EV watch: Tesla skids 12% on concerns over stalling auto business; Rivian and Lucid also fall

Tesla (NASDAQ:TSLA) fell 12.2% in the first half hour of trading on Wednesday after the company’s Q2 earnings report and conference call update failed to impress investors. Elon Musk did not offer any new information on a mass market model, and the robotaxi event was pushed back for two months. The EV giant also warned during the conference call that tariffs on raw materials and finished goods are impacting margins on the Cybertruck and Model 3.

On Wall Street, longtime bull New Street Research lowered its rating on the EV stock to Neutral.

Analyst Pierre Ferragu said the Tesla (TSLA) thesis is playing out, but sees limited catalysts in the near term.

“Auto margins will eventually recover, although for now demand will remain challenging for now, making little room for price stabilization; volume growth should accelerate at best in the second half of next year. Energy nicely contributes to growth already. FSD, Robotaxi, and Optimus remain longer term moonshots.”

After a sizable rally over the last ten weeks, TSLA cruised right up to New Street’s price target, which works out to 50X the 2026 EPS estimate. Ferragu and team do not expect an inflection in the stock for the next 12 months.

Meanwhile, UBS reiterated a Sell rating on Tesla (TSLA). Analyst Jospeh Spak warned that payoff from AI initiatives such as Optimus and a robotaxi fleet are further out, so on earnings updates, the realities of the business fall back to mostly to the auto side of the business.

Seeking Alpha analyst Jonathan Weber said it looks like consumers are increasingly finding Tesla’s (TSLA) offerings less appealing compared to what its peers are offering. “This could be due to a somewhat stale and rather limited model line-up, while the company’s CEO Elon Musk has also been a somewhat controversial figure in the eyes of some consumers,” he observed.

Tesla (TSLA) was swapping hands on Wednesday at a share price about 22% below the 52-week high. Rivian Automotive (RIVN) fell 7.15% in early trading, Polestar Automotive (PSNY) shed 7.05%, and Lucid Group (LCID) was down 5.92% as investors reeled in EV premiums.