Elon Musk Faces Fresh Distractions with The Boring Company Drama Erupting, Leaving Tesla Shares in Question
Tesla Faces Challenges Amidst Elon Musk's Diverse Ventures
Tesla, the electric vehicle giant, is currently navigating through a turbulent period, with concerns about the company's operational performance and Elon Musk's focus on his various projects, including The Boring Company's Nashville project, weighing heavily on investors.
The average stock price target for Tesla (TSLA) stands at $299, which is 10% below the current stock price. This suggests that the market is cautious about the company's future prospects.
One of the key issues is Tesla's declining vehicle deliveries. The company's automotive deliveries have dropped significantly, around 13-13.5% year over year in the first half of 2025, partly due to an aging vehicle lineup and production disruptions. This has led to increasing margin pressures.
Investors are also concerned that Musk's political and other business engagements, including The Boring Company's Nashville transit project, might exacerbate Tesla's operational challenges. Legal risks and regulatory scrutiny, particularly around Tesla's autonomous driving promises, add to investor unease.
Moreover, analysts highlight Tesla's lofty valuation, with a price-to-earnings ratio near 200, despite shrinking revenues. This increases the risk of sharp stock corrections if Tesla's execution falters, and Musk's attention divided among multiple ventures could contribute to execution risk.
Despite these concerns, The Boring Company is planning a 10-mile underground loop in Nashville. However, the project faces technical challenges, including building in flood-prone areas, due to Nashville's higher rainfall compared to Las Vegas.
In a recent development, Tesla launched its robotaxi service in Austin, marking a pivotal moment in autonomous driving technology. However, the company's core automotive revenue declined 16% in Q2, and total revenue fell 12%.
Amidst these challenges, Tesla CFO Vaibhav Taneja warns that customers placing orders after late August may not receive deliveries in time to capture the EV tax credit, as the recently passed One Big Beautiful Bill Act removes the $7,500 electric vehicle tax credit by the end of Q3.
In terms of analyst recommendations, of the 41 analysts covering TSLA stock, 12 recommend "Strong Buy," two recommend "Moderate Buy," 17 recommend "Hold," and 10 recommend "Strong Sell."
Meanwhile, The Boring Company abandoned tunnel plans in Chicago, and allegations of ongoing worker safety violations in Nevada continue to surface. Democratic state representative Justin Jones was barred from company recruiting events.
Changes to emission standards will eliminate regulatory credit revenue from other OEMs, a historically profitable income stream for Tesla. The Boring Company allegedly has no experience building in flood-prone areas, adding to the challenges of the Nashville project.
Despite these challenges, some analysts predict that if TSLA stock is priced at 90x forward earnings, it will trade around $850 in early 2029, indicating upside potential of over 150% from current levels. However, the company's forward price-earnings multiple of 190x is higher than its five-year average of 113x, reflecting the market's uncertainty about Tesla's future.
In summary, while Elon Musk's role in The Boring Company's Nashville project is not usually cited as a standalone risk for Tesla stock, it contributes indirectly to investor worries about Musk’s focus and Tesla’s operational performance during a period of weakening fundamentals, competitive pressures, and legal risks.
Investors are cautious about Tesla's (TSLA) future prospects, with the average stock price target at $299, 10% below the current stock price, due to concerns about the company's declining vehicle deliveries, lofty valuation, and Elon Musk's diverse ventures such as The Boring Company's Nashville project, which might exacerbate Tesla's operational challenges.
The stock market, technology, and specifically the stock-market performance of Tesla (TSLA) may be affected by Tesla's current operational challenges, Elon Musk's focus on various projects, and the technical challenges faced by The Boring Company in Nashville.
