Problems for Tesla (TSLA) continue to mount amid tariff uncertainty and brand backlash over CEO Elon Musk’s political role. Protests targeting Tesla showrooms have dented its image, and Q1 results, hurt by a sharp drop in sales, fell below expectations.

The stock did rally about 5% after Musk said he would step back from the Department of Government Efficiency to give more attention to the EV maker. Yet underlying issues persist. Recent data from used-car listings show Tesla’s resale values plunged double-digits in March, far steeper than any other brand. The Model S led with a 17.2% year-over-year drop, followed by the Model Y at 13.1%, the Model 3 at 10.9%, and the Model X down 7.3%.

This collapse in used-car prices highlights deeper troubles with tariff uncertainty choking off China’s demand, brand damage from political protests, and disappointing earnings. 

Is this plunge in used-Tesla prices the final nail in TSLA’s coffin, or a buying opportunity before a rebound? Let’s discuss.

About Tesla Stock

Currently valued at $834 billion by market cap, Tesla remains a leading force in the electric vehicle space. Known for its lineup of battery-electric cars, Model S, 3, X, and Y, the company also offers energy storage solutions and operates the world’s largest fast-charging network, with over 7,000 Supercharger stations and 1,359 sales and service centers globally. 

Tesla is currently working on the robotaxi, its much-anticipated autonomous vehicle. The company plans to roll out its first robotaxi fleet in Austin by June 2025, deploying self-driving Model Ys equipped with safety drivers. If successful, it could cut ride-hailing costs and significantly boost Tesla’s revenue and valuation.

Tesla has seen a sharp retreat in 2025, now down roughly 30% year-to-date, lagging the broader market.

Despite the slide, the stock still trades at a nosebleed valuation. Tesla currently trades at a price-earnings (P/E) ratio of 117x and a price-sales (P/S) ratio of 8.3x, far above the sector medians of 13x and 0.8x, respectively. That said, the current multiples still sit slightly below Tesla’s own historical averages, suggesting some compression but not a full reset.

Major Hurdles for Tesla

Tesla’s declining sales are emerging as a major issue for the company. Tesla’s European deliveries dropped 49% to just 19,046 units in the first two months of 2025, a notable decline given that the overall EV market grew 24% during the same period. Analysts blame the outdated Model Y, fierce price cuts from rivals like Volkswagen (VWAGY) and Stellantis (STLA), and political backlash. 

In China, the situation looks even tougher. BYD’s (BYDDY) rapid growth, thanks to cheaper models and local advantages, has pushed Tesla into a smaller market share. Once holding over 20% of China’s EV sales, Tesla is now losing ground fast. Until its more affordable, locally made models arrive, profit margins may stay under pressure.

On a global scale, weak consumer confidence and high borrowing costs are adding to Tesla’s challenges. With the stock already down about 30% this year, investors are closely watching to see if the company can meet its expectations for the Robotaxi launch this year.

Tesla Missed Q1 Estimates

Earlier this week, Tesla reported its Q1 earnings, which missed analyst estimates on both the top and bottom line. Revenue dropped 9.2% year-over-year to $19.34 billion, mainly due to Model Y suspension. Net income fell sharply to $399 million, representing a 57.5% miss on analyst estimates, as rising costs and temporary production slowdowns compressed operating margins.

On an adjusted basis, EPS stood at $0.27, significantly below analyst estimates of $0.41.

Despite the revenue and profit shortfalls, Tesla’s free cash flow turned positive, reaching $664 million, a major swing from the loss of $2.5 billion recorded in Q1 2024. The company ended the quarter with nearly $37 billion in cash and cash equivalents, maintaining a robust liquidity position even as it ramps up investments in autonomy and energy infrastructure.

What Do Analysts Think About Tesla stock?

The analyst community is divided on Tesla stock, with some seeing upside potential while others anticipate further downside. The average price target for Tesla stands at $280.72, below its current trading price. 

The consensus rating is “Hold,” reflecting a cautious stance across the board.

While Tesla missed its Q1 estimates, the stock’s rebound following Musk’s comments shows that investor sentiment remains hopeful. However, the company still needs to overcome its ongoing issues to rebuild its reputation and regain market confidence.