Elon Musk’s trillion-dollar Tesla paycheck works out to roughly a dollar for every problem facing Tesla.

So far this year, the electric vehicle giant has endured mounting competition both at home and abroad, rising costs from tariffs, and the obliteration of valuable tax credits. Last week delivered a couple of new battles, including an investigation by US safety regulators over potentially deadly door handles and some big new rivals in the robotaxi space. And yet, by Friday, Tesla scored a couple of key brownie points from Wall Street analysts. So why the optimism?

Design Flaws

Tesla is no stranger to recalls, updates and visits from safety regulators — though this one may require more effort to fix. Two weeks ago, Bloomberg published an investigation into the risks of the mostly electronically powered doors found in Tesla cars, including 140 instances since 2018 of dangerous door malfunctions, with some linked to fatalities. Following the report, the US National Highway Traffic Safety Administration opened a probe into Tesla Model Y door handles (regulators in both Europe and China have already been on the case).

By the end of the week, Tesla’s design chief, Franz von Holzhausen, said on a podcast that the company is “working on” a design fix (notably, the Cybertruck doors have no handles at all and open from both sides using only electrical buttons; manual overrides are tucked away inside the vehicle).

That’s new problem No. 1. New problem No. 2? More competition in the robotaxi space:

• Last Wednesday, Alphabet-owned Waymo said it would team with Lyft to become the first robotaxi service to enter Nashville, with plans to launch in the city next year. A day later, Waymo announced another partnership with Via, a recently IPO’d company that provides software and on-demand rides to public transit systems, with plans to bring robotaxis to public transit networks starting in Chandler, Arizona, this fall.
• Then on Friday, Nvidia announced a possible $500 million investment in self-driving car startup Wayve, which has already been backed by Uber and SoftBank. Wayve offers robotaxi service in San Francisco, Phoenix, Los Angeles, Austin and Atlanta.

Translation: Tesla, which currently only offers robotaxi service in Austin, is falling behind in the robotaxi race.

Optimist Prime: And yet! Things are still looking up for Tesla. Last week’s interest-rate cut from the Federal Reserve is likely to be a big boon for the company (a substantial amount of car buyers finance their purchases), and analysts still see upside for the company. On Friday, Baird analyst Ben Kallo upgraded the company’s stock from hold to buy, highlighting a looming “physical AI inflection” that should boost both Tesla’s robotaxi business and its robotics business, led by its forthcoming Optimus humanoid bot. Meanwhile, Goldman Sachs raised its price target (though not its rating) for Tesla stock last week, from $300 to $395, citing an expected rush of car sales before the $7,500 federal EV tax credit expires at the end of the month.

US Securities and Exchange Commission Chair Paul Atkins says letting corporations require shareholders to resolve legal claims through arbitration instead of the courts will help “make IPOs great again.”

Some investors are asking for whom.

Corporations? Check. The policy shift lets companies curb legal expenses and avoid damaging publicity by inserting mandatory arbitration clauses in registration statements that are required by the SEC before their shares can be sold on public exchanges. Shareholders? Not so much. They risk losing a powerful tool to protect their own interests.

Diminishing Deterrent

“Forced arbitration would block investors from joining together in court to hold companies accountable for securities fraud,” said Marcie Frost, CEO of the California Public Employees Retirement System. Better known as CalPERS, it’s the largest public pension fund in the US, with more than 2 million members and $500 billion in assets. “These class-action lawsuits are a critical way to hold companies accountable for defrauding investors. This would not only reduce recovery for harmed investors but also diminish the deterrent effect that class-action suits often provide.”

The numbers bear that out: Class-action securities settlements in 88 cases totaled about $3.7 billion in 2024, according to data collected by Cornerstone Research. That compares with just $345 million returned to investors through SEC enforcement in the same period.

Atkins points out that the new policy doesn’t weigh in on whether mandatory arbitration is good or bad for investors (though he expects “robust” debate on that point) or preferable to lawsuits:

• Instead, it removes arbitration from the factors the agency considers in deciding whether to clear the sale of company stock to the public.
• “This position is not an invention of the commission, but rather an acknowledgment of current Supreme Court precedent,” said Commissioner Hester Peirce. “Knowing that the SEC will not put its thumb on the scale, companies can decide whether they want to include arbitration provisions.”

The policy reverses a stance taken by the agency’s Division of Corporation Finance since the early 2010s, when it began refusing to greenlight registration statements that included an arbitration clause, referring them instead to the commission and effectively deterring companies from using the tactic.

While the agency previously questioned whether US securities laws of the 1930s, passed after the stock market crash of 1929 led to the Great Depression, overrode broad US government support for arbitration in the Federal Arbitration Act of 1925, it now says they do not.

That decision reflects the changing position of the US Supreme Court, which held in 1953’s Wilko v. Swan that investors couldn’t be forced to give up their right to pursue claims in court, but reversed itself in 1989.

“Arbitration has long been recognized under federal law as a valid alternative to class actions, and the SEC’s move simply removes its prior bias against it without mandating anything,” Lawrence Cunningham, director of the Weinberg Center for Corporate Governance at the University of Delaware, told The Daily Upside.

Resolving disputes through arbitration “doesn’t eliminate remedies or accountability,” he added. “This is ultimately a matter of balance, not absolutes.”

Stacking the Deck: By not considering the benefits or drawbacks of arbitration, however, the SEC ignored “overwhelming evidence” that letting companies force it on shareholders doesn’t serve the public interest, said Commissioner Caroline Crenshaw, the four-member panel’s only Democrat. Instead, she said, it voted “to stack the deck against investors — this time primarily small, retail shareholders in public companies.”

In June, the Swiss government laid out a proposal to compel UBS to add $26 billion to its reserves, and last week, Swiss parliamentarians cleared the way for the country’s Federal Council to directly impose $11 billion worth of that.

UBS, to no one’s surprise, is lobbying policymakers to soften their position, arguing the bank will be left at a competitive disadvantage. An activist investor with a 1.4% stake in the bank is calling for a drastic bargaining tactic: Prepare to up and leave Switzerland, possibly even to join Wall Street.

UBS – S = US

So far, this is a polite, measured impasse — UBS CEO Sergio Ermotti is on record stating his firm wants to “continue to operate as a successful global bank based out of Switzerland.” The Swiss government, for its part, is still sweating over 2023. That’s when officials brokered UBS’s acquisition of failed investment banking giant Credit Suisse, leaving some afraid this made UBS not only too big to fail but also too big to bail out.

UBS is pressing the government to roll back its June proposals, which would force UBS to fully capitalize its foreign subsidiaries. Short of concessions, activist investor Cevian said last week that the new capital proposals would make it “not viable” to run a global investment bank in Switzerland. “We therefore see no other realistic option but to leave,” Cevian cofounder Lars Förberg told the Financial Times. An even more inflammatory report in the New York Post said UBS officials have already met with the Trump administration about moving the bank’s headquarters to US shores. But, back home in Switzerland, where the initial grumblings starting to leak out are seen as more negotiating tactic than threat, many pointed out it’s not as simple as that:

• Zurich-based broadsheet Neue Zürcher Zeitung noted that because of strict stress tests on banks in the US, UBS’s American subsidiary actually has a higher core capital ratio than its Swiss units. Meanwhile, if the bank were to move to the US, its large Swiss business would be considered a foreign business in its home country and would likely face stricter capital requirements in Switzerland. A double whammy.
• Public broadcaster Schweizer Radio noted UBS, if it moved to the US, UK, Hong Kong or Singapore, would also have a hard time retaining international clients who are drawn to Switzerland for its longstanding foreign policy commitment to neutrality: “To the US, perhaps New York? That would scare off Asian clients who don’t want their money in a US bank.”

History Repeating: In 2009, Swiss media reported that UBS threatened to leave the country if it deemed regulations imposed in the wake of the financial crisis to be heavy-handed. Nothing came of it. One thing that would certainly make everyone happy is clarity. The FT noted Cevian hoped UBS shares could double in value in three to five years from the time its stake was disclosed in late 2023. Instead, they’ve been stuck in quicksand with the new capital proposals hanging over them, rising less than a quarter since.