Where Will Tesla Stock Be in 3 Years?
The "One, Big, Beautiful Bill" legislation could have a crushing impact on Tesla and the EV industry as a whole.
Has Elon Musk become a political liability for the company?
With shares down 21% year to date, Tesla (NASDAQ: TSLA) is reeling from a combination of weakening electric vehicle (EV) demand, political uncertainty, and a CEO who seems to have misplaced priorities.
The next three years will be a make-or-break period for the company as it attempts to roll out its robotaxis across American cities, while dealing with the potential fallout of unfavorable Trump administration policies. Let's dig deeper to see how this story might play out for Tesla shareholders.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Is Elon Musk propping up Tesla's valuation?
It's impossible to analyze Tesla without considering its controversial CEO, Elon Musk, who plays a significant role in its stock's perception, even if he isn't necessarily involved with all its day-to-day decision-making. Love him or hate him, Musk is an incredibly skilled executive. He has a track record of involvement in successful companies ranging from PayPal to Starlink, and typically aims to tackle massive world-changing topics like clean energy, space travel, and brain implants.
The market seems to appreciate Musk's bold risk-taking leadership style, which helps explain why Tesla still enjoys an incredibly high valuation, despite its increasingly lackluster fundamentals.
With a price-to-earnings (P/E) multiple of 172, the stock trades at a substantial premium over the S&P 500 average of 30 despite posting lackluster operating results. First-quarter revenue dropped 9% year over year to $19.3 million, while operating income collapsed by 66% to just $399 million. With these weak fundamentals, Tesla should probably be cheaper than it is, but the market still has faith in Musk.
A political liability
Over time, it is becoming clear that Tesla's "Musk premium" is eroding and may soon become a liability. The CEO's managerial skills have not translated to political acumen. In fact, his antics usually seem to minimize results while maximizing the potential for backlash. A great example of this is the flare-up over the "One, Big, Beautiful Bill" legislation, which passed the U.S. Senate on July 1 and is expected to become law later this month despite Musk's vocal opposition on social media.
Now, Musk-affiliated companies must face a double whammy over the potential for political retaliation (this may come in the form of regulatory challenges) while also dealing with the contents of the bill itself.
The bill could be a crushing burden on a U.S. EV industry that is already struggling with consumer fatigue, high interest rates, and tariffs on imported components. Although the final version is yet to be approved, the Senate has agreed to eliminate the $7,500 tax credit on electric vehicle purchases, while also ending support for residential solar and rolling back vehicle emissions regulations on Tesla's gas-powered rivals.
These headwinds come at a time when Tesla's overseas operations are struggling because of political backlash and new, low-cost rivals from China, which often enjoy open support from their government.
What comes next for Tesla?
The next three years will be incredibly challenging for Tesla as the impacts of the act could potentially weaken the market for its products in the U.S. Musk's political antics could make things worse by alienating some consumers and drawing potential political retaliation from President Donald Trump and his allies as it attempts to pioneer regulatorily-sensitive business ventures like artificial intelligence and self-driving cars.
Historically, it hasn't been a good idea to bet against Musk because he usually proves his naysayers wrong. That said, these current challenges look daunting, even for him. And they could easily put pressure on Tesla's sky-high valuation. Investors may want to stay away from the stock until more information becomes available.
Don't miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this.
On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves:
Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $413,238!*
Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,540!*
Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $699,558!*
Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.
See the 3 stocks »
*Stock Advisor returns as of June 30, 2025
Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal and Tesla. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Japan Forward
3 hours ago
- Japan Forward
Why is Ishiba Letting Trump Call the Shots in Tariff Talks?
このページを 日本語 で読む There seems to be no end in sight for the Japan-United States tariff negotiations. With such slow progress, President Donald Trump has been stepping up his criticism of Japan. Trump has said that it is "unfair" that US auto exports to Japan are at such a low level and has rebuffed Japan's requests to scrap or reconsider the 25% additional tariffs his administration has slapped on Japanese cars. The President has also complained that the Japanese imports of US rice are insufficient. Trump has been pointing to both of these issues for quite some time. Nevertheless, the reason why he has recently intensified his criticism of Japan by name is likely a desire to shake up Tokyo. He wants to force major concessions from Japan in order to start eliminating the bilateral trade deficit. Of course, the self-righteous US criticism regarding motor vehicle imports is unacceptable. Additionally, Japan imported 346,000 tons of American rice in 2024, more than twice the amount from the next largest external source, Thailand. At the same time, rice production constitutes the foundation of Japan's food security. So there is no need for our nation to blindly comply with US demands for increased imports of American rice. Japan should remain undeterred by Trump's provocative words and actions and continue to negotiate tenaciously. What is worrisome is the fact that Prime Minister Shigeru Ishiba has been out of the picture. Minister Ryosei Akazawa leaves the meeting with Commerce Secretary Robert Lutnick on June 27 in Washington. (©Kyodo) Trump personally calls the shots as to whether the US will revise its tariff measures. The only person who can directly influence this impasse is the Prime Minister. So why is there no sign of Ishiba becoming proactively involved in the negotiations? After agreement could not be reached at the June summit, the parties decided to continue negotiations at the Cabinet minister level. However, leaving the negotiations to Ryosei Akazawa, Minister of State for Economic Revitalization, does not solve the problem. Akazawa is not in a position to negotiate directly with the President. Ishiba has a responsibility as prime minister to protect the national interest. If he just allows Trump to dictate the pace of negotiations, he will be unable to fulfill that responsibility. Currently, the Japan-US tariff talks remain stymied over the additional tariffs on Japanese motor vehicles imported into the United States. That sector is a priority for Japan. Akazawa visited the US at the end of June for the seventh ministerial meeting. However, he was unable to even meet with Treasury Secretary Scott Bessent, who is overseeing the US side in the talks. Trump's moratorium on the imposition of additional "reciprocal tariffs" is due to expire on July 9. Yet, no progress has been made in the negotiations, including regarding the possibility of extending the deadline. Prime Minister Ishiba answers reporters' questions on June 22. (©Sankei) Trump unilaterally established that deadline. The US President also mentioned that he might send a letter to Japan ending the negotiations and setting the tariff level. It is problematic that Trump continues to unilaterally impose his will without fairly considering the ministerial-level talks and other input. However, it is also questionable whether the Ishiba administration is capable of managing such Trump-style dealmaking. The Prime Minister must demonstrate the leadership necessary to break the impasse. That, of course, includes arranging a telephone summit with Trump, as well as writing him directly. The time has come for Prime Minister Ishiba to prove his ability. Author: Editorial Board, The Sankei Shimbun このページを 日本語 で読む
Globe and Mail
5 hours ago
- Globe and Mail
Durant trade to Houston a seven-team, history-making deal
Kevin Durant's trade to the Houston Rockets is official and officially record-setting. The deal got approved by the NBA on Sunday as part of a seven-team transaction, one in which a slew of other trade agreements got folded into one massive package. 'Kevin impacts the game on both ends of the court and is one of the most efficient scorers in the history of basketball,' Rockets general manager Rafael Stone said. 'We liked the growth our team showed last season and believe Kevin's skill set will integrate seamlessly.' Involved in the deal: Phoenix, Houston, Atlanta, Minnesota, Golden State, Brooklyn and the Los Angeles Lakers. It includes a total of 13 players — the headline moves include Durant going to Houston from Phoenix, the Rockets sending Jalen Green and Dillon Brooks to the Suns, and the Rockets acquiring Clint Capela from the Hawks. The seven-team involvement in the Durant trade tops the previous record, a six-team transaction last summer that most notably sent Klay Thompson to the Dallas Mavericks. Golden State — Thompson's former team — obviously was another part of that trade, as were Charlotte, Minnesota, Philadelphia and Denver on varying levels. 'One of the greatest to ever play the game, we are grateful for the impact Kevin made on our organization and in our community,' Phoenix general manager Brian Gregory said of Durant. 'As a member of the Suns, he climbed the scoring charts to become just the eighth player in NBA history to score 30,000 career points, and we wish him the best as he continues his career in Houston.' There will be at least five second-round draft picks in the deal before all terms are satisfied, the potential for another second-round pick swap and the Hawks and Timberwolves both had to receive some cash considerations to make all the math work. And some of those draft picks won't actually be made until 2032, which raises the serious possibility that some players who will go down in history as being part of the trade haven't reached high school yet. Durant averaged 26.6 points last season, his 17th in the NBA — not counting one year missed because of injury. For his career, the 6-foot-11 forward is averaging 27.2 points and seven rebounds per game. The move brings Durant back to the state of Texas, where he played his only year of college basketball for the Longhorns and was the college player of the year before going as the No. 2 pick in the 2007 draft by Seattle. Houston becomes his fifth franchise, joining the SuperSonics (who then became the Oklahoma City Thunder), Golden State, Brooklyn and Phoenix. Durant won his two titles with the Warriors in 2017 and 2018, and last summer in Paris he became the highest-scoring player in U.S. Olympic basketball history and the first men's player to be part of four gold-medal teams. Durant is a four-time scoring champion, a two-time Finals MVP and one of eight players in NBA history with more than 30,000 career points. 'Having played against Kevin and coached him before, I know he's the type of competitor who fits with what we've been building here in Houston,' Rockets coach Ime Udoka said. 'His skill level, love of basketball, and dedication to his craft have made him one of the most respected players of his generation, and my staff and I are excited to work with him.' Houston sent Green and Brooks to Phoenix, along with the rights to Khaman Maluach from last month's draft, a second-round pick in 2026 and another second-rounder in 2032. The Hawks got David Roddy, cash and a 2031 second-round pick swap from the Rockets. Brooklyn gets a 2026 second-round pick and another in 2030 from the Rockets, and the Warriors received the rights to Jahmai Mashack from last month's draft.
CBC
6 hours ago
- CBC
Trump's global tariff pause is supposed to expire soon. What's at stake for Canada?
U.S. President Donald Trump's three-month pause on his sweeping global tariffs is set to expire in just a few days, unless he opts to give countries extra time to negotiate deals — as his advisers have suggested this weekend. Ahead of the deadline, some trade experts say Canada still faces big risks, despite avoiding that round of levies back in April. "What the president needs is a bunch of wins by July 9 because he needs to show that his strategy is working," said Inu Manak, a fellow for trade policy at the Council on Foreign Relations, during an interview with CBC's The House that aired Saturday. On April 2, Trump held up a list in the Rose Garden of the White House and announced what he called "reciprocal tariffs" on more than 150 countries, including China and the European Union. The rates for individual countries on the list varied from 10 per cent to more than 40 per cent. Canada wasn't on that list, though other tariffs Trump had previously imposed on Canadian goods remained. One week after he unveiled the list, the president backed down and said he would freeze the global tariffs for 90 days to allow each country to negotiate deals with his administration. The problem for Canada is Trump hasn't closed many deals in those 90 days, Manak said. So far, the U.S. has reached agreements with Britain and Vietnam. Negotiations with other top markets like China, India, the European Union and Japan are ongoing. "If we don't see a lot of deals coming out of this, what we're likely to see is [Trump] to get more agitated and ask for more concessions from the countries that he knows he can push a little harder," Manak said. "So I think for Canada, that would be a very bad situation." Carlo Dade, international policy director at the University of Calgary's School of Public Policy, told CBC News "there's a risk every day of the week that [Trump] decides to come after Canada. That is not an exaggeration." "We're open to this potential as long as the president has unrestrained power to implement tariffs whenever, wherever, however he wants," he said. Trump used a law called the International Emergency Economic Powers Act (IEEPA) to apply the worldwide tariffs and his earlier fentanyl tariffs on Canada and Mexico. The law is intended to address "unusual and extraordinary" threats during national emergencies. In late May, the New York-based U.S. Court of International Trade ruled Trump exceeded his authority by invoking IEEPA. The White House swiftly appealed and a federal appeals court allowed IEEPA tariffs to remain in effect while it reviewed the decision. WATCH | Europe gets a reprieve on tariffs: Trump delays tariff threat on EU to July 1 month ago Duration 2:52 U.S. President Donald Trump says he will delay his 50 per cent tariff on imports from the European Union until July 9 after a weekend phone call between Trump and European Commission President Ursula von der Leyen. Manak said another challenge is Trump isn't facing political consequences for his tariffs right now — and no major economic fallout, either. "Right now, he's kind of sitting at a point where he feels he can kind of get away with maintaining the pressure that exists. And that pressure is enough to get other countries to the table," she said. At a White House news conference at the end of June, Trump told reporters the U.S. "can do whatever we want. We could extend [the July 9 deadline]. We could make it shorter. I'd like to make it shorter." On Sunday, U.S. Treasury Secretary Scott Bessent suggested the July 9 deadline is being pushed back by about a month. He said on CNN's State of the Union that the Trump administration would send letters to trading partners "saying that if you don't move things along, then on Aug. 1 you will boomerang back to your April 2 tariff level." "So I think we're going to see a lot of deals very quickly," Bessent told host Dana Bash. He also said Aug. 1 is "not a new deadline." Commerce Secretary Howard Lutnick told reporters Sunday the higher tariffs would take effect on Aug. 1, but Trump was "setting the rates and the deals right now." Is there opportunity for Canada? Fen Osler Hampson, co-chair of the Expert Group on Canada-U.S. Relations at Carleton University, said Canada could leverage the economic uncertainty from Trump's tariffs and "put the pedal to the metal" to expand trade with European and Asian allies. Hampson added that Canada already has good trading relationships with those regions through the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). WATCH | Trump isn't pleased with taunts of 'chickening out' on trade: Does Trump 'always chicken out' on tariffs? 1 month ago Duration 5:34 Investors are poking fun at U.S. President Donald Trump's on-again, off-again tariff threats, calling it 'TACO' trade — which stands for 'Trump Always Chickens Out.' When asked about the term, Trump called it a 'nasty question.' CBC's Katie Simpson reports. With U.S. tariffs, Hampson said those countries are "going to be looking for other market opportunities, both to sell and buy. I think our challenge is to get serious and to realize the real dividends that can come from those two major regional trading agreements." Diversifying Canada's trading partners is one of Prime Minister Mark Carney's top goals — and a key objective for International Trade Minister Maninder Sidhu. "I think Canada has a lot to offer and we should be screaming that at the top of our lungs," Sidhu told CBC's The House in an interview that aired Saturday. Canada has already deepened its trade relationships with countries such as Ecuador and the United Arab Emirates since Carney and Sidhu came into office. But key markets that could make a big dent in easing Canada's reliance on U.S. trade — like the U.K., India and China — are thornier due to fraught diplomatic relationships and other irritants. Colin Robertson, a former Canadian diplomat and vice-president at the Canadian Global Affairs Institute, agreed that Canada can do more trade with other countries, but added a note of caution: businesses, not governments, are the only ones who can decide which companies they trade with. "Ultimately, business has to see a business opportunity," Robertson said, adding that the U.S. continues to be the market with the easiest access for Canadian businesses. On The House, Sidhu told guest host Janyce McGregor that Canadian businesses were indeed comfortable dealing with the U.S., but now they're asking him to help facilitate access to more countries. Canada-U.S. trade talks Carney and Trump continue to negotiate a Canada-U.S. trade deal, after setting a deadline of July 21. Hampson said the deadline helps Canada hold the Americans' attention as the Trump administration negotiates with other countries. The Americans also have an interest in getting a deal done soon, Robertson said. Canada and U.S. restarted negotiations Monday morning, Carney says 6 days ago Duration 1:15 Prime Minister Mark Carney says he had a 'good' conversation with U.S. President Donald Trump on Sunday, and that the two leaders will keep working to reach a deal by July 21. The federal government scrapped the digital services tax over the weekend after Trump paused all trade talks. "If [the Americans] can't do it with Canada, their ally and their partner, it's much harder to do with Mexico, much harder with China," he said. "We should be the lowest of the hanging fruit from the American perspective." Trade discussions hit a roadblock in late June when Trump announced he would walk away from the negotiating table over Canada's digital services tax. The federal government scrapped the tax a few days later and discussions got back on track. Robertson said he's a bit skeptical about how far Canada will get with the U.S. by July 21, but adds that Trump enjoys declaring victory even if the agreement is "only 80 per cent of the way there." "Would we settle for 80 per cent? Be basically there and leave the rest to be cleaned up? I think so," he said. "Because if Trump's taken his eye off it and says it's basically there, then that's sufficient from where we're coming from."
