Is Brand Tesla toast? My monkish view on surviving hurricane Elon

Should I be worried about Elon Musk’s recent shenanigans? Is my bull thesis dead? Is Cathie Wood’s $2,600/share by 2029 prediction a hollow dream?

As I sit here reviewing my investment portfolio, staring at the familiar "TSLA" ticker that has been both my greatest triumph and current source of considerable anxiety, I find myself reflecting on what has been quite the odyssey. For years, I've been a steadfast Tesla bull, watching with pride as my shares multiplied and the company seemingly revolutionised not just the automotive industry, but our very conception of sustainable transport. Yet today, as I pen this essay in July 2025, I'm confronted with an uncomfortable truth: the very man whose vision I backed may well be the architect of the company's potential downfall.

As a UK-based investor in Tesla, I approach my analysis with a distinctly British sense of detachment. While I keep a watchful eye on developments across the Atlantic, I remain a generally unbiased observer of American politics. My views on Tesla are rooted firmly in cold, rational analysis, there’s no emotional attachment or political agenda colouring my perspective. Every assessment I make is guided by the numbers, the facts, and the fundamentals, rather than any partisan leanings or ideological fervour. In short, my investment decisions are driven by logic, not sentiment.

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TL;DR

1. What is the "critical juncture" Tesla currently faces? Tesla stands at a critical juncture due to significant headwinds from CEO Elon Musk's political involvement and other controversies, intensifying competition, and a softening EV market. This has led to measurable brand damage and a decline in vehicle deliveries and market share, while its long-term potential relies on AI/robotics and energy storage.

2. How has Elon Musk's political involvement specifically impacted Tesla's brand reputation and sales in Europe? Elon Musk's political actions, particularly his role in DOGE, have been cited by JPMorgan analysts as a key factor in Tesla's European sales plummeting 50% year-over-year in January 2025. Surveys also revealed a significant percentage of potential buyers, especially Democrats and Independents, were less likely to purchase a Tesla, directly linking his involvement to brand erosion.

3. Provide two key metrics that demonstrate Tesla's recent sales decline in its automotive business. Tesla reported a record sales plunge in Q2 2025, delivering 384,122 vehicles, representing a 13.5% drop compared to Q2 2024. Additionally, Tesla's global sales flatlined in 2024 for the first time in over a decade, with 1.79 million vehicles sold, slightly less than 2023's 1.81 million.

4. Explain the significance of the inventory build-up for Tesla's automotive segment. The inventory build-up, where production consistently exceeds deliveries (e.g., 26,122 excess vehicles in Q2 2025), is a classic indicator of weakening demand relative to supply. This typically forces companies to offer discounts or incentives to clear stock, which directly impacts profit margins and signals underlying demand weakness.

5. What is the core argument for the bullish case for Tesla's "multibagger" potential, according to prominent bulls like Cathie Wood? The core argument for the bullish case is that Tesla's long-term "multibagger" potential is fundamentally decoupled from its traditional automotive sales performance. Instead, it is heavily reliant on the successful, scalable monetisation of its advanced AI and robotics initiatives, particularly Full Self-Driving (FSD) and Robotaxis.

6. Describe the role of Tesla's Dojo supercomputer within its AI and robotics strategy. Tesla Dojo is a supercomputer designed specifically for computer vision video processing and recognition, crucial for training its machine learning models to improve the Full Self-Driving (FSD) system. It processes millions of terabytes of video data from Tesla's fleet, enabling continuous improvement of autonomous capabilities.

7. How has Tesla's energy business, particularly Megapack, diversified the company's revenue streams and profit margins? Tesla's energy division, with products like Megapack and Powerwall, has become its fastest-growing product category, generating surging revenue and higher profit margins (26.2% vs. 19% automotive). This diversified stream, especially Megapack's role in powering AI superclusters, hedges against EV market volatility and positions Tesla as an infrastructure provider.

8. What is a major concern for Tesla bears regarding its current valuation compared to industry peers? A major concern for Tesla bears regarding its current valuation is that it is excessively high compared to industry peers, trading at a P/E ratio of 120-123.58 compared to an industry average of 15. This makes the stock highly vulnerable to any disappointment in growth expectations and signals an overvaluation based on traditional metrics.

9. Identify two strategic initiatives Tesla is undertaking to address its current challenges and drive future growth. Two strategic initiatives Tesla is undertaking are the roll-out of more budget-friendly vehicle models, projected for early to June 2025, to widen its market base. Additionally, the company is committed to cost reduction through innovative manufacturing methods like the "unboxed" approach to enhance profit margins and make vehicles more affordable.

10. Why is the successful monetisation of FSD and Robotaxis crucial, yet also risky, for Tesla's long-term valuation? The successful monetisation of FSD and Robotaxis is crucial for Tesla's long-term valuation, as bulls project it will account for a significant portion of the company's enterprise value. However, it is risky due to ongoing regulatory scrutiny, a DOJ criminal probe, and a "trust deficit" from past "unfulfilled promises" and alleged deceptive marketing, which could impede adoption.

SPOILER ALERT: I am holding my position. Consider becoming a paid subscriber to know why.

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