Tesla Stock Faces Major Risks Ahead of Robotaxi Launch and Earnings Report

Tesla Inc. is entering a critical phase marked by heightened investor caution, as the electric vehicle manufacturer approaches the launch of its robotaxi platform and prepares to report second-quarter earnings expected in late July or early August. The broader context surrounding Tesla’s trajectory has shifted in recent weeks, influenced not only by operational concerns but also by the deteriorating political rapport between CEO Elon Musk and former President Donald Trump.

In early June, Tesla shares declined 8%, significantly underperforming the S&P 500’s 2% gain over the same period. The drawdown coincided with a public fallout between Musk and Trump, raising concerns that a future Trump administration could adopt a more adversarial stance toward Musk’s business interests. While the rhetoric has temporarily subsided, the tension has added a new layer of risk to Tesla’s policy environment.

Prior to the dispute, bullish projections for Tesla were partially based on expectations that Musk’s perceived proximity to Trump might translate into favorable regulatory outcomes—particularly around autonomous driving initiatives and extended electric vehicle (EV) incentives. That alignment now appears unlikely, undermining a key component of the post-election bullish case.

At the same time, a more fundamental concern is emerging: a growing disconnect between Tesla’s market valuation and its underlying financial outlook. According to updated research from JPMorgan analyst Ryan Brinkman, consensus estimates for Tesla’s earnings per share have declined sharply—dropping 77% for 2025, 70% for 2026, and 71% for 2027—since October 2022. Despite these downward revisions, Tesla’s forward price-to-earnings ratio remains at an extraordinary 166, compared to the S&P 500’s average of 22.

This valuation premium comes as Tesla prepares for substantial capital expenditures tied to its robotaxi infrastructure and robotics development—investments that are unlikely to yield meaningful returns in the near term. Compounding the issue is the growing uncertainty surrounding EV tax credits, a critical component of Tesla’s current profitability.

Brinkman estimates that government subsidies account for approximately 52% of Tesla’s profit margins. A legislative rollback of the EV tax credit, a possibility under a Trump-led administration, could significantly impair the company’s financial performance. Despite this risk, financial models have yet to reflect a material revision in medium-term forecasts, which Brinkman views as a disconnect between sentiment and reality.

He attributes Tesla’s recent share price strength to speculative behavior rather than earnings strength or improved business fundamentals. “The rally following the election appears driven more by investor enthusiasm and long-dated optimism than by material shifts in operational performance or fiscal policy,” Brinkman stated. He further warned that persistent high interest rates and potential shifts in market sentiment could trigger a broader revaluation in high-growth equities, including Tesla.

With earnings pressure building, regulatory support potentially weakening, and major investments looming, Tesla faces a convergence of strategic and financial challenges. Whether the robotaxi launch can meaningfully offset these concerns remains uncertain, but investors appear increasingly wary. The next few months could prove pivotal in determining whether Tesla’s stock can maintain its premium valuation—or if a recalibration is inevitable.

Also Read: Tesla Shares Climb as Austin Approves Robotaxi Testing, Musk-Trump Rift Eases