Tesla (NASDAQ:TSLA) shares continued to slump on Tuesday after President Donald Trump suggested on Truth Social that the Department of Government Efficiency (DOGE) should investigate cutting federal subsidies that benefit Elon Musk’s companies. Trump claimed Musk “may get more subsidy than any human being in history,” warning that without government support, Musk’s businesses could collapse.
The remarks reignite a feud between the two billionaires that began shortly after Musk left his role leading DOGE under Trump. Investors fear that losing subsidies could significantly impact Tesla’s finances, sending its stock down in premarket trading.
Q2 Deliveries Expected to Disappoint
Adding to investor anxiety, Tesla is expected to report disappointing second-quarter deliveries on Wednesday. Analysts project global deliveries of about 395,000 vehicles, a roughly 10% drop year over year, despite ramped-up production and refreshed Model Y sales.
Weak demand in key markets like the US and Europe, partly due to Musk’s political entanglements, has weighed heavily on sales. In Europe, Tesla registrations have fallen for five consecutive months, while US registrations dropped 16% in April. The recent exit of Omead Afshar, Tesla’s head of manufacturing and operations, has deepened concerns about the company’s short-term outlook.
Betting Big on Robotaxis as EV Demand Slows
Facing softening EV demand, Musk is pivoting Tesla’s future to focus heavily on AI and self-driving technology. However, the company’s much-hyped robotaxi launch in Austin highlighted the risks of this strategy. Early test rides, promoted by social media influencers, showed cars breaking traffic laws and making dangerous maneuvers, triggering a federal safety investigation.
Unlike competitors like Waymo, which combine lidar, radar, and cameras for more reliable navigation, Tesla uses a camera-only system, a cost-cutting move that experts say makes the cars less safe in challenging conditions.
Can Robotaxis Revive Tesla’s Slowing Growth?
Despite years of delays, lawsuits, and fatal crash probes linked to its “Full Self-Driving” mode, Musk continues to promise that robotaxis will be key to Tesla’s growth. Some analysts believe the disappointing Q2 could mark a low point for deliveries if a more affordable model arrives later this year.
Meanwhile, Tesla’s stock remains down about 20% for 2025, with analyst price targets split widely as investors weigh the risks of Musk’s political battles and his ambitious bet on autonomous driving.
Technical Outlook
Looking at the daily chart we can see that price has fallen below the line-in-the sand 200 period simple moving average. Potential support below lies at the $270 level, while $365 may represent key resistance to the upside.