Tesla stock price has remained on edge this month as concerns about the company have continued. The TSLA share price was trading at $315 on Thursday last week, down 14% from its highest point in June and 35% from its highest point this year. This article explains why the TSLA stock is at risk of further downside.
Elon Musk’s American Party is a risk
The first main reason why the Tesla stock price could crash more is that Elon Musk has become more political. He is working on a new party, known as The American Party, following his fallout with Donald Trump.
His decision to launch the new party came after the Republicans voted for Trump’s Big Beautiful Bill. He believes that the bill will hurt the American economy more by increasing the federal debt and continuing the spending that he worked hard to curtail as the head of the Department of Government Efficiency (DOGE).
Elon Musk also railed against the bill’s energy provisions, which it removed incentives for electric vehicles. Instead, the bill increased spending on traditional energy sources like coal and gas.
The new party is risky to the Tesla stock price because it means that Elon Musk will be more involved politically something that most investors don’t like. Indeed, the TSLA stock price surged after he left the Trump administration a few months ago.
The Trump fallout is also bad for Tesla as Beijing no longer sees him as a geopolitical asset.
Soaring Chinese competition
The other main risk facing the Tesla stock price is Donald Trump’s trade war, which has pushed more Chinese customers to consider local brands like BYD, Xiaomi, Xpeng, and Li Auto.
Many Chinese customers argue that the available Tesla brands seem out of touch with local tastes. Indeed, according to the WSJ, Tesla’s employees in the country have warned headquarters about the aging products. As a result, many salespeople have become frustrated as they are pushed to hit targets without selling the best car.
The numbers are showing in deliveries, where Tesla’s growth has slowed. Its vehicle deliveries fell by 6.8% in the second quarter, even as other companies experienced double-digit sales growth rate.
For example, XPeng’s deliveries jumped to 197,189 in the year’s first half, a higher figure than what it sold in the whole of 2024. Nio’s second quarter deliveries jumped by 25.6% to over 72,000.
The most recent results confirmed that Tesla was no longer a growth company, a trend that may accelerate after the loss of the EV tax credit. The results showed that its total automotive revenue dropped by 6% to $77 billion, while its total revenue rose slightly by 1%. Tesla’s free cash flow also tumbled by 18% to $3.8 billion.
Most importantly, there is a risk that Tesla’s pivot to robotaxis may not be entirely successful. That’s because the taxi business is working fine in its current form, and companies like Uber are well advanced in this innovation.
Tesla stock price technical analysis
TSLA stock chart | Source: TradingView
The daily chart shows that the TSLA stock price has plummeted as its sales in China and Europe have declined. It has formed a double-top pattern at $356 and a neckline at $273, its lowest point in June.
The stock has moved below the 50-day Exponential Moving Average (EMA) and the 50% Fibonacci Retracement level. Therefore, the most likely scenario is where the stock will have a bearish breakdown, with the initial target being at $273.
A move below that support level will point to more downside, potentially to the support at $215, the lowest level in April this year.
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