Tesla’s (NASDAQ:TSLA) robotaxis will have to wildly outperform expectations to offset major shrinkage from Musk’s political exposure.
At the end of May, Elon Musk officially exited his DOGE position and left the year-long alliance with President Trump. Merely days later, Musk engaged in a series of tweets that intensified the impact of his departure, or perhaps the gains of his departure.
By criticizing President Trump on a personal level, alongside attacking his massive deficit-deepening bill, the public received not just a formal departure but one that is memorable and blistering. This way, the animating force propelling vandalism against Tesla cars and owners lost power. And that power had to dissipate.
Despite the FBI’s task force, it soon became apparent that even if vandals are caught, they may not be charged at all, as was the case in Minneapolis. Lacking even the deterrent factor expected in a developed nation, Tesla would face a bleak future. After all, who would dare buy a Tesla car that comes with the expectation of random attacks? As we explored previously, not many.
But it appears that Musk’s exit from the political scene is timely. New events suppress old events. And in a short time, not only did rioters start burning Google’s Waymo robotaxis, but the Iran-Israel war captured the public’s mind. Assuming that the political exposure of Elon Musk, as it transferred to Tesla, is now nullified, what can investors expect to see moving forward?
Tesla’s Devastating EU Shrinkage
As Elon Musk left the White House in late May, Tesla sales in Europe had already plummeted by nearly half in April, from 14,228 to only 7,261 units. This was despite the trend of EV growth in the European market.
In the place of Tesla, Volkswagen Group benefited the most, together with the rise of highly competitive BYD from China. This was not surprising to see as the EU exerts tighter control over its media infrastructure, having consistently portrayed the Trump-Musk alliance in an unflattering light.
Altogether, the EU market churned 2.2 million sales of electrified cars between January and April 2025, per European Automobile Manufacturers’ Association (ACEA) data. This represents a 20% uptick year-over-year, a growth that Tesla is missing.
In that period, the United Kingdom (TADAWUL:4280) saw even greater enthusiasm for BEV/HEV/PHEV vehicles with 22.8% growth at 486,561 units. In this market, Tesla too suffered a 36% drop in May year-over-year, according to the Society of Motor Manufacturers and Traders (SMMT).
The long-term prospect for Tesla in Europe doesn’t look good. Multiple EV manufacturers, from European to Chinese, had plenty of time to scale up and offer more compelling offers. Musk’s political exposure created a perfect penetration momentum that is unlikely to subside.
More importantly, Tesla completely lacks hybrid (HEV) vehicle offerings. Due to its balanced approach and affordability, HEVs continue to be the most popular category. As of May 2025, HEVs make up 35.3% market share in Europe against 15.3% battery electric (BEV) and 7.9% plug-in-hybrid (PHEV) share. During 2024, hybrids sold the most with 30% year-over-year growth. Likewise, hybrid sales dominated the first four months of 2025, rising by 31% in April.
Lastly, it appears that heavy EU tariffs on Chinese auto manufacturers had a muted effect, as they gained 59% more sales year-over-year.
Tesla’s Primary Strength: Robotaxi
According to the latest S&P Global Mobility report, Tesla sales in the U.S. dropped 16% in April, as vandals spooked potential new customers. Compounding this suppression, the overall enthusiasm for EVs subsided, unlike in Europe. For the first time in 14 months, new EV registrations dropped 4.4% year-over-year in April.
Compared to 282,027 electrified vehicles (BEV and PHEV) sold in Europe in April, Americans only bought 97,800 units that month. To make up for the substantial shrinkage in the US/EU, Tesla has to leverage its autonomous driving efforts.
At present, Tesla’s Full Self-Driving (FSD) is rated level 2 on the Society of Automotive Engineers (SAE) scale. For comparison, both Zoox and Waymo are rated level 4, offering fully driverless taxis, although only in limited or geo-fenced areas.
The launch of Tesla’s robotaxis in Austin, on June 22nd or June 28th, will serve as the company’s first big test. This responsibility will fall onto Model Y rather than CyberCab, which was revealed at the “Robotaxi Day” last October at the Warner Bros. Studios.
Autonomous driving has been Elon Musk’s most over-promised feature, supposed to launch all the way back in 2020. Dan Ives from Wedbush Securities believes that successful robotaxi deployment would boost Tesla’s valuation to over $2 trillion by the end of 2026, implying a 100% TSLA stock gain.
Tesla’s Other Strengths: Power and Humanoid Robotics
Renewable stocks are typically sensitive to interest rates. Not only because companies need cheaper capital to expand, but also because customers tend to get loans for such expenditures. Yet, despite higher for longer interest rates by the Federal Reserve, Tesla’s energy storage division is picking up pace.
In 2024, Tesla’s energy division churned out $2.6 billion gross profit, more than double the $1.1 billion in 2023. Tesla’s modular Megapack battery solution is mostly responsible for this growth, utilized by large enterprises and utilities.
As of Q1 2025, Tesla’s energy storage surged 154% year-over-year, to a total of 10.5 GWh capacity for the quarter. For comparison, Tesla deployed 31.4 GWh for the entire year of 2024. Accounting for both storage and energy generation, Tesla’s revenue grew to $2.7 billion, representing a 67% year-over-year growth.
There are signs this trend will continue, as Tesla recently secured a $557 million energy storage deal with Shanghai and China Kangfu International Leasing Co.
On the cutting-edge humanoid robotics front, Tesla’s Optimus is progressing well against its rivals, Unitree, Agility Robotics, Boston Dynamics, and others. Now in the Gen 2 phase, Optimus has much greater mobility, agility, and walking speed compared to Gen 1. On Wednesday, Elon Musk hinted at “many improvements to come in the next design of Optimus”, likely referring to Gen 3.
From previous Tesla reports, the company could utilize its factories to scale Optimus production up to 100,000 units. However, it bears keeping in mind that granular interaction with reality, one that is useful, is far more difficult than reliable FSD for robotaxis.
Tesla’s Price Targets
Ahead of the robotaxi premiere in Austin on June 22nd (or 28th), TSLA stock is down 2% over the week, up 36% over the last three months. Presently priced at $322.23, the average TSLA price target is $306.04 per share.
According to WSJ’s forecasting data, 11 analysts recommend selling at this price range, 18 are holding, while 20 are bullish. The bottom TSLA price outlook is as low as $115, while the ceiling price target in the next 12 months is $500 per share.
Against the average price-to-earnings (P/E) ratio of 25.64 for the consumer discretionary sector, Tesla’s P/E is at a very high 177.22 owing to the company’s multiple speculative angles on robotaxis, humanoid robots and energy.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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