Tesla stock selloff amid trade uncertainties and regulatory challenges

Tesla stock continues to trade under a cloud, closing at $437.09 on January 16 amid intensifying market headwinds. The main selling pressure stems from escalating US-Europe commercial disputes, with Washington's threat to impose up to 25% tariffs on EU imports unsettling the entire automotive sector and rattling investor confidence.

The company's fundamental outlook presents a complex and contradictory picture. Still, a glimmer of opportunity shines from Canada, where the decision to slash duties on Chinese electric vehicles (EVs) from 100% to 6.1% paves the way for Tesla to swiftly resume deliveries of its high-margin Model Y from the Shanghai Gigafactory. This move cements Musk's presence in the Canadian market and offers a welcome boost to operational efficiency. However, a pre-established import quota caps this advantage, limiting its potential windfall.

Meanwhile, Europe's subsidy landscape is shifting. Germany's relaunch of a €3 billion EV incentive program—with no origin restrictions—provides superficial backing yet deepens competitive pressure. Although Tesla stands to benefit on paper, it primarily fuels the advance of Chinese rivals that are expanding aggressively across the continent, turning subsidies into a new battleground.

Simultaneously, the clean energy pioneer faces mounting operational and regulatory scrutiny. The ongoing NHTSA investigation into traffic violations involving the Full Self-Driving (FSD) system keeps looming over the company, posing a significant threat to its reputation and legal standing. This comes just as Tesla prepares to transition to a subscription model for FSD starting February 14. Such a pivot ties its financial future even more closely to consumer and regulatory trust—a fragile foundation amid current doubts. 

Technically, charts reflect this cautious narrative. After a clear bearish descent, the stock has stalled near a local low without any meaningful recovery signals. The Stochastic Oscillator (%K=44, %D=58) is now rolling over from neutral territory, indicating that bullish momentum has run its course. Aside from that, the Chaikin Oscillator confirms dominant selling pressure, suggesting that bears firmly control the short-term narrative. Taken together, these factors tilt the risk toward further declines.

Here is a likely setup for your trading:

Consider selling into short-term rebounds driven by positive news from Canada or Germany. Lock in profits at $422.00. Place Stop loss at $452.00.

This forecast holds true from January 20 till January 27, 2026.