Tesla (NASDAQ:TSLA) Falls Below $182 as Margin Erosion and China Risk Deepen

Tesla (NASDAQ:TSLA) Drops Below $182 as Margin Pressure and China Risks Mount

Tesla (NASDAQ:TSLA) shares fell sharply to $181.80, breaching the critical $182 support level after a string of bearish catalysts hit the EV giant. Weak delivery forecasts, intensifying China competition, and shrinking margins reignited concerns over Tesla’s growth trajectory. Investors dumped shares on volume spikes, sending TSLA to its lowest level since April.

The 50-day and 200-day moving averages now act as resistance at $186.90 and $192.40 respectively. TSLA’s short-term price structure is technically broken, with selling accelerating below the $182 line. Options flows suggest institutional positioning remains cautious ahead of Q2 delivery results and margin updates.

Margins Narrow as Price Cuts Weigh on Profitability

Tesla’s aggressive pricing strategy in China, the U.S., and Europe has squeezed margins for over five straight quarters. Automotive gross margin fell to 16.35% last quarter, down from 19.3% the prior year. Total gross margin dropped to 17.4%—well below the 22% levels investors grew accustomed to in 2022. With no clear rebound in ASPs, analysts fear margin compression will persist into Q3.

In China, BYD’s relentless price competition has forced TSLA to discount its Model 3 and Model Y yet again in key regions. Coupled with weakening export volumes from Giga Shanghai, this has created downward pressure on revenue per vehicle. Tesla’s $7,500 U.S. federal tax credit cushion may help partially, but not enough to restore margin resilience.

China Demand Wobbles as EV War Escalates

China deliveries for May came in softer than expected, and local EV makers continue to crowd the mid-range segment. Nio, XPeng, and BYD all rolled out new models with autonomous features priced below comparable Teslas. Giga Shanghai output fell to 66,000 units last month—a 12% sequential decline. Regulatory risk has also surfaced with China's MIIT pushing back on autonomous software overreach.

Tesla is now expected to end Q2 with global deliveries near 420,000 units—below the 440,000 whisper number on Wall Street. Analysts at multiple desks have trimmed FY2025 delivery estimates to 1.72 million units, down from 1.85 million earlier in the year.

Cybertruck Production Bottlenecks and Dojo Spending Weigh on Cash Flow

Cybertruck rollout continues to lag expectations, with only 3,500 units delivered quarter-to-date. Production remains bottlenecked by supply constraints in specialized casting and interior electronics. Meanwhile, CapEx ballooned to $2.8 billion last quarter as Tesla poured money into its Dojo supercomputer infrastructure and battery R&D.

Free cash flow dropped to $848 million—down 43% quarter-over-quarter. With operating margin now at 9.6%, the lowest since 2020, the pressure to regain efficiency is building. Tesla has promised a leaner cost structure in the second half, but tangible results remain to be seen.

AI and FSD Bets Haven’t Repriced the Stock—Yet

Despite Elon Musk's ambitious push on autonomous driving and AI, the market has yet to fully reward TSLA with an AI premium. Full Self Driving (FSD) beta penetration remains under 15% in North America. Regulatory setbacks and lack of major licensing deals are holding back the AI narrative. The Dojo cluster is still in build-out phase and not yet contributing to topline growth.

Until concrete monetization emerges from FSD or AI licensing, Tesla is struggling to sustain its high-multiple narrative. Institutional investors remain underweight according to 13F filings, with top holders like Vanguard and BlackRock trimming small percentages of their stake in the last quarter.

Technical Setup Flashes Risk Below $178—But Oversold Conditions Near

With TSLA falling below $182, it now trades below both major SMAs and approaches oversold RSI conditions. Key support lies at $178, followed by $171. A break below $171 could target $164.30—the March 2024 low. Resistance sits at $186.90, followed by $192.40.

MACD has crossed into negative territory and volume surged on the breakdown—both signs of strong selling conviction. Unless deliveries surprise to the upside or margin trends reverse, technicals suggest Tesla may continue to drift lower in the near term.

Verdict: Hold With Bearish Tilt as Macro and Margin Risks Build

Tesla (NASDAQ:TSLA) is in a fragile position. While long-term growth catalysts in AI and FSD remain, short-term headwinds are stacking: margin pressure, weaker China sales, and elevated CapEx. Price action confirms the bear thesis for now, with downside risk toward $171–$164 if deliveries disappoint.

The stock is a Hold, with downside skew. Tactical traders may look to re-enter near oversold levels below $170, while long-term investors await clearer signals on AI monetization and gross margin stabilization.

Price at publish: $181.80

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