1 Thing Every Tesla Investor Needs to Watch Right Now
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Tesla (TSLA -0. 67%) stock is in a tricky place. Analysts expect earnings to drop by nearly 30% next quarter compared to the corresponding quarter last year. Yet, on a price-to-sales...
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June 28, 2025
06:40 AM
The Motley Fool
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Tesla (TSLA -0. 67%) stock is in a tricky place
Analysts expect earnings to drop by nearly 30% next quarter compared to the corresponding quarter last year
Yet, on a price-to-sales basis, the stock's valuation remains sky-high at 12
On the other hand, Rivian Automotive, another electric car stock, trades at just 2. 9 times sales
Tesla stock seems priced for big growth despite tepid fitability growth ahead
But there's a risk factor detailed below that could put an even bigger dent in Tesla's growth trajectory for years to come
Every investor needs to monitor this one thing carefully
This one risk factor could punish Tesla stock Right now, more than 90% of Tesla's vehicles sales stem from just two models: the Model 3 and Model Y
Both have starting base prices of less than $50,000
Seeing as the majority of Americans are looking to spend less than $50,000 on their next vehicle purchase, according to a 2024 study by AutoPacific, Tesla is in a solid place to attract the tens of millions of budget buyers in the U
To make Teslas even more affordable, buyers have long been able to qualify for federal tax credits that can total up to $7,500
Both the Model 3 and Model Y qualify for these tax credits
Even some of Tesla's pricier models, the entry-level Cybertruck, qualify
The result is a lower effective purchase price for consumers, and thus more demand for Tesla's ducts
There's just one blem: Federal tax credits may be on the way out
Image source: Getty Images
President Donald Trump's new bill calls for the immediate elimination of federal EV tax incentives
What would happen to Tesla's sales if this were to happen
More than half of all EV buyers say that tax credits were a deciding factor in their purchase
When EV incentives abruptly in Germany in 2023, EV sales fell by more than 16% over the next six months
If tax credits are eliminated in the U. , expect Tesla's sales and earnings to drop in response
Ryan Vanzo has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Tesla
The Motley Fool has a disclosure policy.
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