Tesla stock drops 5.3% as Musk-Trump feud and weak deliveries rattle investors

Highlights

• Tesla shares dropped 5.3% to $300.71, breaking key technical support levels with heavy trading volume.

• Investor sentiment weakened due to an escalating Musk-Trump feud and lower-than-expected Q2 delivery forecasts.

• The stock faces further downside risk, with $275 as the next major support level.

Tesla's recent price action has confirmed a breakdown below critical support. The $310 support level, which had held firm for much of June, was decisively broken on July 1, with Tesla touching intraday lows of $293.75 before recovering modestly. Volume was exceptionally high at 145 million shares, more than double the 30-day moving average, highlighting the intensity of selling pressure.

The short-term technical indicators are bearish. The 50-day moving average has slipped to around $326 and is now sharply declining, while the 200-day moving average, currently near $356, continues to flatten and may soon turn downward. The Relative Strength Index is nearing 30, the traditional threshold for oversold conditions. While this could lead to a short-lived technical bounce, the broader trend remains firmly negative.

TSLA stock price dynamics (April 2025 - June 2025). Source: TradingView

Immediate support is now located at $290, with a further downside target at $275 if selling momentum continues. On the upside, resistance is clearly defined at $310 and then again near $325, which aligns with the falling 50-day moving average. A close above $325 would be required to suggest a meaningful reversal, but this remains unlikely without a significant change in market sentiment.

Musk-Trump feud and delivery shortfall weigh on sentiment

Tesla's technical weakness is compounded by negative news flow. A major factor weighing on the stock is the public feud between Elon Musk and President Donald Trump. Musk recently criticized the administration’s sweeping legislative bill dubbed the “One Big Beautiful Bill Act,” prompting a retaliatory response from Trump, who threatened to revoke federal contracts and subsidies for both Tesla and SpaceX.This political standoff has unnerved investors, raising doubts about the stability of Tesla’s access to government support, particularly as it relates to EV tax incentives and infrastructure grants. The optics of the situation have damaged investor confidence, especially ahead of the second-quarter vehicle delivery report.

Market expectations for Tesla’s Q2 deliveries have been revised downward significantly. RBC Capital Markets projects 366,000 deliveries, well below the previous consensus of 406,000 units. Weakness in European demand, particularly in Germany and the UK, has played a central role in this downgrade. A recent report also pointed to declining order flow in key North American markets, indicating that Tesla’s price cuts have not sufficiently stimulated demand.

TSLA likely to test $275 support in coming weeks

Given the combination of technical deterioration and negative news catalysts, Tesla stock appears poised for further downside in the near term. If the $290 support level is breached with sustained volume, the next critical test will be $275. This level served as support during a brief consolidation period in late 2023 and could attract buyers. However, a break below $275 would open the door to a deeper retracement toward the $250 region.

Conversely, a near-term bounce is possible if the delivery data—scheduled for release later this week—exceeds the revised expectations. In such a scenario, TSLA could recover toward the $310 resistance level. A close above $325 would neutralize the short-term bearish outlook, but this scenario remains unlikely without clear improvement in fundamentals.

Tesla’s short-term stock decline reflects mounting concerns over falling Q2 vehicle deliveries and skepticism surrounding its autonomous driving ambitions. The anticipated 20% year-over-year drop in deliveries, driven by weak demand in Europe and China, adds pressure as local EV rivals gain ground.

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