• Tesla shares fell 10% as sales declines in key markets persist.
  • Intensifying competition in China and regulatory scrutiny over autonomous driving add pressure.
  • Robotaxi launch plans proceed despite broader challenges, with testing underway in Texas.

Continued Sales Weakness Across Markets

Tesla's stock extended its downward trajectory, dropping another 10% as the electric vehicle maker faces persistent sales declines across major markets. In China, deliveries of Model 3 and Model Y vehicles fell 15% year-over-year in May to 61,662 units, marking the seventh consecutive month of declines. European markets showed similar weakness, with German sales plummeting 36% despite overall EV market growth of 45%.

A Tesla spokesperson attributed some European declines to the transition from older Model Y vehicles to updated versions manufactured in Berlin, suggesting potential recovery next month. However, analysts remain skeptical as competitive pressures mount, particularly from Chinese rivals like BYD which reported a 14.1% sales increase during the same period.

Regulatory and Competitive Challenges

The company faces growing headwinds on multiple fronts. In China, Tesla has yet to receive approval for its Full Self-Driving system, while in the U.S., the National Highway Traffic Safety Administration is investigating whether Tesla's supervised driving system might be defective. Meanwhile, BYD's announcement of five-minute charging technology set to launch next month adds to competitive pressures.

Despite these challenges, Tesla is pushing forward with its autonomous vehicle ambitions. Testing of driverless vehicles is already underway in Austin, Texas, with CEO Elon Musk claiming the program is "a month ahead of schedule." The initial robotaxi service is expected to launch with 10-20 autonomous Model Y vehicles later this month, potentially scaling to 1,000 vehicles in coming months.

Analyst Sentiment Remains Divided

Wall Street's view on Tesla continues to show dramatic swings. While the stock had rallied 61% since April 8 on optimism about autonomous-vehicle initiatives, recent sales data has tempered enthusiasm. Wedbush analyst Dan Ives, who recently raised his price target to $550, had cut it to $315 just weeks earlier amid sales concerns. RBC Capital took a more cautious stance, reducing its target from $440 to $320 citing regulatory hurdles in key markets.

Political complications add another layer of uncertainty, with CEO Elon Musk stepping away from his role in President Trump's Department of Government Efficiency and publicly splitting with Republicans over spending legislation. These developments could impact Tesla's ability to lobby for favorable autonomous driving regulations.

The coming weeks will prove critical as Tesla attempts to balance near-term sales challenges with its ambitious autonomous vehicle plans, all while navigating an increasingly complex competitive and regulatory landscape.