It’s been a major news week for Tesla (TSLA), starting with the highly anticipated launch of its autonomous vehicle (AV) service in Austin – but also including some significant low points, such as another drop in European sales, and the sudden departure of a key executive. Against this heavy news backdrop, TSLA enters today’s trading up just 1.1% on the week, after a remarkable 8.23% rally on Monday.
TSLA stock is down 19% on a year-to-date basis, and the shares have collapsed 33% from their mid-December highs – woefully underperforming the broader market. After the stock’s 52% power surge from its April lows, here’s a look at what to expect next.
The launch of Tesla’s robotaxi service in Austin has encountered significant hurdles, with multiple reported traffic violations including speeding and improper lane changes, which has prompted an NHTSA investigation. These safety concerns have emerged at a critical time when Tesla is attempting to transition from a pure electric vehicle (EV) manufacturer to an artificial intelligence (AI) and robotics company, adding complexity to its growth story.
Recent data also shows the company’s European market position has weakened significantly, with May registrations dropping 28% year-over-year. This marks the fifth consecutive month of lower sales for Tesla, despite broader EV market growth.
Separately, reports on Thursday highlighted the departure of key executive Omead Afshar, who played a crucial role in overseeing operations across North America and Europe. Afshar, also a former SpaceX employee, was reportedly fired due to the continued slide in sales.
Outside of Tesla HQ, competition in the global EV market has intensified dramatically, and particularly from Chinese manufacturers. Xiaomi just launched a lower-priced model that directly challenges Tesla’s Model Y, while BYD (BYDDY) has overtaken Tesla as the world’s largest EV manufacturer. The company’s aging vehicle lineup and multiple price cuts have begun to impact vehicle margins, while Cybertruck production appears to be falling short of initial projections.
