After the U.S. elections, Tesla (TSLA) stock traded at close to $500 by mid-December 2024. After that, TSLA stock traded at lower highs, forming a downtrend.
The selling intensified when Tesla shares failed to hold the $350 level, closing at $292.98 last Friday, Feb. 28. Tesla risks falling to $200 for two reasons. First, customers are boycotting the brand. They do not want to associate with owning a product and tying it to CEO Elon Musk. Musk is highly involved in politics as he leads the Department of Government Efficiency (“DOGE”).
A general downturn in consumer spending is unfolding. This is the second, bigger catalyst hurting EV sales. However, consumers may opt for a Lucid (LCID), Rivian (RIVN), or Polestar (PSNY) vehicle instead. In any case, the government is concluding EV credits. For example, Transport Canada has the iZEV Program concluding on March 31, 2025.
In the U.S., the Trump administration added uncertainty to EV tax credits. Although the Inflation Reduction Act of 2022 gave many consumers up to $7,500 in tax credits, this may end. The “Unleashing American Energy” executive order is “considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies.”
Tesla will have a tough time reversing the bearishness in its shares. Look out for the stock re-testing the $200 – $250 lows next.
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