Tesla is set to deliver dismal sales, but here’s why investors don’t care | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Tesla had a rough start to 2025, but if you pull back even further, the electric vehicle maker is having a rough 18 months.

Tesla shares hit an all-time high late last year after investors celebrated President Donald Trump’s election win and Tesla CEO Elon Musk’s proximity to the world’s most powerful leader.

However in 2025, shares are down more than 30% from their all-time high, and even before then, Tesla was struggling with demand.

As Tesla reported its first year-over-year sales decline in 2024, Musk jumped for joy onstage as the presidential candidate he bankrolled marched his way to the White House.

But even now, as Trump and Musk seemingly aren’t friends anymore (for the moment), and Tesla is staring down the barrel of yet another consecutive dismal fiscal quarter, Tesla investors don’t care.

For them, Tesla is a future play.

Tesla bulls believe Robotaxi is a trillion-dollar idea.

Image source&colon; Goessman/Bloomberg via Getty Images

Tesla investors are looking to the future to find value

Tesla derived 90% of its 2024 revenue and 94% of its gross margin from auto sales.

Still, permabulls like Cathie Wood, CEO of Ark Invest, don’t see Tesla as a car company, believing that what it is doing now pales in comparison to what it will do in the future.

“Our target in five years is $2,600, and our confidence in that number has gone up now that Tesla is commercalzng Robotaxis in August and June,” Wood said recently.

In the present, Tesla shares are volatile, spending the premarket and early moments after the opening bell deeply in the red before rallying.

Tesla is scheduled to release earnings after the closing bell, and some investors will be looking for value now.

Tesla’s price to earnings ratio is currently is 189.60 as of July 23, according Yahoo Finance, much higher than its average PE ratio of 111.64 over the last 10 years.

For comparison, the average price to earnings ratio for the Magnificent 7 stocks — the group of blue-chip tech stocks that includes Alphabet, Meta, Microsoft, Amazon, and others — is about 35x.

Cathie Wood says Tesla’s nascent autonomous technology is worth trillions, but to get to that profitable future, Tesla has a bumpy road ahead.

On top of declining sales and demand, Tesla also faces a huge political headwind, as the $7,500 tax credit for American-made electric vehicles that has helped drive sales growth is set to expire in September.

Analysts are expecting the company to report earnings of 40 cents per share on revenue of $22.13 billion, a 13% year over year decline, according to Yahoo Finance.

Tesla deliveries in focus as company prepares earnings release

Tesla has been facing a demand problem for 18 months that has only been exacerbated by Musk’s foray into politics.

The company delivered just 384,122 vehicles in the second quarter, a 13.5% year over year decline that missed analyst estimates by about 3,000 units.

“It’s already turned around,” Musk responded curtly during the Qatar Economic Forum in May when asked about turning around Tesla’s declining sales.

“Europe is our weakest market, but we’re strong everywhere else. Our sales are doing well now, and we don’t anticipate any shortfall.”

But now there’s evidence that the company is also declining in one of its strongest markets.

Tesla sales fell 21% in California in the second quarter to 41,138 units, according to data from the California New Car Dealers Association.

This is the seventh consecutive quarter Tesla has reported a year over year decline, and it’s also the fourth consecutive sequential quarterly decline.

Tesla faces the same issue in California that it does in Europe and China: Hybrid vehicles are more popular.

“Hybrid vehicles are gaining momentum and paving the way for a cleaner, greener California. Registrations for hybrids have climbed 54 percent so far this year, now accounting for 19.2 percent of the market,” CNCDA said in its report.