2025’s been quite a turbulent year for the Tesla (NASDAQ:TSLA) stock price. After reaching impressive highs in late 2024, the electric vehicle (EV) maker saw its market-cap slashed in half within a few short months, with protests erupting at dealerships following CEO Elon Musk’s foray into politics. This all came to a culmination when the US first unveiled its tariff trade plans in April, which spooked the markets, sending Tesla stock falling even further.
However, buying when everyone else is panicking is a proven tactic when aiming for market-beating returns. So was buying Tesla stock in April a good idea? So far, the answer seems to be ‘yes’.
How much money have investors made?
Earlier this month, Musk announced yet more political involvement with the launch of his own party to rival Trump’s Republican party in the mid-term elections next year. This comes after the US government put EV tax credits and other subsidies on the chopping block. And that’s once again caused the Tesla share price to tumble since July kicked off.
Yet, despite all this turbulence and volatility, Tesla stock’s still up since April, climbing by over 28%, even after this month’s price dip. That means anyone who decided to invest £1,000 a few months ago is now sitting on £1,280 – slightly ahead of the £2,400 the S&P 500‘s delivered over the same period.
Having said that, a near three-month timeframe is hardly enough to determine whether these gains are just short-term momentum or long-term sustainable gains. So does investing in Tesla today actually make sense?
Exploring possibilities
The loss of tax credits is a huge blow to this business in the short term. But in the long run it may not matter, particularly as the firm continues to make progress in its Robotaxi and AI ambitions. With plans for a global autonomous driving fleet that covers one billion miles daily by 2030, the revenue potential appears to be enormous.
Obviously, Tesla’s set enormous targets like this many times before, very infrequently delivering on them within the expected timeline. So this growth potential needs to be taken with a healthy pinch of salt. But with a portfolio-wide model refresh of its EVs now underway, along with its impressive battery technology, the company’s medium-term outlook remains promising in the eyes of institutional investors.
Having said that, the risks are bountiful. So far, Musk’s political involvement has resulted in significant brand damage. We’ve already seen potential evidence of this with vehicle deliveries across Europe seemingly collapsing. And it’s why many investors are viewing it as a massive distraction that harms shareholder value. That’s why Tesla stock was sold off following Musk’s party formation announcement.
The bottom line
All things considered, Tesla’s not a stock I’m rushing to buy today. While it certainly has long-term potential, rapid innovation from competitors, particularly in China, could undercut Tesla’s long-term potential. Pairing that with a wildcard CEO makes the risks simply too high for my tastes.
