Key Points
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After rallying last year, Tesla stock has seen a big pullback in 2025.
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Declining vehicle deliveries and political headwinds have pressured the company’s valuation.
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Tesla’s electric vehicle business is facing significant challenges, but some investors are betting that robotaxis and other growth drivers will reinvigorate the business.
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Tesla (NASDAQ: TSLA) stock saw a substantial pullback across this year’s first half. The company’s share price fell 21.3% across the first six months of 2025, according to data from S&P Global Market Intelligence. The sell-off came even as the S&P 500 index climbed 5.5% over the stretch.
Tesla stock surged in the latter half of 2024 in anticipation of political tailwinds connected to the presidential election and President Trump’s victory in the race, but the gains set the stage for a significant pullback this year, as political dynamics shifted and vehicle sales came in at underwhelming levels.
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Tesla stock sank due to vehicle deliveries and political headwinds
Tesla kicked off January with its deliveries update for last year’s fourth quarter and announced that it had delivered 495,570 vehicles in the period. While the performance marked an increase from the 484,507 vehicles it delivered in the prior-year quarter, 2024 still wound up being the first year in which the company’s total deliveries decreased.
The company then published its Q1 performance update in April and reported that it had delivered 336,681 vehicles in the period — down 13% year over year. Vehicle sales this year have looked particularly weak in European markets, and it seems that CEO Elon Musk’s activities in the political realm may have had a significant negative impact on the company’s brand.
Factors including rising competition from Chinese manufacturers also played a role in Tesla’s sell-offs across this year’s first half. The company did launch its robotaxi service in Austin, Texas toward the end of June, but the service’s launch hasn’t been able to support a sustained rally for the stock yet.
What’s next for Tesla?
At the beginning of this month, Tesla published vehicle production and delivery updates for the second quarter. The business delivered approximately 384,122 vehicles in the period, representing a year-over-year decline of roughly 14%. Meanwhile, the business produced 410,244 vehicles in the period — down slightly from the roughly 411,000 vehicles produced in Q2 of the previous year.
Even though the company saw substantial declines for deliveries in the quarter, the results were better than some analysts had feared and actually helped support gains for the stock. The company’s share price has also seen significant moves in relation to developments surrounding Elon Musk’s relationship with President Trump, and there’s a good chance that political catalysts will continue to spur moves for the stock in the near term. Tesla stock has seen some significant swings in July, and its share price is now up roughly 1.3% across this month’s trading as of this writing.
As of this writing, Tesla has a market capitalization of roughly $1.04 trillion and is valued at approximately 10.8 times this year’s expected sales. Given recent declines for vehicle deliveries, the company’s current valuation comes with a high amount of risk. On the other hand, investors are betting that Tesla’s robotaxi project and other growth bets will pave the way for the business to score huge wins outside of its core electric vehicle market.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
