Red Flag Warning – New Reasons Why You Should Re-Evaluate Your Tesla Stock Exposure In 2025 – Number Nine Is the Most Scary

Tesla stock is traded under the name TSLA on the NASDAQ. This public stock has had a long journey since it was listed in June of 2010. With recent developments, now is a logical time to reevaluate whether you have the appetite for a stock that could turn volatile in the year ahead. Before we begin, you should know that your author is not a financial expert, and this story does not suggest that you purchase or sell stock of any type, TSLA or otherwise. 

Tesla was once the “thinking person’s car.” The wealthy intellectual elite of California could not wait to tell you how smart owning a Tesla was. They had a point. The Tesla Model S was revolutionary when it debuted. There was nothing like it then, and nothing like it had ever been made before. It’s been a long time since the prototype Model S was revealed back in 2009. And a lot has changed at Tesla and in the automotive industry. Let’s look at the reasons why people who have IRAs may wish to examine their exposure to Tesla and why active investors in the company may wish to also do an analysis of their exposure to Tesla. Remember, Tesla is not just a car company anymore. When you invest in Tesla, you are also investing in its energy generation and storage products, robotics, and AI. If you are an expert in all of these various fields and feel that the stock may grow during the time you own it, that’s cool. If you are not an expert, why are you holding the stock in the first place?

You may also enjoy our story titled, 5 Potential Black Swan Opportunities in the Tesla and EV Market in the U.S.

Elon Musk’s Political Activities Threaten the Tesla Brand Reputation
Tesla’s reputation as the “smart” car to buy is now in question. The company’s leader, who joined the company as an investor shortly after it was founded, now firmly holds the reins at Tesla’s automotive division. He’s a special man. Genius. Hard-working. Energetic beyond the norm, even for those who work around the clock. However, he’s recently been shedding friends. A salute he gave sent shivers down the spine of those who remember, or who have studied, the 1930s in Europe. Musk’s role in slashing government funding is polarizing. You may not be bothered by any of this. However, there is solid evidence reported widely in the automotive and mainstream media that shoppers are starting to be turned off in big numbers. Some upset Tesla owners are vowing to dump their TSLA stock. 

As California Buys, The Nation Will Follow
The Californian market has always been Tesla’s largest and most well-penetrated. The company began manufacturing here and its founders started operations in California (despite incorporating on the East Coast.) As of late, the news on Tesla sales in California is downright scary. Sure, the company still leads all other EV companies by a country mile, but the total sales are starting to look grim. This could be a bellwether event for the company’s national sales. As reported by Barron’s: Tesla Stock Fell. California Might Be Turning Against Elon Musk.

European Shoppers Are Stepping Back from Tesla
Like in California and the U.S., Tesla is starting to lose sales in Europe. The reports are worse than in California. There are many reasons attributed to this change in sales, but the numbers themselves are the biggest concern, not whether the sales drop is being caused by Elon Musk, the company’s products, or other market factors. 

Big US Regulatory Changes Afoot – Watch the ZEV Credit Mandate
It’s almost a foregone conclusion that consumer-facing price supports are about to change in America. Even Elon Musk supports dropping the EV tax incentive at the federal level. We’ve seen this happen before and the changes to the market were almost universally good. The Chevy Bolt’s average transaction price went down (not up). Tesla did just fine without the government giving rich folks money to help pay for their near-supercars. 

However, it’s not the consumer-facing government EV support that we are most concerned about. Rather, it’s the payments that go to Tesla from other automakers who cannot sell enough EVs. Called regulatory credits, these have been pointed to as the difference between Tesla being profitable and being in the red on many occasions. If these go away, and the Trump Administration and new Congress could easily end them, then Tesla and every other EV maker will have a real problem on their hands. What is the buzzword to watch for to see if these have a bullseye on them? “Ending EV mandates” is the term. And it’s already been promised by Trump 47.

Tesla’s Latest Product Is An Abject Failure
You may like the new Cybertruck. I may like the new Cybertuck. Your neighbor may buy a new Cybertruck. However, this does not change the fact that EV pickup trucks are failing miserably in America. The Cybertruck is now well into its third calendar year of deliveries and Tesla has never mentioned the truck even one time in a delivery report. Not – one – mention. Instead, Tesla lumps the failing Cybertruck into the “other” category of low-selling, failing models in its portfolio. If Tesla isn’t even mentioning its news model in delivery reports, that’s a red flag. If it were successful, the company would be trumpeting that fact in its reporting. 

Tariffs On Tesla Vehicles Have Been Proposed
Canada and the U.S. are dancing around a possible trade war. Canada is an expansion market for Tesla, and if Canada places tariffs on Tesla, or bans the product outright, Tesla would be denied an easy, and very high-profit market it has yet to saturate. 

Competitors Have Caught Up To Tesla
Here in the U.S., there are now hundreds of electrified models for sale. Many of them are outstanding. Don’t take our word for it. Here’s what Nikki Gordon-Bloomfield of Transport Evolved told Torque News this week about Tesla vs. its competitors:

Tesla isn’t the only option anymore. A wider range of vehicle types and price points mean customers can opt for competitors that are just as clean, green, smart, and practical, without the stigma of destructive authoritarianism, so-called “Roman salutes”, or political ideologies. 

China Is About to Become a Closed Market To Other Automakers
So far, Tesla has had a good run in China. It was the first company not forced into a joint venture partnership that all but assured its eventual takeover by a Chinese company. However, President Trump and Elon Musk are now close allies. And a trade war has begun between the two nations. China does not have to fight fair. It could torpedo Tesla’s Chinese success in an instant. It doesn’t help that every respectable EV advocate has now been to China and reported back that Chinese companies are building cars better than Tesla’s in every possible segment. 

Your Investment In Tesla Is Really An Investment In Bitcoin
The most worrisome news we’ve seen about Tesla in relation to its stock valuation is the report that Tesla’s profits last quarter were closely tied to its investment in Bitcoin. CNBC reported that Tesla’s profits were heavily impacted by how public companies are required to report their cryptocurrency holdings. “It’s important to point out that the net income in Q4 was impacted by a $600 million mark-to-market benefit from bitcoin due to the adoption of a new accounting standard for digital assets,” Tesla’s CFO was quoted as announcing. We are not experts in cryptocurrency. Are you? If not, perhaps you would consider reducing your exposure to a company so heavily leveraged in crypto. 

If you hold Tesla stock, your IRA mutual funds hold Tesla stock, or if you invest in an index fund that holds Tesla stock, this is a good time to step back and consider if you want that exposure. Your financial advisor or IRA administrator can quickly tell you what your exposure is and what options you have. 

Do you invest in Tesla stock? What do you think about the path ahead for this stock?

Do you think that Elon Musk being the leader of Tesla is a plus or a minus right now for Tesla’s valuation?

John Goreham is a credentialed New England Motor Press Association member and expert vehicle tester. John completed an engineering program with a focus on electric vehicles, followed by two decades of work in high-tech, biopharma, and the automotive supply chain before becoming a news contributor. He is a member of the Society of Automotive Engineers (SAE int). In addition to his eleven years of work at Torque News, John has published thousands of articles and reviews at American news outlets. He is known for offering unfiltered opinions on vehicle topics. You can connect with John on Linkedin and follow his work on his personal X channel or on our X channel. Please note that stories carrying John’s by-line are never AI-generated, but he does employ grammar and punctuation software when proofreading and he also uses image generation tools.