Tesla stock dropped in recent trading days as investors considered tariffs, weak Chinese sales data, and the impact of a "buyers strike" on the electric-vehicle maker. However, it’s not all bad news for Tesla as Trump says he wants to make interest payments on car loans tax deductible if the cars are made in America. Let’s dive into the potential sscenarios and related options strategies with Tesla stock.

1. Bullish Outlook

Trump to Make Interest Payments on Car Loans Tax Deductible

President Donald Trump delivered the biggest speech of his presidency yet, he stopped short of saying if he would claw back some of this week’s levies on Canada and Mexico, though Commerce Secretary Howard Lutnick has suggested a partial reprieve from the duties could be coming.

On taxation, Trump proposed sweeping cuts and exemptions: "I'm calling for no tax on tips, no tax on overtime and no tax on social security benefits." He also aims to make car loan interest tax-deductible for American-made vehicles, promising to "absolutely boom" the auto industry.

Shares of Tesla rebounded 2.5% in premarket trading on the news.

Tesla Offers Incentives to Revive Sluggish Demand

Tesla announced several incentives aimed at boosting demand for its electric vehicles amid signs of a slowdown in sales during the first quarter of 2025.

The company is offering free lifetime supercharging on Foundation Series Cybertrucks purchased after February 28, as well as 0% APR financing or zero due at signing for Model 3 orders. Additionally, Tesla is advertising discounts on older Model Y units as it ramps up production of a refreshed version.

While these incentives indicate weaker-than-expected demand, investors appear to have interpreted them as a positive sign that Tesla is taking proactive steps to stimulate sales. The stock's surge in premarket trading on Wednesday suggests optimism that the company's measures could successfully revive demand and lead to a stronger second quarter performance.

Option Strategy: Bull Call Spread

• Structure:

  • Buy $265 Call (3/14 Expiry)

  • Sell $275 Call (3/14 Expiry)

    $TSLA Vertical 250314 265.0C/275.0C$

• Max Profit: $470

• Breakeven: $270.3.

• Rationale: Targets upside toward analyst mean price target ($335.98) with defined risk.

  Source: Tiger Trade App

2. Bearish Outlook

The "Buyers Strike" Is a Real Problem for Musk

Tesla's February sales in France fell 26% year over year. Early numbers from the China Passenger Car Association showed Tesla's February wholesale number, which includes exports and retail sales, dropped 49%.

It's a steep Chinese drop, likely affected by Tesla's Model Y changeover. The company recently started selling an updated version of its best-selling vehicle. Updating models often means losing production as plants go offline so tooling can be updated.

The Chinese February drop follows January sales data that showed Tesla underperforming in the U.S., Europe, and China. Sales fell year over year in all three regions.

In a Monday report, Morgan Stanley analyst Adam Jonas characterized weak sales numbers as a "buyers' strike," with CEO Elon Musk's increasingly political activity turning off core Tesla buyers - politically left-leaning people looking to go green.

Option Strategy: Bear Put Spread

• Structure:

  • Buy $275 Put (3/14 Expiry)

  • Sell $265 Put (3/14 Expiry)

    $TSLA Vertical 250314 265.0P/275.0P$

• Max Profit: $527.5.

• Breakeven: $270.28.

• Rationale: Hedges against downside risk toward support ($262.84) amid net capital outflows (-$270M over 5 days).

Source: Tiger Trade App