Excerpt: Tesla’s 2025 revival likely hinges on Musk’s renewed focus, record-breaking energy business growth, and favorable regulations.
Tesla (NASDAQ:TSLA) stock has seen a turbulent year in 2025. To date, the stock has fallen more than 35%, while the overall market has only declined about 6.75%. The shares have given up tens of billions in market value, and test investors’ conviction.
Recently though, there are signs the stock may recover, closing yesterday up 3.50% at $259.51 and continuing higher in pre-market trading.
There’s renewed optimism driven by several catalysts which may help change the course of Tesla’s year. For investors strategizing whether Tesla has the potential to regain traction, three important growth drivers should be considered.
Elon Musk’s Return to the Driver’s Seat
Elon Musk, CEO of Tesla, has stated that he will "significantly" decrease his work for the Department of Government Efficiency (DOGE), the advisory board he’s inserted into the President Trump administration.
This announcement signifies a major change in focus back to Tesla after months of being in politics that caused boycotting and controversies on nearly a worldwide scale. Starting next month, Musk is going to limit his government work, only working one or two days a week.
This coming phase for Musk and his company comes at a pivotal time for the electric vehicle maker. Tesla’s recent quarterly report revealed some shocking metrics; they saw a 20% drop in car sales and a staggering 70% drop in profit from the same quarter of the prior year.
Musk directly disclosed he would "be spending a far greater percentage of my time on Tesla" and this has been well received by investors, who reacted with a 5% jump in share price in after-hours trading after the news dropped. With Musk’s only innovative thought and leadership returned to the full-time workforce of Tesla, the company has an opportunity to focus on operational issues and product strategy.
Tesla Energy’s Explosive Growth
While Tesla’s automotive segment has struggled, Tesla Energy has powered through as an exceptional performer. Tesla Energy deployed a record-breaking 31.4 gigawatt-hours (GWh) of storage products in 2024, by far exceeding the 14.7 GWh deployed in 2023. This incredible growth catapulted what was considered a side-project in the Tesla world over the last decade and a growing source of revenue—over 10% of Tesla’s revenue total!
The financial impact of this growth is massive—the energy segment produced $10.09 billion revenue in 2024, which is a 67% increase year-over-year. Even crazier is the gross profit, which was $2.6 billion and steeply more than double the prior year.
With the Lathrop Megafactory at maximum production levels and the new Shanghai Megafactory about to ramp to mass production in 2025, some market analysts are valuing the Megapack business only at $120 billion and pegged as a "sleeping giant" that ultimately could outgrow Tesla’s automotive business. With this diversification, Tesla has created traction on a revenue stream that will continue to rise intermixed with less competitive pressures than the electric vehicle business.
Easing Regulatory Path for Self-Driving Technology
The U.S. Department of Transportation has recently introduced a new autonomous vehicle framework that significantly minimizes reporting for companies investing in self-driving technologies. This roll back of regulatory measures is clearly a win for Tesla, especially as it prepares to roll out its long-awaited Cybercab, a robotaxi that was built from the ground up without being inhibited by a steering wheel, brake pedal, and so forth.
Then, the new rules ought to facilitate domestic manufacturers like Tesla and others to research and produce autonomous vehicles which may not comply with all existing federal safety standards. Perfect timing, given that Musk just announced another significant undertaking for the summer, featuring the Cybercab autonomous vehicle, which presents another opportunity for revenue stream production through ride hail.
Reduced regulatory burden means that Tesla will be able to get autonomous vehicle fleets going much sooner than they initially thought and to also scale them much quicker, putting them in an excellent position to capture a substantial portion of the multi-trillion-dollar market that so many analysts believe will exist in a few years.
If Tesla can work through and get through these regulatory obstacles while at the same time ensuring that it can produce promised autonomous driving capability, then Tesla will change the trajectory of their future growth trajectory and valuation metrics.
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This article was written by Shane Neagle, editor in chief of The Tokenist. To get trade ideas and pre-market insights delivered to your inbox every morning premarket, click here to sign up for Bull Whisper (free), brought to you in partnership with The Tokenist.