Ross Gerber, an early Tesla investor, has been vocal about concerns surrounding Elon Musk and Tesla’s future. Once a strong supporter, he has reduced his stake in the company, citing multiple risks that could drive Tesla stock down by as much as 50% in 2025.
In a recent Business Insider interview, Gerber outlined four key reasons why he believes Tesla is vulnerable to a significant decline.
1. Full Self-Driving (FSD) Challenges
Gerber argues that Tesla’s Full Self-Driving (FSD) technology is not ready for widespread deployment, despite Musk’s ambitious plans to launch an autonomous taxi network in Austin, Texas.
He highlights Tesla’s decision to rely solely on cameras rather than LIDAR, a sensor technology used by competitors like Alphabet’s Waymo. “We’re well behind in robotaxi and autonomy,” Gerber stated, adding that Tesla may hit a roadblock unless it upgrades its hardware.
2. Elon Musk’s Divided Attention
Musk’s focus is spread across multiple ventures, including Tesla, SpaceX, xAI, and his government-related projects. Gerber believes this lack of dedicated leadership is hurting Tesla.
“His 100% focus is on AI, which is a detriment to Tesla,” Gerber explained. “If he were putting all his time into Full Self-Driving, I’d feel a lot more confident.”
3. Slowing Tesla Vehicle Sales
Tesla’s vehicle sales have declined for the first time in its history, and growing competition from Chinese EV giant BYD is a major concern.
“China is prioritizing its own EV companies over Tesla,” Gerber said. “BYD is dominating emerging markets.”
Additionally, Tesla’s association with Donald Trump has sparked backlash, potentially affecting consumer sentiment. Celebrities like Sheryl Crow have publicly parted ways with Tesla, and European sales figures show a sharp decline—63% in France, 60% in Germany, and 38% in Norway.
4. Tesla’s Overvalued Stock Price
Despite declining vehicle sales, Tesla’s valuation remains significantly higher than other automakers. With a $1.1 trillion market cap, Tesla is nearly five times larger than Toyota, despite generating only 20% of Toyota’s profits.
Gerber notes that Tesla trades at a price-to-earnings (P/E) ratio of 118x, more than triple that of other Magnificent 7 tech stocks like Nvidia.
“If things don’t work out, Tesla could drop by 50%,” Gerber warned.
Wall Street’s Bearish Outlook on Tesla
Major investment firms like JPMorgan share Gerber’s concerns. The firm has maintained a $135 price target for Tesla stock, implying a potential 60% downside from current levels.
The Bottom Line
With challenges in Full Self-Driving, leadership concerns, slowing sales, and a stretched valuation, Tesla faces significant risks in 2025. While still holding a substantial Tesla stake, Gerber continues to reduce his position, signaling a cautious outlook for investors.
