Tesla’s Triple Blow: European Sales Collapse, Robotaxi Lawsuit, and a $30B "Retention Fee" – Can It Save the Stock?

$Tesla(TSLA.US)

Cutting through the noise around Tesla reveals three core challenges driving its stock stall: demand erosion, regulatory/legal risks, and governance turmoil. Here’s how markets are pricing each:

I. Demand: European Sales Implode, No Offset from U.S./China

July Registrations: UK (-60%), Germany (-55%), Sweden (-86%), France (-27%) – 7 straight months of decline.

Saturation + Competition: High EV penetration in Europe; aging Model 3/Y face rivals (VW ID.7, Renault Scenic, BYD Seal/ATTO 3).

Price Cuts Lose Impact: Multiple 2023 price cuts failed to sustain orders; H1 2024 demand elasticity exhausted.

Subsidy Rollback: UK/Germany/France scaling down incentives in 2025, pressuring price-sensitive buyers.
→ Conclusion: Europe is now a "replacement + competition" market. Tesla’s share erosion has no near-term catalyst.

II. Regulation + Litigation: Robotaxi & Autopilot Narratives Crack

Robotaxi Lawsuit (Delaware Court): Investors allege Musk exaggerated FSD capability (securities fraud). Internal engineers warned "unsupervised Robotaxi impossible by 2024" in 2023. Risk: SEC fines + marketing freeze if proven.

Autopilot Liability: $240M punitive damages ($200M by Tesla) in 2019 Florida fatality case. Jury ruled Tesla "grossly negligent" for "Full Self-Driving" claims – sets precedent for class actions.
→ Conclusion: Robotaxi/FSD drove 50%+ valuation premium. Reality gap could trigger 15–25% de-rating.

III. Governance: $30B "Retention Fee" Backfires

Legal Overhang: New $30B award (post-2018’s $56B package) likely faces shareholder suits amid ongoing Delaware court review.

Market Fears:

Musk’s 6 CEO/chair roles strain focus.

EPS dilution (4–5%) to "retain" an already-paid CEO.
→ Conclusion: Governance premium becomes discount. No buyback/dividend support → stock reliant on speculative bids (e.g., Ark).

Why "Stall" Not "Crash"?

Short squeeze: 3% short interest triggers covering amid steep drops.

Polarized Investors:
• Bulls (Ark, Baillie Gifford): Bet on "2026 Robotaxi + 3TWh storage" → $2,000/share DCF.
• Bears (Gordon Johnson, Jim Chanos): Auto EBIT margin <5% by 2025 → 15x PE = $80–100.
→ Outcome: Range-bound ($160–220 for 3 months).

Key Near-Term Catalysts:

Aug 8 Robotaxi Event: Stock -10% if "supervised demo"; +15% if unsupervised 20km drive.

August Europe Registrations: Double-digit drops confirm demand cliff.

Delaware Court Ruling on 2018 Package: If voided, Musk may threaten to move AI/FSD teams → volatility.

Short Covering + Put/Call Skew: Signals tactical bottoms.

Robotaxi Commercialization Timeline.

Bottom Line:

Fundamentals: 2024 delivery growth may slow to ~+5% (vs. 2023’s +38%); energy/services too small to offset auto margin compression.

Valuation: 85x 2024E GAAP PE / 45x EV/EBITDA (ex-leases) prices in 2027 Robotaxi success. Regulatory/tech failure → 25–30% downside.

Strategy: High volatility favors event-driven gamma trades. Long-term capital: Wait for European sales stabilization + Robotaxi regulatory clarity. Stop loss: $150 (May 2023 low).