Elon Musk’s own artificial-intelligence (AI) bot, Grok, has sounded a dire warning about the billionaire’s EV maker, Tesla Inc. The company is in a “precarious position” currently, navigating one of the stormiest periods in its history, buffeted by multiple headwinds.
Current Challenges
These headwinds include:
- A sales slump
- Profit declines
- A backlash against the brand
- Stock volatility
- Political and regulatory risks due to Musk’s public feud with President Donald Trump
Tesla’s “Golden Period” Is Likely Over
Grok states that Tesla’s “golden period” or era of peak success is likely over. This period was defined by widespread brand admiration, solid government backing, soaring stock-market performance, and dominance in the EV industry.
Probable Outcomes
The highest-probability outcome for Tesla over the next 12-18 months is a “volatile but survivable period” characterized by:
- Ongoing difficulties
- Incomplete recovery
- A reliance on major milestones such as the robotaxi launch and new model rollouts
Worst-Case Scenario
The worst-case scenario for Tesla would be a dangerous convergence of key threats, including:
- An extended market-share plunge
- Regulatory and political aftermath of Musk’s clash with Trump
- Continued brand damage
- An underwhelming robotaxi outcome
This could force the company into extreme financial distress, with a 15-25% probability of a “death spiral” characterized by:
- Collapsing sales and market share
- A plummeting stock price
- Regulatory roadblocks
- A tarnished brand
- A failed pivot to autonomy and AI
Best-Case Scenario
Tesla’s most optimistic forecast sees a robust rebound by mid-2026, fueled by:
- A successful robotaxi launch
- An early affordable EV model boosting sales by 20-30%
- Renewed brand strength
- Mitigated political risks
- A stock rally to $400-$500
However, this scenario is plausible but unlikely due to the need for near-perfect execution across high-risk initiatives, with a lower, 15-20% probability.
Key Risks
The key risks weighing on Tesla include:
- Sales and profit slump: European sales plummeted 49% in April 2025, with rising competition from BYD and an outdated lineup.
- Stock market woes: Tesla’s market value has plunged $470 billion from a December peak of $1.54 trillion.
- Brand Crisis: Musk’s role in Trump’s Department of Government Efficiency (DOGE) and their feud has ignited protests and triggered demonstrations.
- Regulatory Risk: Musk’s criticism of Trump’s EV tax credit repeal has heightened fears of stricter regulations on autonomous driving and robotics.
- Operational Struggles: Tesla is scrambling to roll out its robotaxi service, set to launch in June 2025 in Austin with just 10-20 vehicles.
- Valuation Gap: Despite significant losses, Tesla’s $700 billion+ valuation remains largely driven by speculative optimism around autonomy and AI.
Mitigating Factors
Several factors lessen the odds of Tesla facing an extremely negative scenario:
- Cash Reserves: Tesla has $30 billion in cash reserves as of early 2025.
- Capital Access: Tesla still enjoys access to a strong investor base, providing avenues to raise funds.
- U.S. Market Strength: Tesla maintains a dominant 50% EV market share in the U.S. and a loyal customer base.
- Musk’s Leadership: Musk has steered Tesla through past challenges, solidifying the company’s global influence.
- Robotaxi and AI Innovation: Tesla’s June 2025 robotaxi launch and energy storage division diversify revenue streams, reducing dependence on EV sales alone.