Automaker Ford Motor Company ( F ) just sent a worrisome signal for the electric vehicle (EV) industry. The company reported a 0.9 percent drop in U.S. unit sales for November, and while its domestic combustion lineup grew 2.2 percent, that power couldn’t come close to offsetting a stunning 61 percent plunge in electric equipment sales, a decline that accelerates the decline already seen in October.
Ford management had already anticipated this fallout, with the $7,500 federal electric vehicle tax credit expiring in October, pushing many consumers away from electric vehicles and creating a shock to demand, at least for now. Furthermore, Ford’s latest EV numbers weren’t just disappointing, they were a loud warning siren for the entire EV ecosystem.
Such a steep decline reinforces concerns that the pace of EVs is slowing just as the competition is heating up. And while Ford is dominating the headlines now, the reverberations could also hit electric vehicle leader Tesla ( TSLA ) the hardest, especially as Tesla is already navigating pressure in key global markets. So, with sentiment turning cautious and demand signals looking shaky, it’s worth taking a closer look at TSLA stock now.
Founded in 2003 by a group of engineers determined to prove that electric vehicles could outperform gasoline-powered cars, Tesla has grown from a scrappy Silicon Valley start-up to one of the world’s most influential companies. Under CEO Elon Musk, the brand has reshaped the automotive industry with high-performance electric vehicles and a bold vision for the future.
Today, Tesla’s ambitions extend far beyond cars to include autonomous driving, artificial intelligence (AI)-powered robotics, and energy infrastructure, including grid-scale battery technology. With a market capitalization of around $1.4 trillion, Tesla is firmly among the elite “Magnificent Seven” group.
And while its lineup of electric vehicles still drives most of the brand’s recognition, much of Tesla’s long-term story is tied to big bets on its autonomous Cybercab robot taxi and Optimus humanoid robot. Investors see them as potential blockbuster products that could eventually generate more revenue than Tesla’s entire auto business. Musk has even suggested that he could help make Tesla the most valuable company in the world one day.
Yet despite all the hype, Tesla’s momentum has cooled considerably this year. A combination of intensifying competition, a slowing core EV market and a growing investor preference for long-term bets on AI and robotics weighed on sentiment. Macroeconomic pressures from tariffs and a potential economic slowdown, as well as price battles in global markets, added further stress.
The company is also under the spotlight due to scrutiny over Musk’s massive $1 trillion compensation package. All of this has translated into a relatively underperforming stock in 2025. Tesla shares are up just 10.52% year-to-date (YTD), trailing the S&P 500 ($SPX)’s 16.46% over the same period. In fact, TSLA stock is currently the worst performer among the Magnificent Seven in 2025.
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Tesla’s third-quarter 2025 results, released in late October, provided a mixed but intriguing update for investors. The headline number was revenue, which rose 12% year-over-year (YOY) to $28.1 billion, handily beating the Wall Street estimate of $26.6 billion. Notably, this was the first quarter of the year in which Tesla posted sales growth compared to 2024. A big boost came from US customers rushing to claim the $7,500 federal electric vehicle tax credit before it expired, creating a surge in last-minute demand that helped boost overall sales.
That rush has helped Tesla’s core segment rebound, with revenue rising 6% year over year to $21.2 billion. The energy business, however, once again stole the limelight. Tesla’s energy storage division posted a 44% annual revenue increase to $3.4 billion, fueled by rapid adoption of its advanced battery systems. This segment has repeatedly posted double-digit gains, cementing its role as one of Tesla’s most resilient and fastest-growing segments.
But beneath the strong top-line results, the margin picture told a tougher story. Tesla continued to cut prices to keep up with fierce global competition, and profitability took a hit. Gross margin fell to 18 percent, down from 19.8 percent last year, while operating margin fell 501 basis points to 5.8 percent. Adjusted EPS fell 31% from a year ago to $0.50, coming in about 10.5% below analysts’ expectations, underscoring the pressure Tesla is under to defend its market share.
Looking ahead, Tesla is doubling down on its most ambitious projects. The company is targeting 2026 for “volume production” of its long-awaited Cybercab robot, heavy-duty semi-truck and next-generation Megapack 3 energy storage system. At the same time, Tesla is ramping up the first production lines for its Optimus humanoid robot, a sign that the company’s long-promised shift from automaker to robotics and AI power is moving closer to reality.
Ford’s 61% drop in EV sales isn’t just a Ford problem. It’s a flashing red warning for other industry players, including Tesla. When a major automaker sees demand for electric power collapse just after the $7,500 federal tax credit expires, it suggests that a significant portion of EV buyers remain highly price-sensitive and their purchasing decisions can change overnight when the incentives disappear.
In early October, Tesla reported record deliveries of 497,099 vehicles in the third quarter, with total production of 447,450 vehicles. That increase was largely driven by a last-minute rush by U.S. buyers trying to get the same federal tax credit before it ran out. In other words, Q3’s strength was boosted by a temporary tailwind that won’t be available in the coming quarters.
And even with record deliveries, the financial situation has revealed cracks. Profitability weakened as aggressive price cuts, growing competition and a softer global EV backdrop squeezed margins. That leaves Tesla exposed if industry-wide demand continues to cool, particularly with rivals launching cheaper electric vehicles and scale hybrids. With these pressures mounting, investors may be wise to keep a close eye on Tesla now, as the post-stimulus landscape could look very different from the growth seen in Q3.
Even Wall Street seems uncertain about where Tesla will go. The stock has a consensus “Hold” rating, highlighting the split 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 on the sidelines with a Hold, and nine went so far as to issue a Strong Sell.
Tesla is already trading above its average price target of $385.69. Even so, the upside is off the table. Wall Street’s most bullish analysts see a path to $600, which would mean a roughly 34% upside from current levels if Tesla can deliver on its ambitious roadmap.
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At the time of publication, Anushka Mukherji had no (directly or indirectly) positions in any of the titles mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
