Elon Musk faces controversy as his tunneling venture, The Boring Company, pushes forward with plans for a 10-mile underground loop in Nashville, despite his repeated promises to focus on Tesla (TSLA) and eliminate political distractions. The timing couldn’t be worse for TSLA stock investors who are concerned about Musk’s divided attention.

The Nashville project has sparked heated political battles, as Democratic lawmakers have demanded transparency while Republican leaders embrace the partnership. Democratic state representative Justin Jones was reportedly barred from company recruiting events and told he’s “not allowed to be here” despite representing the impacted district. A state commission held an emergency meeting to discuss a controversial “no cost/mutual benefit” lease arrangement giving Musk access to public property.

The Music City Loop proposal faces technical challenges that highlight Musk’s pattern of ambitious promises that often struggle to become reality. According to a CNBC report, Nashville receives 50 inches of annual rainfall compared to Las Vegas’ 4 inches, and The Boring Company allegedly has no experience building in flood-prone areas. The city has previously purchased flood-vulnerable homes to convert to green spaces, raising questions about underground construction safety.

The Boring Company’s previous projects offer little reassurance. The Las Vegas tunnel system cost Nevada taxpayers $50 million and has been criticized for safety violations and design limitations. It also abandoned tunnel plans in Chicago and faces allegations of ongoing worker safety violations in Nevada.

For Tesla stock shareholders, this controversy represents another distraction from Musk’s core automotive business. Despite promises to refocus on Tesla, Musk continues to be involved in multiple ventures. 

Tesla Did Not Impress Wall Street in Q2

In Q2, Tesla launched its robotaxi service in Austin, marking a pivotal moment in autonomous driving technology. The EV maker achieved its first fully autonomous rides with paying customers and no safety driver, demonstrating tangible progress toward its ambitious autonomy goals. However, near-term challenges are clouding the investment outlook for TSLA stock.

The recently passed One Big Beautiful Bill Act presents multiple headwinds for Tesla’s business. The legislation removes the $7,500 electric vehicle tax credit by the end of Q3, forcing Tesla to accelerate U.S. deliveries before the incentive expires. 

CFO Vaibhav Taneja warned that customers placing orders after late August may not receive deliveries in time to capture the credit. Additionally, changes to emission standards will eliminate penalties, reducing regulatory credit revenue from other OEMs, a historically profitable income stream for Tesla.

Tesla experienced a $300 million sequential cost increase from tariffs in Q2, with two-thirds impacting automotive operations and the remainder affecting energy storage. It expects the full tariff impact to materialize in coming quarters, as manufacturing and sales cycles create timing delays. Despite these pressures, energy storage customers are showing a willingness to absorb some tariff costs, reflecting strong underlying demand.

Total revenue in Q2 declined 12%, and core automotive revenue fell 16%. 

Is TSLA Stock a Good Buy Right Now?

Analysts tracking TSLA stock expect adjusted earnings to narrow from $2.42 per share in 2024 to $1.69 per share in 2025. However, they also forecast earnings to expand to $9.46 per share in 2029. 

Today, TSLA stock trades at a forward price-earnings multiple of 190x, higher than its five-year average of 113x. If the EV stock is priced at 90x forward earnings, it will trade around $850 in early 2029, indicating upside potential of over 150% from current levels. 

Of the 41 analysts covering TSLA stock, 12 recommend “Strong Buy,” two recommend “Moderate Buy,” 17 recommend “Hold,” and 10 recommend “Strong Sell.” The average TSLA stock price target is $299, which is 10% below the current stock price.