San Francisco, June 7, 2025 – Tesla Inc. is contending with significant headwinds on multiple fronts this week, as political tensions in Washington collided with internal leadership shifts and fresh commentary on its global growth ambitions.
Political Clash Over EV Tax Credits
On June 5, Tesla shares tumbled 14 percent, wiping out over $150 billion in market value, after former President Donald Trump publicly threatened to eliminate the federal $7,500 EV tax credit. The dispute erupted following critical remarks by CEO Elon Musk about a recent tax proposal. Although the White House later clarified that no immediate changes to the credit are planned, the episode underscores how dependent Tesla remains on government incentives to keep vehicle prices competitive in the U.S. market.
Analysts warn that rescinding the tax credit could raise the effective sticker price of Tesla’s Model 3 and Model Y by up to 17 percent, while also potentially reducing Tesla’s profit margins once sales of regulatory credits to other automakers wind down.
Executive Departure in Robotics Unit
Adding to the uncertainty, Tesla’s head of the Optimus humanoid robot program announced his departure on June 6. The Optimus project—first unveiled in 2021 as Tesla’s foray into general-purpose robotics—has faced repeated delays, and the leadership change may signal a strategic realignment. Investors will watch closely whether Tesla refocuses resources on its core automotive and energy storage divisions or persists in developing robotics technology.
Musk Family Comments on International Expansion
In a separate development, Errol Musk, father of Elon Musk, concluded a five-day visit to India, where he praised the country’s rapidly growing automaker and renewables sectors. He suggested that establishing local manufacturing or R&D operations in India would be “an excellent move” for Tesla, given the market’s rising demand for electric vehicles. While no formal negotiations have been disclosed, Errol Musk’s comments have heightened speculation about Tesla’s long-rumored entry into the world’s fourth-largest auto market.
Tesla’s near-term prospects hinge on navigating U.S. policy uncertainty around EV subsidies and managing leadership transitions in emerging businesses. Yet despite these challenges, demand for electric vehicles remains strong globally. As Tesla pursues new manufacturing and market opportunities—particularly in regions offering production incentives—its ability to maintain innovation while preserving profitability will be critical to sustaining its market leadership.
