Tesla Stock Soars, But Will Sales?

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Last Updated on: 17th May 2025, 12:50 am

Tesla stock soared this week. There are different theories on why that is. I think the biggest and most likely factor was Donald Trump seemingly rolling back his big tariffs talk. Many on Wall Street see Trump as mostly bluster and bluffing, and didn’t take his tariff talk too seriously. But then tariffs were announced and the market crashed. However, it seems Wall Streeters may be right and Trump discovered that was going to end very badly for him and is now faking wins while changing policy again. We’ll see, but my view is that this is why Tesla’s stock price bounced back a ton this week. At closing today, Tesla’s stock price was almost exactly where it was on February 10.

However … Tesla’s stock decline was also presumably a result of worse than expected Q1 sales, and worse than expected Q1 financials. Tariffs weren’t in effect in Q1, and there are several notable reasons why Tesla seems to be struggling with demand consumer challenges. The bullish argument is that the sales hit was only a result of Tesla changing over its manufacturing lines for the new Tesla Model Y. But there are already signs of less than stellar demand for the new Model Y in China, Europe, and maybe even the US. Again, that’s not even taking potential tariffs into account!

Actually, with potential tariffs coming, one would think that buyers would rush to purchase the vehicle before any such consumer taxes hit.

It’s been a big question for months whether Tesla will be able to find rapid vehicle sales growth again, or even return to 2023 sales levels. So, even with the tariff rollback, I find it a little bit curious that the stock has rebounded so strongly  — tariffs or not, there seem to be serious concerns around Tesla sales. Or maybe there aren’t. Maybe, despite a very slow start to Q2 in China and Europe, expectations are generally high that Tesla will get back onto the track it left in 2023. The problems I have with believing that are fivefold:

• EV competition is strong — super strong — in China, and Tesla seems to be lagging with its pace of innovation. (See “NIO Launches Big Upgrades to Top Selling EC6 & ES6” as just the latest example.)
• EV competition keeps growing fast in Europe as well, which is leading to Tesla losing sales and market share there.
• There’s huge political backlash to Elon Musk and Tesla in Europe, and that doesn’t seem to be fading.
• EV competition is also growing fast in the USA, where Tesla historically had something approaching a monopoly, which is leading to Tesla losing sales and market share there.
• There’s big political backlash to Elon Musk and Tesla in the USA as well, and that doesn’t seem to be fading.

Also, Tesla is already offering incentives on the new Model Y, and the company has already rolled out the cheaper rear-wheel drive version, which is likely an indication that demand for the AWD version isn’t high enough to match production capacity.

Upgraded Model Y or not, I wouldn’t assume Tesla sales will rise in 2025. There’s not enough evidence of that, or logic behind it.

There are also theories that the Tesla stock is up because of its robotaxi, AI, and robotics work. Perhaps. But I haven’t seen anything significantly different/new or bullish on that front to indicate this is the reason for the stock surge.