To The Moon

$Tesla Motors(TSLA)$’s stock price plunging below $300 is making headlines, but the real shockwave comes from Washington: a proposed bill to slash electric vehicle (EV) and clean energy subsidies. With CEO Elon Musk publicly clashing with President Donald Trump and geopolitical tensions rising, investors are asking—does this dip offer a golden entry point, or is it a warning to stay away?

Macroeconomic Forces: Policy, Politics, and Global Competition

EV Subsidies in the Crosshairs: The U.S. Senate is considering a bill that would roll back federal support for EVs and clean energy. President Trump has been vocal, claiming that companies like Tesla “would not survive without government subsidies” and that Musk would “probably have to close up shop” if federal support evaporates. While this is political hyperbole, the threat is real: removing subsidies could increase the cost of EVs for consumers, potentially slowing adoption and pressuring Tesla’s margins.

Geopolitical Tensions and Oil Prices: Recent flare-ups between the U.S. and Iran have sent oil prices on a rollercoaster, briefly spiking Brent crude to $75 per barrel. Historically, higher oil prices can boost EV demand, but the current environment is more complex. Geopolitical instability also fuels inflation and market volatility, making consumer and investor behaviour harder to predict.

China’s Competitive Onslaught: Tesla’s global dominance is under siege, especially in China, where BYD now commands 40% of the EV market compared to Tesla’s 6%. BYD’s aggressively priced models, like the $19,000 Seagull, are squeezing Tesla’s market share and forcing price wars. Meanwhile, U.S. tariffs on Chinese-made parts are squeezing Tesla’s U.S. margins, even as the company tries to localize production with new Gigafactories.

Valuation Reset: Tesla’s stock has dropped over 30% year-to-date, making it one of the S&P 500’s worst performers in 2025. This sharp reversal from its pandemic-era highs reflects not just company-specific issues, but also a broader market rotation away from high-growth, high-valuation stocks in a more uncertain macro environment.

Trading Strategies: Buy the Dip or Wait for Clarity?

Historical Perspective: Tesla’s dips have historically offered strong rebounds. After similar sharp declines, the stock has delivered an average 131% return within a year, with some recoveries as high as 183%. However, past performance is not a guarantee—especially when the macro backdrop is shifting so dramatically.

Potential Approaches:

• Incremental Buying: Consider dollar-cost averaging into TSLA, buying small amounts on further weakness rather than making a single large purchase. This reduces timing risk and takes advantage of volatility.

• Diversification: Instead of going all-in on Tesla, consider EV-focused ETFs (like KARS, IDRV, DRIV, or LIT) to spread risk across the sector. This cushions against company-specific shocks while still capturing long-term EV growth.

• Hedged Positions: Use options to hedge downside risk. Protective puts or covered calls can help manage volatility, especially if you’re accumulating shares during a period of uncertainty.

• AI and Sentiment Tools: Leverage AI-powered trading tools and sentiment analysis to monitor market mood and identify potential inflection points. Many traders report improved ROI using data-driven strategies.

Risk Management and Trading Psychology

Key Risks:

• Policy Uncertainty: The fate of EV subsidies is a political wildcard. If the bill passes, expect further pressure on Tesla and the entire EV sector.

• Competitive Pressures: Tesla’s shrinking market share in China and margin compression in the U.S. could weigh on earnings for several quarters.

• Elon Musk’s Volatility: Musk’s public disputes and unpredictable behaviour can trigger sharp moves in the stock, as seen with the $152 billion market cap drop following a recent controversy.

Psychological Considerations:

• Avoid Emotional Trades: Fear and greed are amplified during high-volatility periods. Before acting, ask: Has the market already priced in the bad news? Is this a contrarian opportunity, or is more pain ahead?

• Plan Your Exits: Set stop-losses and profit targets in advance. Don’t let hope or regret dictate your actions—stick to your plan.

• Stay Adaptable: The only certainty is uncertainty. Be ready to pivot your strategy as new information emerges.

Conclusion

Tesla’s dip below $300 is a test of conviction for bulls and a warning flag for bears. The risk-reward calculus has shifted: while past dips have been lucrative buying opportunities, the policy landscape and competitive dynamics are more challenging than ever. If you believe in Tesla’s long-term innovation and resilience, incremental buying or diversified EV exposure may make sense. But with political, economic, and sector-specific headwinds swirling, strict risk management and emotional discipline are non-negotiable.

As always, Do Your Own Due Diligence and ensure risk management > prediction. Trade smart, stay adaptable, and don’t let emotions chase candles.