyer Merritt (@SawyerMerritt) June 24, 2025
Ives rates Tesla shares Buy with a $500 price target. He believes self-driving technology could be worth trillions.
Goldman Sachs analyst Mark Delaney expressed more caution. He was surprised a Tesla employee remained in the vehicle during rides.
Delaney expects slow scaling of the robotaxi service. He maintains a Hold rating with a $285 price target.
Valuation Questions Persist
Tesla’s valuation has drawn criticism from some strategists. The stock trades at 10 times revenue, which Chad Morganlander called “insane.”
Tesla’s forward price-to-earnings ratio sits at 178 times. The S&P 500 trades at roughly 21 times by comparison.
Earnings estimates have collapsed since October 2022. Projections for 2025 have dropped 77% during this period.
Estimates for 2026 and 2027 have fallen 70% and 71% respectively. The decline reflects weakening fundamentals across Tesla’s core business.
The company also faces regulatory risks. EV tax credits represent about 52% of Tesla’s current profits according to JPMorgan.
These subsidies could disappear under the Trump administration. Their elimination would wipe out a large portion of earnings.
GLJ Research analyst Gordon Johnson believes Tesla modified its Model Y vehicles for the robotaxi service. This could complicate plans to create an Airbnb-style fleet from existing vehicles.
RBC’s Tom Narayan noted that passenger safety monitoring isn’t new for Level 4 autonomous services. He rates shares Buy but has a $307 price target below current levels.
Narayan estimates robotaxi technology represents about 60% of his Tesla valuation. This shows how much the stock depends on autonomous driving success.
Tesla’s robotaxi service currently operates in a geofenced Austin area for $4.20 per ride with handpicked passengers.
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