Automaker Ford Motor Company (F) just sent a troubling signal to the electric vehicle (EV) industry. The company reported a 0.9% drop in U.S. sales in November, and while its internal combustion engine lineup grew 2.2%, that strength was unable to offset a staggering 61% plunge in all-electric sales, which accelerated a decline already seen in October.
Ford leaders had anticipated the consequences, with the expiration of the $7,500 federal electric vehicle tax credit in October turning many consumers away from buying electric vehicles and taking a hit to demand, at least for now. Furthermore, Ford’s latest EV numbers are not only disappointing, but a wake-up call for the entire EV ecosystem.
Such a sharp collapse adds to concerns that EV momentum is slowing as competition intensifies. While Ford is dominating the headlines right now, the impact could also hit electric vehicle leader Tesla (TSLA) the hardest, especially given that Tesla is already dealing with pressure in major markets around the world. So with market sentiment turning cautious and demand signals looking shaky, it’s worth taking a closer look at Tesla stock now.
Founded in 2003 by a group of engineers determined to prove that electric cars could outperform gasoline-powered vehicles, Tesla has transformed from a scrappy Silicon Valley startup into one of the world’s most influential companies. Led by CEO Elon Musk, the brand has reshaped the auto industry with high-performance electric vehicles and a bold vision for the future.
Today, Tesla’s ambitions extend far beyond cars to encompass autonomous driving, artificial intelligence (AI)-powered robotics and energy infrastructure, including grid-scale battery technology. Tesla’s market capitalization hovers around US$1.4 trillion, firmly ranking among the elite “Seven Powerful” groups.
While its electric vehicle lineup still drives most of the brand recognition, Tesla’s long-term story largely has to do with big bets on the Cybercab autonomous robot taxi and Optimus humanoid robot. Investors view these as potential blockbusters that could ultimately generate more revenue than Tesla’s entire auto business. Musk even said they could one day help Tesla become the most valuable company in the world.
Yet despite all the buzz, Tesla’s momentum has cooled significantly this year. Increasing competition, a slowdown in the core electric vehicle market and growing investor preference for long-term AI and robotics bets have weighed on sentiment. Macroeconomic pressures from tariffs and a potential economic slowdown, as well as price wars in global markets, have further exacerbated the pressure.
The company has also come under scrutiny as Musk’s massive $1 trillion compensation package has come under scrutiny. All of this leads to relatively lackluster stock performance in 2025. Tesla shares are up just 10.52% year to date (YTD), lagging far behind the 16.46% return of the S&P 500 Index ($SPX) during the same period. In fact, TSLA stock is currently the worst-performing stock among the Big Seven in 2025.
Tesla’s fiscal 2025 third-quarter results, released in late October, provided investors with a mixed but interesting update. The most important number is revenue, which rose 12% year over year to $28.1 billion, easily beating Wall Street expectations of $26.6 billion. It is worth noting that this is the first quarter of this year that Tesla will achieve sales growth in 2024. U.S. customers rushed to buy before a $7,500 federal electric vehicle tax credit expired, providing a huge boost, creating a last-minute surge in demand that helped lift overall sales.
The craze helped Tesla’s core automotive business rebound, with revenue rising 6% year-on-year to $21.2 billion. However, the energy business is once again in the spotlight. Annual revenue at Tesla’s energy storage unit grew 44% to $3.4 billion, driven by rapid adoption of advanced battery systems. The unit has now posted double-digit growth multiple times, cementing its position as one of Tesla’s fastest-growing and most resilient businesses.
But behind the strong revenue results, the profit margin story tells a tougher story. Profitability has taken a hit as Tesla continues to slash prices to keep up with fierce global competition. Gross profit margin fell to 18% from 19.8% last year, and operating profit margin fell 501 basis points to 5.8%. Adjusted earnings per share fell 31% year-on-year to $0.50, about 10.5% lower than analysts expected, highlighting the pressure Tesla faces to defend market share.
Looking ahead, Tesla is doubling down on its most ambitious project yet. The company aims to achieve “volume production” of its long-awaited Cybercab robotaxis, heavy-duty Semi trucks and next-generation Megapack 3 energy storage systems in 2026. Meanwhile, Tesla is accelerating construction of the first production line of its Optimus humanoid robot, a sign that the company’s long-promised transformation from an automaker to a robotics and artificial intelligence powerhouse is getting closer to reality.
Ford’s electric vehicle sales plummeted 61% and it’s not just Ford’s problem. This is a flashing red warning to other industry players, including Tesla. When a major automaker saw electricity demand collapse immediately after a $7,500 federal tax credit expired, it showed that a sizable portion of EV buyers remain highly price-sensitive and that their purchasing decisions could change overnight when incentives disappear.
At the beginning of October, Tesla announced that its vehicle delivery volume in the third quarter reached a record high of 497,099 vehicles, with total production reaching 447,450 vehicles. The surge was largely driven by last-minute attempts by U.S. buyers to secure the same federal tax credits before closing. In other words, the strong momentum in the third quarter was driven by temporary tailwinds that won’t materialize in the coming quarters.
Even as deliveries hit a record high, the financial data revealed problems. Profitability weakened as sharp price cuts, increased competition and a weak global EV backdrop squeezed margins. Tesla will be at risk if demand continues to cool across the industry, especially as rivals roll out cheaper electric and hybrid vehicles at scale. As these pressures mount, investors may be wise to keep a close eye on Tesla now, as the post-incentive picture could be very different from the third-quarter surge.
Even Wall Street seems unsure of where Tesla will go next. The stock has a unanimous “hold” rating, highlighting the divide among analysts. Of the 41 analysts covering TSLA, 14 are firmly in the “strong buy” camp, two call it a “moderate buy,” 16 prefer to wait and see with a “hold” rating, and nine even issue a “strong sell” rating.
Tesla shares are above the average price target of $385.69. Even so, the upside remains. Wall Street’s most optimistic analysts believe Tesla will reach $600 if it can achieve its ambitious roadmap, which would represent an upside of about 34% from current levels.
On the date of publication, Anushka Mukherji did not hold (either directly or indirectly) any securities mentioned in this article. All information and data in this article are for reference only. This article was originally published on Barchart.com