- Tesla is experiencing a significant financial downturn, leading to substantial profits for short-sellers and declining vehicle deliveries.
- Elon Musk's increased political involvement, including announcing his own political party, has negatively impacted Tesla's stock value and investor confidence.
- The company's struggles, particularly due to government policies and trade restrictions, are threatening the broader clean energy technology sector and could lead to energy affordability issues.
Investors who have shorted Tesla stock are about to pocket $1.4 billion in profits as the beleaguered company continues its rapid downward spiral. A potent combination of tariffs, anti-clean energy legislation, and stunningly bad PR have led to devastating drops in the companys share values, with reverberating consequences for the companys many ventures, not to mention clean energy tech research and development writ large.
Tesla has been failing to meet its forecasts for a while now, even with projections much reduced to reflect the current policy atmosphere. For two consecutive financial quarters, the companys vehicle deliveries have fallen short of 400,000. Bloomberg reports that Tesla Inc. is in trouble, adding that having promised a revolutionary new automated product for a decade, missing repeated deadlines, the company finally launched a limited, somewhat automated pilot that looks years behind the competition.
While the companys electric vehicle sales numbers have been dismal since the middle of last year, the company has had at least one bright spot of growth in its portfolio its energy storage business . Between 2020 and 2024, revenue derived from energy storage and solar installations ballooned from $2 billion to $10.1 billion. But even this business is not immune to the pall cast over the company. Deployments of its Powerwall and Megapack stationary storage products have declined in the first two quarters of this year.
On Monday, Teslas stock tumbled 7.5% in a single morning as the (in)famous founder and Chief Executive Officer Elon Musk announced that he will be forming his own political party. This move comes on the heels of a frenzied period of collaboration followed by a high-profile fracas with President Donald Trump. Investors are clearly worried about Musks behavior, and the stock market is reflecting that defection.
Very simply, Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story, Dan Ives, an analyst at Wedbush Securities, recently told The Guardian. He added that there is a broader sense of exhaustion among Tesla investors stemming from Musks repeated and divisive involvement in the political sphere.
Ironically, Musks company has been kneecapped by the very same political party and policy initiatives that Musk himself helped spearhead in the initial months of the Trump presidency. While Musk stood with his arms folded in the Oval Office, his company was releasing statements against Trumps proposed end to clean energy tax credits, writing on X (also owned by Musk) that abruptly ending the energy tax credits would threaten Americas energy independence and the reliability of our grid.
The current administrations approach to clean energy subsidies and international trade amount to a whole lot of bad news for nearly all of Teslas portfolio, including energy storage. While battery storage installations might continue to receive tax credits under the bill, new restrictions over parts or materials sourced from foreign entities of concern (FEOC) could make any remaining tax credits nearly impossible to claim, reports Tech Crunch. Like so many other domestic clean energy supply chains, the lions share of raw materials are sourced from China, which dominates global critical mineral refining.
Musk is now publicly distancing himself from Trump, but the damage is already done. The bottom is about to fall out of electric vehicle sales thanks to the Big Beautiful Bill, a (highly predictable) outcome which Musk realized too late .
The impact of the bill on domestic clean energy, energy storage, and other major growth sectors in global energy markets are likely to hit American consumers hard, potentially setting America up for the worst energy-affordability crisis since the 1970s. Meanwhile, Elon Musk is still the richest person on planet earth, by a comfortable margin.
By Haley Zaremba for Oilprice.com
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