Tesla Inc. (NASDAQ: TSLA) is experiencing a dramatic decline as of June 5, trading at $284.70 after shedding 14.3% in a single trading session.
The plunge marked one of Tesla’s steepest one-day losses in recent quarters.
Highlights
- Tesla shares fell 14.3% to $284.70 after breaking below critical moving averages and a bearish wedge pattern.
- The decline was intensified by a public feud between Elon Musk and Donald Trump, raising fears of political and regulatory fallout.
- Technical indicators and volume suggest continued downside risk toward $265 or lower.
On the daily chart, Tesla had been consolidating in a rising wedge pattern over the past several weeks, which is typically considered a bearish formation. The breakdown from this wedge pattern confirms a continuation of the larger downtrend that began in late 2024, when the stock peaked near $415. Momentum indicators, including the Relative Strength Index (RSI), now hover near oversold territory, but have not yet signaled a sustainable bottom. MACD lines have crossed to the downside, further supporting the bearish thesis.
Key support levels to monitor include $265, which served as a floor during the late-February to early-March consolidation zone. A breach of this level could expose Tesla to a rapid move toward $215, the lows from January 2024. Beyond that, the $170 level marks a longer-term support zone, tested during the cyclical bottom in Q3 2023. On the upside, any bounce is likely to face stiff resistance near $320 and especially at $365, the upper band of the earlier wedge formation and a psychologically significant round number.
TSLA stock price dynamics (April 2025 – June 2025). Source: TradingView
Volume analysis adds further weight to the bearish case. The sharp sell-off occurred on significantly higher-than-average trading volume, indicating institutional distribution and panic selling among retail holders. This type of volume spike is typically not associated with bottoming behavior but rather the acceleration phase of a decline. In previous cycles, similar volume surges during breakdowns have preceded further multi-session selloffs. Until TSLA prints a bullish reversal pattern accompanied by declining volume on down days and increasing volume on rallies, the trend remains firmly negative.
Political feud rattles market confidence in Tesla’s future
Tesla’s steep decline is not solely driven by technical factors; macro and political developments are exacerbating market jitters. The latest catalyst was a public and escalating feud between Tesla CEO Elon Musk and U.S. President Donald Trump. According to a CNBC report, the fallout stems from Musk’s vocal opposition to components of a recent tax and spending bill backed by Trump-aligned legislators. In retaliation, Trump reportedly criticized Musk’s companies and signaled potential scrutiny or rollback of government incentives that have historically benefited Tesla and SpaceX.
For Tesla investors, the dispute raises significant uncertainties. The electric vehicle (EV) sector remains highly sensitive to government policy and regulatory environments, especially regarding tax credits, environmental standards, and infrastructure investments. If the Trump administration takes a less favorable stance toward EV adoption or subsidies, Tesla could face competitive and operational headwinds. Furthermore, Musk’s high-profile media presence and increasingly politicized persona risk alienating institutional investors seeking management stability and low headline risk.
Compounding these concerns are existing macroeconomic pressures, including rising interest rates, persistent inflation, and slowing EV demand in key markets such as China and Europe. Analysts also cite growing competition from established automakers and Chinese EV players as an ongoing structural threat to Tesla’s market share and pricing power.
Further downside expected barring a political or technical reversal
Given the convergence of technical weakness and heightened political risk, Tesla stock appears vulnerable to additional short-term downside. If the $265 support level fails to hold in upcoming sessions, TSLA could retrace swiftly to $215, where a minor demand base may offer some relief. A deeper correction toward $170 remains on the table if macro headwinds and political tensions persist without resolution.
Conversely, should Musk de-escalate his political rhetoric or if investors interpret the sell-off as overdone, a relief rally could emerge. However, the path to reclaiming $320 or $365 would require a clear shift in sentiment, likely triggered by either strong earnings performance, improved delivery numbers, or easing macroeconomic conditions.
Tesla’s technical weakness is compounded by deteriorating fundamentals, with global demand continuing to slide. In May, sales in China fell 15% year-over-year and German sales plunged 36%, contributing to an estimated 9% drop in Q2 deliveries to 404,850 units.