To The Moon

$Tesla Motors(TSLA)$

Tesla stock (NASDAQ: TSLA) has been under intense pressure in recent months, falling more than 35% from its 2025 highs amid growing concerns over declining global EV demand, margin compression, and increasingly hawkish fiscal policy. With U.S. and European lawmakers now considering slashing or restructuring electric vehicle (EV) subsidies — once a major tailwind for Tesla's expansion — the mood in the market has shifted from euphoric to cautious.

But amid all the pessimism, a pivotal question looms for long-term investors: if Tesla stock drops to $300, is it time to buy?

In this article, we explore what potential EV subsidy rollbacks could mean for Tesla's financials, why the broader auto market is cooling, and whether $300 represents a compelling long-term entry point. We also examine valuation, fundamentals, and risk-reward dynamics to help investors decide whether the next dip is an opportunity — or a warning.

EV Subsidy Cuts: A New Macro Headwind?

For years, generous government subsidies fueled the meteoric rise of EV adoption. From U.S. tax credits to EU incentives and Chinese cash-back schemes, subsidies made EVs cost-competitive with internal combustion engines. Tesla, as the category-defining brand, benefited massively from this public support.

But times are changing.

Governments Are Tightening the Purse Strings

As budget deficits rise and inflation persists, both U.S. and European lawmakers are under pressure to rein in spending. In the U.S., debates are already underway about revising the Inflation Reduction Act (IRA) EV provisions, particularly those tied to income caps and battery sourcing rules. Meanwhile, the EU is considering phasing out purchase subsidies and replacing them with emissions-based penalties on legacy automakers instead.

China, the world’s largest EV market, already cut major incentives in 2023 and 2024, leading to a sharp deceleration in domestic EV sales growth. The net result: the global policy tailwind that once lifted all EV stocks may be turning into a headwind.

What Does This Mean for Tesla?

Tesla, unlike many of its rivals, has the benefit of scale and branding. Its Model Y and Model 3 are still bestsellers in key markets, and the company has built substantial pricing power. But with average selling prices (ASPs) already under pressure from price wars, subsidy rollbacks could push EV affordability out of reach for some consumers, particularly in the mass-market segments Tesla has been trying to penetrate.

Tesla’s Business Under the Microscope

Sales Growth Is Slowing

Tesla’s Q1 2025 results showed a 9% year-over-year revenue decline — the first in several years — and management warned that growth will be “materially lower” in FY25 than in previous cycles. Unit sales in Europe and China were especially weak, and North American demand, though still stable, showed signs of saturation.

The launch of the Cybertruck, once a potential growth driver, has been met with production bottlenecks and lukewarm reception. Meanwhile, the long-promised $25,000 Tesla has yet to materialize.

Margins Are Under Pressure

Tesla’s automotive gross margin (ex-regulatory credits) has fallen from 29% at its peak to under 18% as of Q1 2025. Ongoing price cuts, increased competition from Chinese automakers like BYD and Nio, and inflationary pressure on battery materials have all taken a toll.

More worrying, Tesla's operating margin has slipped to just 6% — far below its recent highs. With subsidy reductions looming and input costs stubbornly high, profitability may continue to deteriorate without a significant rebound in volume or pricing power.

Five Things Investors Need to Know

1. Subsidy Risk Is Real While Tesla has always marketed itself as subsidy-resilient, tax incentives still matter — especially for budget-conscious buyers. If the $7,500 U.S. federal credit is slashed or made harder to qualify for, Model 3/Y sales could take a hit.

2. FSD Monetization Remains Unproven Tesla bulls often point to Full Self-Driving (FSD) as a future cash cow, but after years of promises, regulatory hurdles and safety concerns have kept true autonomy elusive. Without meaningful FSD revenue, the bull case weakens.

3. AI and Dojo Hype May Be Overblown Tesla has tried to pivot attention to its AI and Dojo training systems, claiming it is an AI company as much as an automaker. But outside of Tesla's own ecosystem, tangible monetization remains unclear, and investors should be cautious about assigning tech-multiple valuations to non-core initiatives.

4. Competition Is Fierce Tesla’s early-mover advantage is eroding. Legacy automakers like Ford, GM, Volkswagen, and Hyundai have stepped up their EV offerings, often at lower price points. In China, local brands continue to outpace Tesla in both innovation and price competitiveness.

5. $300 Is a Key Technical and Psychological Level Tesla last traded at $300 in late 2022 before a sharp rally. From a technical standpoint, this level represents strong support. If breached, it could trigger further downside. However, for long-term investors, this may also be the "blood in the streets" moment worth monitoring.

Valuation: Growth Premium or Overhyped Multiple?

Tesla currently trades at a forward P/E of roughly 45x based on FY25 consensus earnings of ~$7 per share. That’s a premium not only to the broader market (S&P 500 average ~20x) but also to other automakers (GM and Ford both trade under 10x).

Even when compared to tech peers, Tesla’s multiple is ambitious. NVIDIA, for example, trades at a similar P/E — but with 40%+ operating margins and exponential AI growth. Tesla’s topline is barely growing and margins are falling.

Using a more conservative lens:

• Base Case: EPS of $8 in FY26, multiple compression to 30x → Target Price: $240

• Bull Case: FSD monetization and margin recovery → $12 EPS, 40x multiple → $480

• Bear Case: Continued ASP erosion, subsidies cut, margins fall → $5 EPS, 25x multiple → $125

In short, $300 is not a screaming bargain based on fundamentals — but it may be an acceptable entry point if you believe in Tesla’s multi-decade growth story.

Sentiment Check: From Euphoria to Anxiety

Investor sentiment toward Tesla has cooled significantly in 2025. Once the darling of retail investors and hedge funds alike, TSLA has faced multiple downgrades from Wall Street analysts, including high-profile names like Morgan Stanley and Goldman Sachs. Both firms recently revised their 12-month price targets downward, citing weakening demand and policy risks.

Retail sentiment has also shifted. Google Trends shows declining search interest in Tesla stock, and Reddit forums like r/WallStreetBets have pivoted toward other high-beta tech names. The once-invincible aura surrounding Elon Musk’s empire has dimmed as reality sets in.

Still, there is a core group of Tesla believers who see every dip as a buying opportunity. For these investors, $300 is not a warning — it's an invitation.

Strategic Considerations: Should You Buy at $300?

Investing in Tesla at $300 depends on your outlook:

• If you believe Tesla will successfully evolve into an AI-driven, autonomous mobility platform, $300 could prove a long-term bargain.

• If you’re skeptical about FSD, profit margins, or the sustainability of EV demand, it’s likely too early to step in.

For most investors, the prudent move is to watch from the sidelines and wait for further clarity. Tesla's Q2 and Q3 results, especially any forward guidance around subsidy changes or margin stabilization, will be critical.

Dollar-cost averaging (DCA) could be a viable strategy for those unwilling to time the bottom. But betting the farm on a single dip — especially in a market that’s reevaluating growth stocks across the board — is risky.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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