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The intersection of politics and corporate performance is unusually stark in Tesla’s (Nasdaq: TSLA) case. At the end of March, we posited that TSLA stock would likely yield losses by the end of 2025. After all, from the onset of the Trump-Musk alliance and the DOGE initiative, it didn’t take long for political opposition to mobilize, with EU sales already dropping by 45% in January.

It soon became apparent that street-level action against Tesla owners would introduce an element of risk that most owners were unlikely to accept. As the U.S. justice system became increasingly fragmented and partisan, it became uncertain whether vandals targeting Tesla owners could even be prosecuted, reducing the deterrence factor in the process.

In short, by entering political waters, Elon Musk painted a target on Tesla, his only publicly traded company. Yet by May, there was already speculation that Musk would step back from his government role. This culminated in the conspicuously public breakup with President Trump over the One Big Beautiful Bill Act (OBBBA).

In light of Musk’s exit from politics, what is the likely trajectory for Tesla?

The Current Sentiment Landscape for Tesla

One of the insights that emerged from DOGE audits is that public life is much more centralized than previously thought. In other words, public opinion is an engineered product generated by society’s nerve centers—various institutions, think tanks, NGOs, and media corporations.

Engineered public opinion, in turn, generates sentiment. This creates the landscape for Tesla’s prospects. By the end of March, the company had already suffered a 7% global sales decline. But it’s also possible that the Trump-Musk breakup is a deliberate exit strategy.

Whether it represents agreed-upon PR theater or not, such a scenario would shift public sentiment on Tesla. By leaving President Trump with such conspicuous hostility, Elon Musk removed the mobilization factor for political opposition on the ground. There is no longer a Trump-Musk monolith to target.

Simultaneously, Musk covers his bases with Trump supporters by tempering his previous displays of disagreement. His “in” for that approach is President Trump’s publicly positive view of Elon Musk.

Perhaps more importantly, the escalation of recent race riots in LA has overshadowed the Trump-Musk dispute in significant ways. Intersecting with Musk’s opposition on the left, the riots reveal incoherence as protesters wave foreign flags while demanding not to be sent to the respective countries for which they display such flag-waving pride.

It is very difficult for the media to polish away such incoherence. This is especially true when these riots are accompanied by systematic attacks on Google’s robotaxi service, Waymo. Remember, Google has been traditionally and ideologically aligned with protesters who now burn Waymo autonomous vehicles.

Therefore, not only are the LA riots pushing Musk’s political tenure out of public view, they are likely to continue doing so. In the process, there is greater exposure of the incoherence that put Tesla owners at risk in the first place.

Ultimately, the entire Trump-Musk alliance is likely to fade from public consciousness as a minor footnote. However, Tesla’s EV competitors have already taken advantage of the suppressive effects thus far.

Chinese Takeover of the EV Sector

In late 2023, Musk himself noted at the New York Times DealBook conference that “China is super good at manufacturing, and the work ethic is incredible.” He also implied that Tesla would be among the top 10 car companies, all of which would be Chinese.

As of Q1 2025, Tesla’s EV deliveries dropped by 13% year-over-year to 336,681 units. This represents Tesla’s lowest sales output since the second quarter of 2022. Meanwhile, BYD’s EV sales in Q1 2025 rose nearly 60% year-over-year to 1,000,804 units.

According to the latest Tesla China data, only 8,600 Tesla cars were insured in China, representing a nearly 34% drop week-over-week. Overall, Chinese multinational Geely Holding Group dominates the global EV market, having increased its market share to 62%.

Tesla’s market share decreased from 14% in Q4 2024 to 12% in Q1 2025, while BYD Auto remained relatively flat within the 15-16% range.

In Europe, Tesla sales dropped as already negative public sentiment toward Trump became attached to Musk. In Germany alone, Tesla sales are down 36.2% year-over-year, according to KBA data, despite overall EV sales surging by 44.9%. Similarly, in the UK—Europe’s largest EV market—Tesla sales plummeted by 45% in May, contrasting with the broader EV market surge of 28%.

This trend clearly points to the US as Tesla’s stronghold, where it holds a 43.4% EV market share in Q1 2025, followed by General Motors (10.8%) and Ford (7.7%), according to CarEdge.

That said, there is a possibility for Tesla’s sales to rebound in China. Most recently, on June 3rd, China’s Ministry of Industry and Information Technology included Tesla as part of its EV promotion program in rural areas. This program, which has been running since 2020, had excluded Tesla until now.

The Bottom Line

With EV scaling firmly in favor of Chinese automakers, and with political exposure having a lingering suppressive effect, Tesla will have to rely on robotics, divided between robotaxis in the short-run and humanoid robot Optimus in the long-run.

Tesla’s first robotaxi debut will launch in the City of Austin, on June 12th, limited to geo-fenced areas. The city’s official website shows Tesla’s autonomous vehicles being in the “testing” phase, while Alphabet’s Waymo is ahead in “deployment” phase.

This will be a major milestone for Tesla. If the company’s full-self driving (FSD) proves robust, it will serve as a major incentive for people to monetize their vehicles as robotaxis, in addition to serving as a status symbol of having a robotic chauffeur.

Although it depends on Elon Musk’s further actions on social media, Tesla will likely fade out of view as a political target. This makes TSLA stock still highly speculative, but with firmer fundamentals than before.

When it comes to TSLA stock price, investors should expect the average price target of $308.44, per WSJ’s forecasting data, against the current price of $318.13 per share. Tesla’s bottom outlook is $115, while the TSLA ceiling price target over the next 12 months is $500 per share.

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